INDIAN INSTITUTE OF MANAGEMENT KOZHIKODE

Globalizing Indian Thought

Executive Post Graduate Programmes

Batch 2014-2016
MASA-SM08-10

NEWELL CO. CORPORATE

STRATEGY
Assignment 1

Submitted To: Prof. Jijo Lukose P.J.

Submitted By:
Name
Umesh Tambare

Roll number
EPGP07 089

Q.1: Does Newell have a successful corporate-level strategy? Does the

company add value to the businesses within its portfolio? If so, how?

NEWELL CO. CORPORATE STRATEGY

Yes, Newell have a successful corporate-level strategy, the sustainable growth

from 1900 to 1997 shows all this is possible due to their corporate strategy. Below
are few highlights of their strategic decisions

Newell aimed Inorganic Growth through series / continuous acquisitions of

firms with parallel to their business (products).

Operating margin of minimum 15% expected from each business.
Newell have divisional structure with each division to handle design,

manufacturing, marketing, sales and service.

Maintained centralized basic functions such as administration, finance, legal,

tax issues at corporate head offices.

High value to quality and service (keep its customers at 95% line-fill and
100% on time delivery.

Yes, Newell adds value to the businesses within its portfolio.

After acquisition the companies were put through a process of streamlining,

focusing on operational efficiency and profitability, known as Newellization.

An integrated financial system, a sales and order processing system and a
flexible manufacturing system is implemented within the newly acquired

organization.
Aiming to- Profit growth, not sales growth.

Q.2: What are companys distinctive resources?

Newells distinctive resources are

Centralized basic functions such as administration, finance, legal, tax issues

at corporate head offices.

Employees who are motivated by success.
Own production and on time deliveries (shipping) of products.
Computer and communication hardware- Newells top 20 customers place
90% of their order through Electronic data interchange (EDI).

Q.3: Does the acquisition of Calphalon make sense?

Acquisition of Calphalon was having mixed (positive/negative) impact on Newell
businessIIMK EPGP07: MASA-Assignment 1

Page 2

NEWELL CO. CORPORATE STRATEGY

Calphalon was a strong brand addition to Newell.
Though Calphalon sales were growing but due to high SG&A expenses (25%
per year) net income was stable or decreasing.
Calphalon current business channel would compete with WearEver products
in mass merchandisers, leading to self cannibalization.
Calphalon expertise in developing pull strategies and building strong
connections to the end consumers was new skill addition to Newell.
Newell has to work on many aspects of Calphalon business to bring discipline
and reduce SG&A.

Q.4: Was the Rubbermaid acquisition a good move for Newell?

Yes, Rubbermaid acquisition was a good move for Newell.

McDonough (CEO) pointed one research that companies with $10 billion
market capitalization commanded high P/E multiples and with Rubbermaid

acquisition Newells market value going to cross $10 billion.

The purchase was through shares, which was tax free and no additional

burden of debt.
Rubbermaid and its brand names enhanced Newells opportunities for

globalization and internal growth.

Newell management was confident enough to streamline the Rubbermaid by
using its expertise in integrating acquisitions, manufacturing distribution,
customer relations and customer service.

IIMK EPGP07: MASA-Assignment 1

Page 3