Does Newell have a successful corporate-level strategy? Does the company add value to the businesses within its portfolio?
The company did add a lot of value to the businesses within its portfolio, which essentially was a translation of a successful strategy at the corporate level as it acquired many under-performing companies along the years. These companies ranked very high on market effectiveness and performance but performed very poorly financially. The companies that manufactured brand-name staple products ranked first and second in terms of market share. This was a green signal for Newell to acquire these companies as it thought that they were significantly undervalued due to poor management and can thus be rejuvenated with the better support structure that Newell has and ultimately turn profitable for the parent company.
It streamlined the businesses of the acquired companies through its IT-based sales and flexible manufacturing system. In essence it attempted to create synergies by exploiting the already existent operational expertise and creating new operational efficiencies. Globalization played an important role here for Newell as the combination of Rotring – a German manufacturer of writing instruments and Panex – a cookware manufacturer in Brazil, in combination with Rubbermaid accounted for 25% of the total sales for Newell. Newell manufactures low-cost but high-volume staple products like home furnishings and house-wares and sells these to large retailers. In other words, it doesn’t savor the smaller retailers as much which implies that it primarily focuses its distribution and marketing efforts on a relatively few key accounts. It has an intricate system of knowledge-transfer and sharing within the organization with job rotation for managers along with comprehensive training programs and regular management meetings. It also leverages economies of scope by exploiting relationships with discount retailers to get the shelf-space it...