• The company’s strategy was to acquire companies selling well branded products to mass retailers at low profit margins.
• After acquisition theses companies went through a process known as “Newellization” to align them to Newell operations, with the ultimate goal of turning profit margin to 10-15%. To be considered successful this needed to be achieved in a period less than 18 months.
• The companies targeted needed to offer products whom had operations similar in nature to Newell existing line of products but yet had to offer growth opportunities to grow the company as a whole. This allowed Newell to achieve integration of these companies quickly and help achieve the overall efficiencies.
• “build …show more content…
This gave Newell a competitive advantage as not all of their competitors were able to do so and this was something that was being driven by the major retailers to bring the overall cost down. This further improved the economies of scale for Newell and process continued.
• Newell was able to charge premium on their products as they offered reliability and consistency to mass retailers. In 1970 the industry average was 80% of line fill and on-time delivery. At the same period Newell was able to target 95% of these measures and soon drove them up to 100%. This service level allowed Newell’s suppliers to have a higher WTP when compare to competitors.
• Newell was able to meet these service level by utilising its corporate resources mentioned above.
• In addition to WTP, given that many suppliers charged penalties for missed deliveries, Newell ability to deliver on time help reduced the overall cost.
• Newell technology allows them more competitive as Wall Mart are likely to have a higher WTP because the auto invoice, payment makes it easier probably compare to average