Newell Company

At the time Newell Company already was selling extensively to big retailers. Daniel Ferguson recognized that the company was good at making high volume products at a low cost. And, because they were selling extensively to big retailers, Newell Company knew how to relate to large retail institutions and how to sell their products to them.

After the initial 'alien' acquisition by Newell Company, they started to acquire more and more companies (more than thirty acquisitions in the next two decades), that sold at first glance, completely different products. This launched Newell Company enormous growth in the years followed. To outsiders it seemed that Newell Company only grew because of its many acquisitions, but this was not exactly the case. If you pay close attention to the type of companies Newell Company acquired you see that every single one fitted perfectly in the new strategy: "manufacturing and distributing volume merchandise lines to the volume merchandisers". All the acquisitions had the same resources: Newell's relationship with discount retailers and its high-volume manufacturing.

Newell's new strategy proved to be very successful, sales grew exponentially and the company even ranked twenty-two in the Fortune 500 at one point. The strategy was so successful that it became an example for other companies and even written about in a previous case we read in our class: "Creating Corporate Advantage".

One key point of Newell strategy is that it not just bought companies and integrated them with the existing companies. They carefully looked at the companies that they bought. They bought "companies that manufactured low-technology, non-seasonal, noncyclical, non-fashionable products that volume retailers would keep on the shelves year in and year out". Usually these companies were not performing at their best (but that was not a criteria), due to high costs and low operating margins. Newell carefully inspected the companies and cut cost without hurting the efficiency or quality of the products. They were so good at this that people in the field starting to call this "Newellization".

Newell Company was so focused and so strict with their new strategy that they even sold off companies that were successful and profitable but not in their distribution network. For instance, in 1989 Newell Company sold off manufacturer of home sewing products Wm. E. Wright, just because their distribution changed from retailers to specialty stores.

Also interesting to note is the fact that even though Newell Company focuses on quality, their program-selling approach: "good, better and best products" and they always cut costs of new acquisitions they still attach a great importance to customer relations. A remarkable example of this is the fact that they do not negotiate prices. At first you think this contradicts