Rubbermaid Merger

1. Newell’s corporate-level strategy is to grow and become “big enough to get attention” from its big buyers, such as the Walmart, Sears, Kmart (back then), etc. The company’s CEO John McDonough saw the acquisition of other smaller companies as a way of achieving the $10 billion market value threshold, which would give Newell leverage and bargaining power over their big clients and fulfil the corporate-level strategy. Once a smaller company is acquired by Newell almost immediately it goes through a process called “Newellization” which meant that costs would be cut and profit margins increased. This process often included laying off workers and closing factories, aimed at raising “operating margins above the 15% minimum Newell expected”.
2. Newell had great knowledge of how to quickly transform an underperforming company into a profitable addition to its portfolio. The company had great discipline both internal and financial which is arguably its biggest capability which allowed it to grow and expand, outside of its product manufacturing. During the 1990s Newell, experienced difficulties maintaining internal growth rates with the benchmark being set in 1991 when it “achieved 6%
Rubbermaid was the biggest acquisition made by Newell with the main goal and idea to increase its global presence following the deal. For many years, Rubbermaid was one of the most successful respected companies in America and was even named the most company in America in 1993. Through the purchase of Rubbermaid, Newell was able to utilize the respect and global recognition of the brand and to further expand its market reach. Moreover, despite the fact that it was struggling prior to its acquisition Rubbermaid was still a very large company with revenues of $2.4 billion compared to Newell’s $3.2billion. This meant that through this purchase Newell could finally reach its goal of $10 billion in market value, giving it the leverage over its big buyers which the company was aiming