Newell / Rubbermaid Case Study – Strategy
Acquisitions are the foundation of Newel’s growth strategy and the company has an aggressive and disciplined approach to achieving Its’ growth targets.
Newell focuses on calculations that are generally mature businesses with ‘unrealized profit potential’, and pass a number of clearly defined screening criteria. If the transaction is completed, Newell will begin the process of assimilating Rubberneck’s operations through a process called “Amelioration” The companies expect that the merger will create synergy through the leveraging of Newell Rubberier brands.
By 2000, these efforts are ANALYSIS The Amelioration process The Amelioration process Is based on the prospective acquisition target having a umber of attributes that correlate with Newel’s requirements of a target organization. The first step in this analysis is that of screening criteria applied to the Rubberier opportunity. The first criteria is that the target organization must be a mature business. Rubberier was started In 1 920 when five businessmen who made toy balloons launched Wooster Rubber.
The organization has been continuously run since 1920 and has had a great deal of success over the years. The company name has become synonymous with plastic dishware and storage units. The next attribute desired of a company to undergo the Amelioration process Is the existence of Unrealized Profit Potential. In 1995, Rubberier at 75 was troubled by rising competition, Increased demands from retailers and skyrocketing-raw materials costs. By taking advantage of Newel’s strengths in these areas, increased profits may De realized.
Fit with existing businesses is the next criteria defined.
This includes a corporation with low technology products, low in fashion and seasonal content and sold through mass distribution channels. Rubberier primarily makes plastic products such as household and children’s products. These items are generally fairly owe technology although there is some specialization and a degree of higher technology required in the plastics industry. The products are definitely low in fashion and have very little seasonal influence.
The products are sold through mass distribution channels, including large retailers. Another criteria is that the target organization should be Number one or two position in their markets and have established shelf space with major retailers. Although there is no indication in the case as to where Rubberier exists within their markets, Rubberier has obviously held a very large market share in their product areas. In addition, Rubberier has established shelf space with many major retailers.
Long product life cycle is an attribute that is definitely applicable to Rubberier products.
Rubberneck’s products include housewives such as plastic containers, storage units, brooms and toys, all of which have a very long product life cycle. The final criteria defined is that the target organization must have the potential to reach Newel’s Financial Performance standards. Based on the above strategic fit and the current difficulties and tensions faced within the Rubberier corporation, there appears to be the potential for increased financial performance with the right leadership and structural changes.
From this analysis, Rubberier appears to be an extremely good fit to the Newell organization. All criteria set by Newell appear to be met, by varying degrees by Rubberier.
This analysis process is somewhat objective and the potential flaw in this analysis is obviously the possible prejudice of the individual(s) performing the comparison. That being said, I feel that in this particular instance, there is a strong fit between the criteria and Rubberier.