Case Study Description of Newell Rubbermaid: Strategy in Transition
Describes the transformation of a company's corporate-level strategy. Begins by laying out the strategy that brought the Newell Co. stunning success for nearly three decades. The highly integrated, internally consistent strategy was tailored for manufacturing and selling a particular genre of products to a particular kind of customer. In the mid-1990s, Newell encountered some shifts in its competitive environment and a subtle erosion in profits. In 1999, the $3.5 billion company paid a 49% premium to acquire the $2.5 billion Rubbermaid Co., in part for its product development process and strong consumer brands. After the acquisition, the profits of the combined enterprise deteriorated at an accelerated rate and the CEO was replaced. In less than a year, a fundamentally new strategy was announced, profits improved, and both Wall Street and major retailers were encouraged. Some setbacks followed, leading to reduced earnings and revised expectations. Exposes students to the pains and struggles of changing a deeply ingrained and long-lived strategy. Also forces them to confront the question of whether the new strategy is the right one and the markers one should seek to prove the case.
Authors :: Cynthia A. Montgomery, Rhonda Kaufman, Carole A. Winkler
Swot Analysis of "Newell Rubbermaid: Strategy in Transition" written by Cynthia A. Montgomery, Rhonda Kaufman, Carole A. Winkler includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Newell Rubbermaid facing as an external strategic factors. Some of the topics covered in Newell Rubbermaid: Strategy in Transition case study are - Strategic Management Strategies, Mergers & acquisitions, Strategic planning, Strategy execution and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Newell Rubbermaid: Strategy in Transition casestudy better are - – increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, wage bills are increasing, increasing household debt because of falling income levels, increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China,
increasing transportation and logistics costs, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Newell Rubbermaid: Strategy in Transition
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Newell Rubbermaid: Strategy in Transition case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Newell Rubbermaid, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Newell Rubbermaid 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 Rubbermaid: Strategy in Transition can be done for the following purposes –
1. Strategic planning using facts provided in Newell Rubbermaid: Strategy in Transition case study
2. Improving business portfolio management of Newell Rubbermaid
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 Rubbermaid
Strengths Newell Rubbermaid: Strategy in Transition | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Newell Rubbermaid in Newell Rubbermaid: Strategy in Transition Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Newell Rubbermaid 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.
Operational resilience
– The operational resilience strategy in the Newell Rubbermaid: Strategy in Transition Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Sustainable margins compare to other players in Strategy & Execution industry
– Newell Rubbermaid: Strategy in Transition firm has clearly differentiated products in the market place. This has enabled Newell Rubbermaid to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Newell Rubbermaid to invest into research and development (R&D) and innovation.
Ability to lead change in Strategy & Execution field
– Newell Rubbermaid is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Newell Rubbermaid in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Newell Rubbermaid in the sector have low bargaining power. Newell Rubbermaid: Strategy in Transition has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Newell Rubbermaid to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Newell Rubbermaid is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Cynthia A. Montgomery, Rhonda Kaufman, Carole A. Winkler can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
High brand equity
– Newell Rubbermaid has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Newell Rubbermaid 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 Rubbermaid in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Newell Rubbermaid has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Newell Rubbermaid: Strategy in Transition - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Newell Rubbermaid is present in almost all the verticals within the industry. This has provided firm in Newell Rubbermaid: Strategy in Transition 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.
Organizational Resilience of Newell Rubbermaid
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Newell Rubbermaid does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Successful track record of launching new products
– Newell Rubbermaid has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Newell Rubbermaid has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Weaknesses Newell Rubbermaid: Strategy in Transition | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Newell Rubbermaid: Strategy in Transition are -
Workers concerns about automation
– As automation is fast increasing in the segment, Newell Rubbermaid needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High bargaining power of channel partners
– Because of the regulatory requirements, Cynthia A. Montgomery, Rhonda Kaufman, Carole A. Winkler suggests that, Newell Rubbermaid is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Low market penetration in new markets
– Outside its home market of Newell Rubbermaid, firm in the HBR case study Newell Rubbermaid: Strategy in Transition needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Newell Rubbermaid supply chain. Even after few cautionary changes mentioned in the HBR case study - Newell Rubbermaid: Strategy in Transition, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Newell Rubbermaid vulnerable to further global disruptions in South East Asia.
Capital Spending Reduction
– Even during the low interest decade, Newell Rubbermaid 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.
Need for greater diversity
– Newell Rubbermaid has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Slow to strategic competitive environment developments
– As Newell Rubbermaid: Strategy in Transition HBR case study mentions - Newell Rubbermaid takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Interest costs
– Compare to the competition, Newell Rubbermaid 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Newell Rubbermaid: Strategy in Transition, it seems that the employees of Newell Rubbermaid don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Newell Rubbermaid is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Newell Rubbermaid: Strategy in Transition can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of Newell Rubbermaid is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Newell Rubbermaid needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Newell Rubbermaid to focus more on services rather than just following the product oriented approach.
Opportunities Newell Rubbermaid: Strategy in Transition | 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 Rubbermaid: Strategy in Transition are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Newell Rubbermaid to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Newell Rubbermaid to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Newell Rubbermaid can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Newell Rubbermaid: Strategy in Transition suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Low interest rates
– Even though inflation is raising its head in most developed economies, Newell Rubbermaid 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.
Better consumer reach
– The expansion of the 5G network will help Newell Rubbermaid to increase its market reach. Newell Rubbermaid will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Newell Rubbermaid 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.
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 Rubbermaid can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 Rubbermaid can use these opportunities to build new business models that can help the communities that Newell Rubbermaid operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Using analytics as competitive advantage
– Newell Rubbermaid 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 Rubbermaid: Strategy in Transition - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Newell Rubbermaid 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 Rubbermaid 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.
Creating value in data economy
– The success of analytics program of Newell Rubbermaid has opened avenues for new revenue streams for the organization in the industry. This can help Newell Rubbermaid to build a more holistic ecosystem as suggested in the Newell Rubbermaid: Strategy in Transition case study. Newell Rubbermaid can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Leveraging digital technologies
– Newell Rubbermaid 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.
Developing new processes and practices
– Newell Rubbermaid can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Loyalty marketing
– Newell Rubbermaid 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.
Threats Newell Rubbermaid: Strategy in Transition External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Newell Rubbermaid: Strategy in Transition are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Newell Rubbermaid 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 Rubbermaid: Strategy in Transition, Newell Rubbermaid 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 .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Newell Rubbermaid 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.
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 Rubbermaid in the Strategy & Execution sector and impact the bottomline of the organization.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Newell Rubbermaid business can come under increasing regulations regarding data privacy, data security, etc.
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 Rubbermaid 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.
Regulatory challenges
– Newell Rubbermaid needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Shortening product life cycle
– it is one of the major threat that Newell Rubbermaid is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Stagnating economy with rate increase
– Newell Rubbermaid can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Environmental challenges
– Newell Rubbermaid needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Newell Rubbermaid can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Technology acceleration in Forth Industrial Revolution
– Newell Rubbermaid has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Newell Rubbermaid 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.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Weighted SWOT Analysis of Newell Rubbermaid: Strategy in Transition 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 Rubbermaid: Strategy in Transition 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 Rubbermaid: Strategy in Transition 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 Rubbermaid: Strategy in Transition 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 Rubbermaid: Strategy in Transition 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 Rubbermaid needs to make to build a sustainable competitive advantage.
