A corporate strategy is used to discover how valuable a company is in comparison to other companies . To initiate the strategy, corporations invest in valuable resources, construct the organizational structure, devise a business portfolio, and a host of other business functions, with the anticipation of transferring skills to other corporations. The Newell Company decided to exemplify strategic steps in the manufacturing of home and hardware products . The two strategies designed for the Newell Company was the acquisition of companies Calphalon and Rubbermaid. The acquisition of Calphalon would expand the access to department and specialty store markets, which would move the product line for a higher demand in the market. The acquisition of Rubbermaid would change the name to NewellRubbermaid, which would increase the global presence and offer more products than Newell Company could provide. The acquisition of these businesses was important to the growth of the Newell Company. The Newell Company supplied a guideline on the importance of incorporating a corporate strategy into a business plan will be beneficial to the expansion of a company. This case study will expound on the processes set to execute business acquisitions, the ideal acquisition for Newell, and the alignment of SBU’s.
Newell has been acquisitioning companies since 1917 when he became the regular supplier for the Woolworth store, which was a growing corporation . Newell was able to make the acquisitions of corporations successful by implementing a two-pronged strategy that would allow him to acquire 30 businesses over the next two decades. The implementation of the strategy involved companies with low-manufactured technology, noncyclical, nonfashionable, and nonseasonal, products that retailers would leave on the shelves. Companies that were acquired were put into “Newellization.” This process included the companies to be streamlined to focus on the profitability and efficiency of the corporation. The goal of this process was to raise operating margins higher than 15%. In the establishment of multiproduct offering, the strategy of acquisition included consolidation and centralization to maximize efficiency. Over time, centralization was not an effective strategy to selling a variety of products, which caused the corporation to be organized into separate divisions responsible for marketing and manufacturing.
The ideal acquisition for the Newell Company is with Rubbermaid. Rubbermaid is known for its equity and innovation of products during its highly successful time during 1980 to 1991. During the downfall of Rubbermaid, the new CEO Wolfgang Schmitt promoted new product development and team culture, but there were inefficiencies in management and operations. The reconstruction of Rubbermaid from the Newell Company acquisition involved diminished cost, and customers complained that products and services were not of standard. The expectation of this acquisition was to apply the Newell process of streamlining and the management of smaller companies to a larger company for Rubbermaid to enhance internal growth and globalization opportunities.
When conducting a corporate strategy, it is important that each department involved in implementing the strategy is in alignment with the strategic business unit (SBU). In the case of the Newell Company, acquisitions took place at a corporate level. The core function of each department involved in the acquisition was to generate profit through the corporate strategy . Having all the departments aligned for the specific goal of generating profit, along with the specific tasks for the assignment and a disciplined strategy encouraged growth of the Newell Company. Departments had the opportunity to develop ideas for the strategy, but could not expand the core focus of the product given to the department.
In conclusion, having a corporate strategy is very useful when it is properly executed. The Newell Company is a company that has successfully utilized a corporate strategy to expand its corporation. Newell used the strategy of “Newellization” to revitalize the acquired companies to increase operating margins. Rubbermaid is a great example of how corporate strategy can be useful to expand the Newell Company to globalization and internal growth. The Newell Company was able to be successful because the departments remain focus and are in alignment with the strategic business unit to ensure cohesiveness to achieve the generation of a profit.
- Montgomery, C. (2005). Newell Company: Corporate Strategy. Harvard Business School , 1-22.
- Sharer, K. (2003). Corporate Strategy. Retrieved from hbs: http://www.hbs.edu/coursecatalog/1230.html
