Newell Company- Case study
The Newell Corporate emerged out as a product line strategy. Newell sold their products including drapery hardware to many users. However, the product lines lacked differentiation. Early 1966, Newell purchased a small window-shade production in order to help solve the problem of differentiation. Dan Ferguson engaged Stanford Professor on an inquisitive conversation to discuss appropriate differentiation strategies to be built in the organization. The first strategy was the use of competitive advantage that was based on provision high-volume/low-cost product to be availed to the willing buyers in a large mass retailer (Aaker, 2009).
- What opportunities and threats did Newell face in the late 1990s? Use external analysis tools to provide support for your answer.
In the late 1990s Newell faced a great challenge due to the increase in customer buying power. Almost mass retailer chains took over the discount retailer market allowing retailers to access effective leverage over price and scheduling as such, manufacturers like Newell were forced to increase efficiencies in their stores as well as in their distribution systems. Newell embarked on their technology through introduction of (EDI), Electronic Data Interchange that acted as the company’s electronic management system for requesting for orders, sending and receiving invoices, and payments with their retail partners. (Hamel, 2009).The divisions enabled Newel and their reatailers to appropriately schedule their own services and products while maintaining minimal stock levels compared to actual sales. The use of modest Technology additionally led to increase of merchandisers since the organization could provide nightly point-of-sale data on every product sold after a daily account. The data aided reducing strategy is known to be the cross docking (Hamel, 2009).
Another challenge was the acquisitions of Calphalon and Rubbermaid. These two acquisitions acted as stepping stones for Newell as the two companies continued to offer greater brand recognition compared to that of Newell brand. Newel was greatly challenged because of the rate at which these two companies gave them stiff competitor for their customers in the market. Newel had to acquire more changes in their management systems in which the companies were acquired and the short amount of time between them a to avoid being overthrown in the competition (Eccles, 2009).
2. Did Newell have any sources of competitive advantage in the 1990s? Use internal analysis tools to provide support for your answer.
Newell’s top managers got their competitive advantage from their counterparts from Rubbermaid in 1999. Newell owned a30-year track history of building shareholder value that they had acquired from companies like Levolor and Sharpie pens. Rubbermaid had adopted their corporate strategies from the most admired U.S. organizations and were ready to establish convenient innovations that made their company to be more profitable after it had a good growth curve.
Newell and Rubbermaid both sold their products in a collaboration. This process saw the less brands sell faster because they were promoted well by the well renowned products that Rubbermaid had established over years to their customers. All household products got essentially the same sales from their hidden identities from the reap the benefits of well branded products. Nevertheless, many low-tech plastic items such as laundry equipment’s has been using better links in its supply chain (Eccles, 2009).
Rubbermaid’s executives also encouraged Newell by offering their exclusive right to acquire their company and utilize the incoming opportunities. As a result, Newell achieved up to $5.8 billion megamerger for the first time in their business history ( Alderson, 2015).
3. At the time of this case did Newell meet the criteria for effective corporate-level strategy? Why or why not?
Newell has successfully been able to utilize corporate resources to establish and maintain competitive advantage. Accessing its business-unit level the company has greatly benefited from the attractiveness of other potential and powerful markets in which they compete. Newell has been able to meet criteria for effective corporate-level strategy through establishment of financial controls, Organizational control, and Strategic control. Eccles, (2009) Financially, Newell management has been able to make high profits and reduce losses that could have been lost through poor marketing strategies. Competitive advantage has greatly helped in financial control to avoid loss of capital through low sales in the organization. Organizational control has been achieved through effective collaboration with well branded companies. On the other side, strategic control in Newell institution can be well explained through the analysis of different strategies that the managers adopted from other organization to increase profitability and uphold the status of the product brands to ensure customer satisfaction (Barney, 1995)
4. Should Newell acquire Calphalon and/or Rubbermaid? Why, or why not?
Newel should adopt the two acquisitions in order to remain competitive in the market. The Calphalon acquisition offers a good link and an opportunity to enter into department and their specialty stores while still upholding maintaining good products and Newell’s best merchandiser brand. Barney, (1995) explains that by acquiring Calphalon Newell was also exposed to new market stores through signing of a contract that helped them to exclusively display specially designed products to Caphalon. Apart from their introduction to Calphalon New targets, Newell decided was able to maintain Calphalon connections in with their departments and specialty stores offering them the opportunity to stand as the leading mass merchandiser brand.
Nevertheless, Calphalon have a good customer connections. Their People are more compassionate about great junk food and their cookware generally. Barney, (1995) As such Newel were able to control quality production towards customer satisfaction in compliance with Newell’s strategy to maintain perfect customer loyalty. Calphalon owns variety of end products that corresponds to with Newell’s price point strategy to overcome their competitors. Having variety of produces at a range of prices it is impossible for other companies to overrule the market and compete with them. Calphalon products have been known for their quality brands hence Newell will increases brand equity in their aspired strategy. Finally, both companies look forward to brand their names stronger and this makes a company a better competitor by having the good competitive advantage ( Alderson, 2015).
Barney, Jay B., 2005. “Looking Inside for Competitive Advantage”, Academy of Management Executive, Vol. 9, No, 4.
Alderson, W. (2015). Cited by Hoffman, N.P. (2000). An Examination of the Sustainable Competitive Advantage Concept: Past, Present, Future. Academyof Marketing Science Review, 2000:4
Eccles, R. , 1999. “Are You Paying Too Much for that Acquisition?” Harvard Business Review, Vol. 77 Issue 4, p136-146.
Hamel, C. K. 2009. “Collaborate with Your Competitors—and Win” Harvard Business Review, Vol. 67 Issue 1, p133-139.
Aaker, D. (2009). Managing assets and Skills: the key to a sustainablecompetitive Advantage, California Management Review, 31, 2: 91-106.