Case newell company corporate strategy

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Case newell company corporate strategy

Case newell company corporate strategy

Newell and Rubbermaid Corporation: A transformation chronicled The unhappy combination of Newell with Rubbermaid provides a good example of redefining and implementing a strategy to fix a troubled merger, as part of a larger transformation process.

Postmerger, when Newell finally lifted Rubbermaid's veil, the deal makers discovered that Rubbermaid had been very successfully dressed for sale. Even more troubling was the fact that the two businesses turned out to be fundamentally incompatible.

Rubbermaid was a consumer-oriented innovator, accustomed to offering the premium product in each of its categories. By contrast, Newell was a low-cost, high-volume supplier of more-ordinary household products. When there's a fundamental mismatch between two merged companies, the choices are 1 to get a divorce or 2 to stay married by rethinking the strategy for the whole enterprise.

Newell chose to stay married to Rubbermaid. Galli would be the third to try to save the merged company. But Newell was confident in Galli's ability to turn Rubbermaid around, even if that meant rethinking parts of the larger Newell strategy.

Galli began by announcing his priorities: In MayNewell Rubbermaid announced a major restructuring program that would cut 3, jobs worldwide 6 percent of the combined company's total and close several manufacturing sites. But when the overall investment thesis is in question, cutting costs may not get you nearly far enough.

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Even as you're taking steps to stop the bleeding, you probably need to be revisiting your basis of competition to figure out what has gone wrong. In Galli's case, that meant facing up to the fact that the company could not be two things at once.

Either it would focus on low-cost production, which was Newell's original strength, or it would embrace Rubbermaid's focus as a marketing-oriented product innovator. Newell saw that in order to rescue its marriage with Rubbermaid, it was going to have to innovate significantly in its base business.

In other words, the acquiring company consciously decided to alter its investment thesis to fit a new reality. And in order to do that, it was going to have to take a step that many companies trying to retrofit a troubled merger find themselves taking: For Galli, that meant hiring people from companies that were proven winners in mass-market innovation.

And because of the wide gulf between Newell management's expertise and the skills the combined company would need, Galli had to make wholesale management changes. In all, Galli made management changes at the vice-president level and above. He also introduced an incentive scheme designed to align executive interests with a set of specific promises the company had made to the investment community.

And as new people arrived, Galli gave them a strong understanding of exactly how Newell planned to get back on track. He put the leaders through an intensive six-day "boot camp" in leadership development.

Galli's first priority was hiring and training the right kinds of people. At the same time, though, he had to create a system to set corporate goals and measure performance.

He did this by rolling out what he calls an "operating cycle," which is essentially a twelve-month calendar that forces Newell to set strategy, review the organization, review operations, set budgets, and evaluate performance.

Next, Galli very explicitly set out to redefine the company's culture, to capture the essence of a company dedicated to product innovation on a mass-market scale. He created a recruitment program called Phoenix-named for the mythical bird that periodically rises from its own ashes-which took all of Newell Rubbermaid's fresh hires from colleges and put them out in Wal-Marts and other retail stores, where they would rub shoulders with sales clerks and customers and get a street-level feel for their products.

In order to save the marriage between Newell and Rubbermaid Galli needed not only to activate but also to redefine the strategy of the whole company.

This transformation involved making Newell act more like Rubbermaid had traditionally performed-that is, making the combined entity a consumer-oriented company. In a sense, the corporation was "Rubberized" after it was "Newellized.

By DecemberNewell Rubbermaid shares were down since Galli's arrival two years earlier. The company has made noteworthy strides in free cash flow.The Core Framework for Corporate Development.

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Case newell company corporate strategy

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Newell Rubbermaid: Strategy in Transition is a Harvard Business (HBR) Case Study on Strategy & Execution, Fern Fort University provides HBR case study assignment help for just $ Our case solution is based on Case Study Method expertise & our global insights.

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Newell Corporate Strategy - Essay