Newell's Corporate Strategy

Newell's goal is to increase its sales and profitability by offering a comprehensive range of products and reliable service to the mass retail channel. Newell has chosen to develop its product line through key acquisitions, rather than internal organic growth. The strategy succeeds based on their two pronged approach of following an established acquisition process (Newellization) and ensuring corporate continuity across the division to support its performance in the market. This strategy helps Newell successfully diversify their portfolio of products for mass retailers (Exhibit #1).

Newell's key resources and capabilities are tailored around the company's needs for growth and their customers need for diversity and efficient distribution. The company's product range (21 product lines) and depth (good, better, best) creates huge incentive for retailers to stock product from only one supplier. Their logistics operation with nearly 100% first-pass line fill and expanding global presence help the company improve and expand with their customers (mass-merchandisers). The process of "Newellization" is a valuable resource to the company by which Newell acquire, convert, and integrate a new acquisition (products) into their existing product lines within a short lead time. This process provides them an opportunity to gain additional market share in key distribution channels. The company's emphasis on firms (with high brand awareness and a low cost structure) after Newellization creates an offering in the market which is difficult to imitate (Exhibit #2).

As part of Newell's corporate strategy all acquisitions are performed at the corporate level. As part of Newell's control system, potential target firms undergo an intense screening process and must become at par with company's existing performance criteria (market share, COGS, SG&A expense, and projected operating margin) after the Newellization process. As part of company's control strategy, although corporate tightly controls the finances, yet it allows brand and division president autonomy to guide the performance of the business. The structure and the system of the firm (the central financial, sales and ordering, manufacturing, and HR systems, performance review, bracket meetings) creates consistent and predictable brands that help Newell maintain its competitive advantage.

For the success of their corporate strategy, corporate office does a good job of seamless linking of its structure, system & processes with its businessesand resources. For example, Newell uses a formalized training process in order to link corporate vision to the values and resources at the division level. The company ensures that they obtain candidates that are best suited to exceed expectation in their demanding environment by using