Newells corporate level strategy

Focus on Core Competence: They primarily core competence was focused on

high volume /lowcost product to large mass retailer .Initial focus is on Home and
Hardware products . Newell Companys strategy is to acquire different companies
mplerubber maid in plastics , panex in ccookware and others were also in same
window , picture fthat will help them grow their business in the basic home and
hardware products industry before 1994 and started diversifying into unrelated field
such as writing instruments and window treatments to grow the company as a
whole. These companies are mostly underperforming and suffer from high cost thus
Newell would put these companies through a process of streamlining, focusing on
operational efficiency and profitability, and this process known as Newellization
would align these companies to Newells own cost structure and processes in less
than 18 months. Newell also acquire small businesses to round out their existing
product lines and consolidate industry capacity.
Change in organizational structure to divisional . Decentralization if manufacturing
and marketing facilities .
High level of differentiation:Hardware/Home: window treatment $900 million
,Hardware and tools $400 million. Picture frames $400 million ,Home storage$200
million .
Office products : Market and writing $900 million ,office storage and organization
$200 million .
Houseware: Aluminium cookware $500 million ,Glassware $300 million , Hair
accessories $200 million.
Value creation through Diversification.: Operational and corporate relatedness
was there between the companies acquired by newell For exarame hardware and
so on . it helped Newell in getting .
Economies of scope and scale : example Anchor Reduction of employees
10400 employees to 9000) ,Cost cutting for example closing of one glass factory .
Reduction of excess inventory by 40% . Centralization of administrative
andfinancial and computer functions . reduction of customer orders from 18 to 7 .
Market power: Acquisition of brand name staple products lead them to get the
shelf space and become important for retailer .
Financial economy: Because of fundamental similarity in business easy changes
in cost structures to improve operating margins above 15% minimum .
Achieving CRITICAL MASS: Protect its shelf space at each price point in given
category and hence economies of scale in each product category to protect from
new entrants at both high and low price levels .
Entering in global market through Merger and acquisition :by 1990 17% of sales
from non U.S. business .Maitainn relation with U.S. retailer like walmart that have
become global .

Newells parenting capabilities: They primarily core competence was focused

on high volume /lowcost product to large mass retailer .Initial focus is on Home
and Hardware products .
Powerful multi product offering . Three standard system .: Integrated financial
system , sales and order processing system and flexible manufacturing system .
Better efficiencies in warehouse and distribution system low inventory . Use of IT
that is placing of order through EDI . Efficient shipment system for on tiome
delivery . Focus of each division on its own performance and superior customer
service for example 95 % line fill when industry average was 80% .. Famous as no
problem supplier .Highly competitive recruitment 1:10 ratio of selection . High goal
setting pre tax ROA 32.5% to 43.5% .
Value created by Newell for each business unit as a parent: Value creation
through Diversification.: Operational and corporate relatedness was there
between the companies acquired by newell For exarame hardware and so on . it
helped Newell in getting .
Economies of scope and scale : example Anchor Reduction of employees
10400 employees to 9000) ,Cost cutting for example closing of one glass factory .
Reduction of excess inventory by 40% . Centralization of administrative
andfinancial and computer functions . reduction of customer orders from 18 to 7 .
Market power: Acquisition of brand name staple products lead them to get the
shelf space and become important for retailer .
Implementaion of : Three standard system .: Integrated financial system , sales and
order processing system and flexible manufacturing system . Newell would put
these companies through a process of streamlining, focusing on operational
efficiency and profitability, and this process known as Newellization would align
these companies to Newells own cost structure and processes in less than 18
months. Newell also acquire small businesses to round out their existing product
lines and consolidate industry capacity. Improved Operational efficiency .
Diversification strategy of Newell in terms of operational relatedness and
corporate relatedness