Newell Rubbermaid Case Analysis

Newell’s Complete Strategy

Newell’s businesses all correspond well with Newell’s current mass distribution or the companies were easily changed to fit that current distribution. All of Newell’s companies were considered mature when they were acquired and had “unrealized profit potential.” The companies have low technology, fashion, and seasonal content with long product life cycles and the potential to reach Newell’s standards of profitability which include earnings per share growth of 15% per year and maintaining a return on beginning equity of 20% or above. All companies were number one or two in their market, are resourced based and can run independently. All are also companies that already had a pre-existing relationship with retailers that could be leveraged during the merger. As stated in the case, “The most important acquisition is shelf space.”

Newell’s critical resources include its experienced managers, its key administrative functions (data processing, accounting, EDI, capital expenditure approval) which are all centralized, and its established manufacturing and marketing programs. Another corporate resource includes Newell’s divisional operating control system.

These corporate resources allow Newell to coordinate and control the business operations. By centralizing its data management, divisional control and coordination, and financial management, Newell can run all of its companies as one, while the companies also run independently. The companies are run independently of each other by presidents of each of the 18 product divisions. These presidents control the manufacturing, marketing, and sales activities that affect the product lines and their performance. The divisional coordination and control are made possible through similarities between the operating standards and control across the businesses. These similarities help create a common “pool” of managers and know-how so that they can all be transferred easily from one division to another....