Newell Case Analysis
1. Does Newell have a successful corporate-level strategy? Does the company add value to the businesses within its portfolio?
-Their strategy is to increase their sales and profits by offering a wide range of products and reliable service to the mass retail channel.
-Newell does this through key acquisitions rather than internal growth
-21 product lines encourages retailers to buy many products from one source
-Nearly 100% first-pass line fill
-“Newellization” = Newell obtains, transforms, and integrates a new acquisition of products into their existing product lines with a short lead time.
-Newell’s emphasis on companies that have high brand awareness and a low cost structure after Newellization creates an offering in the market, which is hard to copy (Exhibit #2).
-Newell’s control system makes all new acquisitions meet certain criteria: -Market Share -COGS -Selling, General, and Administrative Expenses -Projected Operating Margin
-Newell does a good job of combining their structure, system and processes with its businesses and resources.
-Training process that links corporate vision to the values and resources at the division level.
-Newell University instills company strategies and values in its workers.
-Their corporate-level strategy has proven successful by their financial numbers: -3 divisions -Hardware/Home Furnishings – 46% of Newell’s revenue -Office Products – 28% of Newell’s revenue -Housewares – 26% of Newell’s revenue
-They control costs at the division level, which leads to returning 9% net income as a percentage of sales.
-10-year average return to its investors is 13% above the industry average.
4. Does the acquisition of Calphalon make sense?
-Calphalon became part of their Housewares division, which extended their reach into the non-mass merchandise market.
-Did not cannibalize themselves with current cookware at mass retailers.
-Newell is expanding into non-saturated markets where products haven’t
-Their strategy is to increase their sales and profits by offering a wide range of products and reliable service to the mass retail channel.
-Newell does this through key acquisitions rather than internal growth
-21 product lines encourages retailers to buy many products from one source
-Nearly 100% first-pass line fill
-“Newellization” = Newell obtains, transforms, and integrates a new acquisition of products into their existing product lines with a short lead time.
-Newell’s emphasis on companies that have high brand awareness and a low cost structure after Newellization creates an offering in the market, which is hard to copy (Exhibit #2).
-Newell’s control system makes all new acquisitions meet certain criteria: -Market Share -COGS -Selling, General, and Administrative Expenses -Projected Operating Margin
-Newell does a good job of combining their structure, system and processes with its businesses and resources.
-Training process that links corporate vision to the values and resources at the division level.
-Newell University instills company strategies and values in its workers.
-Their corporate-level strategy has proven successful by their financial numbers: -3 divisions -Hardware/Home Furnishings – 46% of Newell’s revenue -Office Products – 28% of Newell’s revenue -Housewares – 26% of Newell’s revenue
-They control costs at the division level, which leads to returning 9% net income as a percentage of sales.
-10-year average return to its investors is 13% above the industry average.
4. Does the acquisition of Calphalon make sense?
-Calphalon became part of their Housewares division, which extended their reach into the non-mass merchandise market.
-Did not cannibalize themselves with current cookware at mass retailers.
-Newell is expanding into non-saturated markets where products haven’t