MGMT102 G8 Tan Tuan Qi Newell
AY2014-15 Term 2
CASE ASSIGNMENT 1
(Newell Company)
12th March 2015
MGMT 102 – Strategy (G8)
Instructor: Assistant Professor Abhijith G. ACHARYA
Done by:
Tan Tuan Qi
S9132306J
Q1. Newell is a company with a successful corporate-level strategy of using horizontal integration through acquiring companies that fit its criteria for acquisition in order to achieve synergy through economies of scope. Such companies manufacture hardware and do-it-yourself products that are low-technology, non-seasonal, non-cyclical and non-fashionable to volume merchandisers. They compete on cost rather than on production differentiation and targets the same type of customers (large mass retailer) and thus exhibit many similarities with Newell. As such, potential synergies can be achieved through Newell’s acquisition. Important to Newell’s success in corporate-level strategy is its core competence which is its ability to provide a high service level to the mass retailers. Crucial this is its organization capability and resources. Newell has previously invested in computer and communication hardware which is a valuable, rare, costly to imitate and organized to capture value. It is a valuable resource that is organized to capture value as it seeks to provide Newell’s customers with what they want, namely reliable delivery that allows the mass retailers to maximise sales yet minimise holding costs while also reducing claims from retailers on unfilled orders. Such a resource is also rare and hard to imitate for Newell’s rivals due to the relatively high cost of such investment for smaller manufacturers. However, for Newell, having started investment early and having many different divisions, this cost is justifiable due to having economics of scope for their ability to streamline data from retailers through its Electronic Data Interchange (EDI). This works by streamlining data management to serve Newell’s many different divisions and allow all divisions within to
CASE ASSIGNMENT 1
(Newell Company)
12th March 2015
MGMT 102 – Strategy (G8)
Instructor: Assistant Professor Abhijith G. ACHARYA
Done by:
Tan Tuan Qi
S9132306J
Q1. Newell is a company with a successful corporate-level strategy of using horizontal integration through acquiring companies that fit its criteria for acquisition in order to achieve synergy through economies of scope. Such companies manufacture hardware and do-it-yourself products that are low-technology, non-seasonal, non-cyclical and non-fashionable to volume merchandisers. They compete on cost rather than on production differentiation and targets the same type of customers (large mass retailer) and thus exhibit many similarities with Newell. As such, potential synergies can be achieved through Newell’s acquisition. Important to Newell’s success in corporate-level strategy is its core competence which is its ability to provide a high service level to the mass retailers. Crucial this is its organization capability and resources. Newell has previously invested in computer and communication hardware which is a valuable, rare, costly to imitate and organized to capture value. It is a valuable resource that is organized to capture value as it seeks to provide Newell’s customers with what they want, namely reliable delivery that allows the mass retailers to maximise sales yet minimise holding costs while also reducing claims from retailers on unfilled orders. Such a resource is also rare and hard to imitate for Newell’s rivals due to the relatively high cost of such investment for smaller manufacturers. However, for Newell, having started investment early and having many different divisions, this cost is justifiable due to having economics of scope for their ability to streamline data from retailers through its Electronic Data Interchange (EDI). This works by streamlining data management to serve Newell’s many different divisions and allow all divisions within to