Newell core competency Is to sell low cost high volume home and hardware goods to mass retailers. Newell acquired more than 30 major businesses In 20 years.
The kind of business Newell acquired was based on the business being strategic fit to the core competency of manufacturing low technology, non-seasonal, encyclical, non- fashionable products, until most recent larger acquisitions.
Typically the target business had certain characteristics that made them more attractive for Newell, such s underperforming due to high costs, low operating margin. Newell would then turnaround the business In less than 18 months by applying rigorous operational Improvement and profitability Improvement processes. Usually Ralston the operating margin above the 15% minimum Newell expected from the businesses. 2.
What was Newel's strategic rationale in managing its portfolio of businesses (e. G. , serving mass retaile
...rs)? Is this rationale sustainable?
Newell strategic rationale in nagging Its portfolio of businesses was to make It more important to the mass retail customer. Newell laser focus on serving the needs to the mass retailers and continuous Improvements led to Newell gallon solid reputation for Its service. Newell strategic objective was also to grow profits, possible due to superior service level, price premium and highly efficient operations.
For more than two decades Newell consistent performed above benchmark was also result of disciplined acquisition, integration of strategic fit businesses.
Serving the mass retailers is a sustainable business strategy, as long as the mass retailers dominate the retailing space, which seems to be the case for foreseeable future. Newell operationally efficient execution complemented very well the needs to the mass retailers. But It's not going to help Newell sustain for sa
next 100 years as there will be disruptions in the retailing not know currently that will impact Newell business. 3.
What did Newell contribute to its businesses post-acquisition to improve their performance?
During the Integration acquired business would undergo "Amelioration" process. "Amelioration" process essentially stream the business by cutting cost, improving efficiency by applying Newell process to the acquired business and elevating the acquired business efficiency and profitability to Newell standard. Three Newell standard systems were introduced to the acquired business: an integrated financial system, sales and order processing, and manufacturing system.
Anchor integration being a good example of Amelioration, cut costs (labor, tore), focused product portfolio and efficient operations (inventory management, reduced customer order fill time), Ongoing Operations, Newell maintained centralized administration at the corporate level, while the division was given complete freedom to handle design, manufacturing, marketing, sales and service to the customer. Newel's centralized administration functions were legal, tax, benefits, DEED', credit and collection, and financial control systems.
In case of Anchor acquisition $12 million saving realized with centralization of administrative.
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