Newell Rubbermaid Essay

2234 Words9 Pages
1-Brief Introduction & Key Issues Newell Company started out as a manufacturer of hardware and do-it-yourself items for the home aligned with volume retailers. As the company followed a corporate growth strategy that leveraged acquisition, rather than organic growth, Newell acquired two noteworthy firms: Calphalon and Rubbermaid. These acquisitions are interesting for different reasons, and this paper will attempt to analyze the underlying business and corporate strategy governing the mergers, the mutual fit of the two companies involved and the overall efficacy of the deals to achieve their intended purpose. 2-External Analysis The prime externality that affected Newell was the bargaining power of customers. Newell’s customers were mass retailers such as Wal-Mart, Kmart and Sears. These three powerhouse retailers dominated the market share of mass retailers. Consequently, these retailers were able to influence the type and volume of product delivered to their stores. This power also permitted them to influence price and the timeliness of supply. This external pressure incentivized Newell to optimize their supply chain and maximize supply efficiency, which led to systems like cross-docking. The threat of new competition and the threat of other products/services went hand in hand with how Newell was perceived by their customer. If a Wal-Mart, say, were displeased with an aspect of Newell’s performance they would pressure Newell by threatening to allow a competitor into the supply chain to stock some stores. Given the relatively un-differentiated nature of Newell products substitute suppliers were not hard to find. In essence, any market player that was operationally similar with a comparable, or superior, portfolio of products was a threat for Newell. As a result, competitive rivalry in the market ensued to maintain the position of preferred supplier. To
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