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Individual Case Analysis: Newell Company: the Rubbermaid Opportunity

In: Business and Management

Submitted By dwill2391
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The case is about the company Newell considering the acquisition of Rubbermaid Incorporated to develop a new company. . Rubbermaid is a manufacturer of plastic products ranging from children’s toys, house wares, to commercial items. Acquisitions are Newell’s main foundation when it comes to growing as a company and making sure every acquisition goes through the proper Newellization process to improve new businesses. Rubbermaid suffered from problems affecting the retail buyers who purchased their items, operations, not being able to compete with rival prices, to a decline in the company’s net earnings.
In this case Newell Company contemplated whether or not acquiring Rubbermaid would be a good decision to make. Although Rubbermaid posed great growth opportunity and could possibly bring an increase in income for Newell, I do not think it would be a wise idea for them as a company to merge. Newell Company is highly respected and well known for its customer satisfaction, in-full delivery, the ability to implement sophisticated EDI tie-in with its customers, and the provision of marketing and merchandising programs for the different products they offer. Rubbermaid has had many problems when it comes to customer service, competing with their competitors, and unrealistic financial targets. In an article done by Fortune it was revealed that Rubbermaid had angered their most important retail buyers with ballooning cost forcing them to give shelf space to competitors, lacked modern machinery and making deliveries on time, and finally their prices compared to rivals had grown too large. Acquiring Rubbermaid would then make Newell responsible for all of these problems. In the future Rubbermaid could cause more bad than good, from operation problems to disappointing competitive strategies posing a threat to Newell's reputation.
I would recommend Rubbermaid build a better relationship with its retail buyers as well as gain back customer loyalty by adjusting different product price, should also develop a new product line in order to compete with its competitors, they also need to create a new strategy to ensure deliveries get mad on time.
I analyzed whether or not it would be a good idea for Newell to merge with Rubbermaid. I used the evaluation the Internal and External factors, the company’s financials, and recommended strategies to improve the current problems to conduct the proper answer.
Internal Strengths: * Newell has established a sustainable competitive advantage for the corporation and with many acquisition opportunities and internal growth momentum. * Newell practiced a competitive strategy that was to differentiate in the basis of superior service to its mass merchandise customers.
Internal Weakness: * Although acquiring Rubbermaid would help Newell's growth it would challenge the company's capacity to integrate and strengthen its acquisitions. * Newell's corporate management held monthly reviews to track multiple operating and financial measures and as a result divisional management operated in a goldfish bowl under high pressure.
External Threats: * In 1995 Rubbermaid was ranked among top 10 in Fortune’s list of America’s admired companies had drastically fallen in 1998 to No.100. * Rubbermaid had angered their most important retail buyers with the way it passed along ballooning costs.

External opportunities: * For several decades Rubber maid was well known for a wide range of plastic products from children's toys through housewares to commercial items. * Rubbermaid was ranked among top 10 in Fortune's list of America's most admired companies, including the No.1993-1994.
External Factor Evaluation

Key External Factors | Weights | Ratings | Weighted Score | | | | | Opportunities | | | | For several decades Rubber maid was well known for a wide range of plastic products from children's toys through housewares to commercial items. | 0.07 | 4 | 0.28 | Rubbermaid was ranked among top 10 in Fortune's list of America's most admired companies, including the No.1993-1994. | 0.04 | 2 | 0.08 | Rubbermaid earned its early reputation by setting aggressive goals for 15 percent growth in revenues and profits and then, by large, meeting its targets. | 0.05 | 2 | 0.1 | As a company profits peaked in 1994 at $228 million. | 0.06 | 3 | 0.18 | In 1998, Rubbermaid manufactured and sold over 5,000 products under four key brand names: Rubbermaid, Garco, Little Tikes, and Curver. | 0.08 | 3 | 0.24 | Rubbermaid's international sales and operations had been growing in recent years. | 0.05 | 2 | 0.1 | Rubbermaid has 23 product lines and specializes in mainly utility products encompassing five categories Kitchen, Home Organizations, Health Care, Cleaning, and Hardware | 0.07 | 3 | 0.21 | | | | | Threats | | | | In 1995 Rubbermaid was ranked among top 10 in Fortune’s list of America’s admired companies had drastically fallen in 1998 to No.100. | 0.07 | 3 | 0.21 | Rubbermaid had angered their most important retail buyers with the way it passed along ballooning costs. | 0.08 | 4 | 0.32 | Retailers began to give more shelf space to Rubbermaid’s competitors. | 0.08 | 4 | 0.32 | Rubbermaid was laggard in areas such as modernizing machinery, eliminating unnecessary jobs, and making deliveries on time. | 0.07 | 2 | 0.14 | The Premium prices that Rubbermaid a charge over its rivals has grown too large and they are losing customer loyalty. | 0.08 | 3 | 0.24 | The company’s financial targets seem to be unrealistic and trying to reach them is becoming troublesome. | 0.06 | 2 | 0.12 | Although sales were up in 1995 were up eight percent the company took a restructuring charge of $158 million pre-tax and net earnings fell $60million. | 0.07 | 3 | 0.21 | The strategies Rubbermaid as a company were using reflected uneasy balance of inconsistent ambitions. | 0.07 | 2 | 0.14 | Total | 1 | | 2.89 |

Financial Analysis:
Newell Ratio Analysis:

Work Cited
"Business Strategy Blog." : Newell Company: Corporate Strategy. N.p., 20 Feb. 2011. Web. 24 Apr. 2013.
"Case Example: Newell and Rubbermaid Corporation." Case Example: Newell and Rubbermaid Corporation. N.p., n.d. Web. 24 Apr. 2013.
M, Erik. "Business Case Study: NewellRubbermaid." Yahoo! Contributor Network. N.p., n.d. Web. 24 Apr. 2013.

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