Newell Company Swot Analysis

Introduction:

Newell Company, a global marketer of consumer and commercial products with three major product grouping: Hardware and Home Furnishing, Office Products, and House wares. Rubbermaid is a well-known and for several decades, a renowned manufacturer of a wide range of plastic products ranging from children's toys though housewares to commercial items. On October 1998, the Newell Company was considering a proposed merger with Rubbermaid Incorporated to form a new company- Newell Rubbermaid Inc. The Rubbermaid opportunity would mark a quantum step in this program, but, equally, would pose a formidable challenge to Newell's demonstrated capacity to integrate and strength its acquisitions. Is the proposed merger a good opportunity for Newell? The following analyses are the decision criteria according to this merger.

Strategic Analysis:

Strength:

Products:

With three main product grouping, Newell had achieved a compound sales growth rate of 13 percent, an earning per share growth rate of 16 percent and an average annual return on the beginning shareholder equity of 21 percent. We could see that Newell has not so broad product lines. Given the relatively slow growth rate of the market in which it chose to operate, Newell chose relatively narrower product line to avoid greater manufacturing complexity, increased inventory, more management resources required, and etc.

Relationship with Customers:

Newell's products were, for the most part, sold through mass merchandisers such as Wall-Mart (accounted 15 percent of Newell's sales), Kmart, Home Depot, Target, and so on. Resellers fall within a continuum. Here we could see that Newell focused on more consumer oriented, lower price, high volume products. The way Newell chose to sell products through merchandise could reduce costs of warehousing inventory, managing inventories, balancing warehousing and inventory, what is more important is established customer base of reseller will increase sales, reduce advertising costs. And also, business which implied lines that low in technology, fashion and seasonal content were sold through mass distribution channels is one of criteria that Newell followed when it make acquisition.

As Newell followed customers and opportunities into Mexico, Europe and the Americas, its international sales had increased form 8% in 1992 to an expected 22% in 1998. Newell had retained customer base and also built brand name internationally with increased sales revenue.

Continuing Operations:

Newell's competitive strategy was to differentiate on the basis of superior service to its mass merchandise customers. This strategy is competitive and applied to all of its operations. For its superior service, it included industry-leasing quick response and on-time, in-full delivery, the ability to implement sophisticated EDI tie-ins with its customers extending to vendor-managed inventories, and the provision of marketing and merchandising programs for product categories that encompassed good, better and best lines. Newell worked hard on customer service satisfaction by use of modern technology. Common logistics management relative to merchandiser customers would be cost-efficient in supplying and reduces complexities related.

Organization Operations:

Newell centralized certain key administrative functions such as data management, divisional coordination and control, and financial management. It would save time and money for Newell to transfer experienced managers into its acquisitioned company and a result, let new acquisition on track as soon as possible. Since senior management understand the business, it should be easier for them to train employees and solve problems during work, thus improve efficiency and effectiveness.

Divisional coordination and control were facilitated by the fundamental similarities of the Newell businesses. These similarities made it possible for corporate level management to develop a common pool of managers and know-how that could be transferred relatively easily from one division to another. The size of acquisition varied from $46M to $762M, it is necessary to