Case Study Description of Newell Co.: Acquisition Strategy
Newell is a $1.5 billion manufacturer and distributor of low-tech home and hardware products, geared to serve volume purchasers. In 1992, Newell is considering two approaches to expand its current product line with the acquisitions of Sanford Corp., a $140 million manufacturer and marketer of writing instruments and office supplies, and Levolor, a $180 million manufacturer of window blinds. The case focuses on Newell's enduring corporate strategy as a guide for selecting appropriate acquisitions to grow the company.
Swot Analysis of "Newell Co.: Acquisition Strategy" written by David J. Collis, Elizabeth Johnson includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Newell Manufacturer facing as an external strategic factors. Some of the topics covered in Newell Co.: Acquisition Strategy case study are - Strategic Management Strategies, Marketing, Mergers & acquisitions, Risk management, Strategic planning and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Newell Co.: Acquisition Strategy casestudy better are - – talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, increasing commodity prices, there is increasing trade war between United States & China, increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%, challanges to central banks by blockchain based private currencies,
technology disruption, wage bills are increasing, etc
Introduction to SWOT Analysis of Newell Co.: Acquisition Strategy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Newell Co.: Acquisition Strategy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Newell Manufacturer, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Newell Manufacturer operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Newell Co.: Acquisition Strategy can be done for the following purposes –
1. Strategic planning using facts provided in Newell Co.: Acquisition Strategy case study
2. Improving business portfolio management of Newell Manufacturer
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Newell Manufacturer
Strengths Newell Co.: Acquisition Strategy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Newell Manufacturer in Newell Co.: Acquisition Strategy Harvard Business Review case study are -
High switching costs
– The high switching costs that Newell Manufacturer has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
High brand equity
– Newell Manufacturer has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Newell Manufacturer to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Superior customer experience
– The customer experience strategy of Newell Manufacturer in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Newell Manufacturer is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Newell Manufacturer is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Newell Co.: Acquisition Strategy Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of Newell Manufacturer in the sector have low bargaining power. Newell Co.: Acquisition Strategy has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Newell Manufacturer to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Newell Manufacturer is one of the most innovative firm in sector. Manager in Newell Co.: Acquisition Strategy Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to recruit top talent
– Newell Manufacturer is one of the leading recruiters in the industry. Managers in the Newell Co.: Acquisition Strategy are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Cross disciplinary teams
– Horizontal connected teams at the Newell Manufacturer are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Strong track record of project management
– Newell Manufacturer is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Newell Manufacturer is present in almost all the verticals within the industry. This has provided firm in Newell Co.: Acquisition Strategy case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Sustainable margins compare to other players in Strategy & Execution industry
– Newell Co.: Acquisition Strategy firm has clearly differentiated products in the market place. This has enabled Newell Manufacturer to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Newell Manufacturer to invest into research and development (R&D) and innovation.
Organizational Resilience of Newell Manufacturer
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Newell Manufacturer does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Newell Co.: Acquisition Strategy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Newell Co.: Acquisition Strategy are -
Lack of clear differentiation of Newell Manufacturer products
– To increase the profitability and margins on the products, Newell Manufacturer needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Newell Manufacturer is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Newell Co.: Acquisition Strategy can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Newell Co.: Acquisition Strategy, in the dynamic environment Newell Manufacturer has struggled to respond to the nimble upstart competition. Newell Manufacturer has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Capital Spending Reduction
– Even during the low interest decade, Newell Manufacturer has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Skills based hiring
– The stress on hiring functional specialists at Newell Manufacturer has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High cash cycle compare to competitors
Newell Manufacturer has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Products dominated business model
– Even though Newell Manufacturer has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Newell Co.: Acquisition Strategy should strive to include more intangible value offerings along with its core products and services.
Interest costs
– Compare to the competition, Newell Manufacturer has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Increasing silos among functional specialists
– The organizational structure of Newell Manufacturer is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Newell Manufacturer needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Newell Manufacturer to focus more on services rather than just following the product oriented approach.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Newell Co.: Acquisition Strategy, is just above the industry average. Newell Manufacturer needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High operating costs
– Compare to the competitors, firm in the HBR case study Newell Co.: Acquisition Strategy has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Newell Manufacturer 's lucrative customers.
Opportunities Newell Co.: Acquisition Strategy | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Newell Co.: Acquisition Strategy are -
Leveraging digital technologies
– Newell Manufacturer can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Learning at scale
– Online learning technologies has now opened space for Newell Manufacturer to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Newell Manufacturer is facing challenges because of the dominance of functional experts in the organization. Newell Co.: Acquisition Strategy case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Newell Manufacturer can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Loyalty marketing
– Newell Manufacturer has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Newell Manufacturer can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Using analytics as competitive advantage
– Newell Manufacturer has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Newell Co.: Acquisition Strategy - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Newell Manufacturer to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Newell Manufacturer to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Newell Manufacturer can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Newell Manufacturer can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Newell Manufacturer in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Newell Manufacturer in the consumer business. Now Newell Manufacturer can target international markets with far fewer capital restrictions requirements than the existing system.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Newell Manufacturer can use these opportunities to build new business models that can help the communities that Newell Manufacturer operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Newell Manufacturer can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Newell Co.: Acquisition Strategy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Newell Co.: Acquisition Strategy are -
Increasing wage structure of Newell Manufacturer
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Newell Manufacturer.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Newell Manufacturer can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Newell Co.: Acquisition Strategy .
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Newell Manufacturer.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Newell Manufacturer can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Newell Manufacturer high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Shortening product life cycle
– it is one of the major threat that Newell Manufacturer is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Newell Manufacturer with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Newell Co.: Acquisition Strategy, Newell Manufacturer may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Newell Manufacturer needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Technology acceleration in Forth Industrial Revolution
– Newell Manufacturer has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Newell Manufacturer needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Newell Manufacturer in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Newell Manufacturer will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Newell Manufacturer in the Strategy & Execution sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Newell Co.: Acquisition Strategy Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Newell Co.: Acquisition Strategy needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Newell Co.: Acquisition Strategy is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Newell Co.: Acquisition Strategy is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Newell Co.: Acquisition Strategy is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Newell Manufacturer needs to make to build a sustainable competitive advantage.