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 - – challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%, technology disruption, competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, talent flight as more people leaving formal jobs, increasing energy prices,
there is backlash against globalization, increasing transportation and logistics costs, 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 -
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.
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.
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.
Strong track record of project management
– Newell Rubbermaid is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
Learning organization
- Newell Rubbermaid 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 Rubbermaid is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Newell Rubbermaid: Strategy in Transition Harvard Business Review case study emphasize – knowledge, initiative, 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.
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.
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.
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.
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.
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.
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 -
No frontier risks strategy
– After analyzing the HBR case study Newell Rubbermaid: Strategy in Transition, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
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.
High cash cycle compare to competitors
Newell Rubbermaid 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.
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.
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Newell Rubbermaid: Strategy in Transition, in the dynamic environment Newell Rubbermaid has struggled to respond to the nimble upstart competition. Newell Rubbermaid has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Products dominated business model
– Even though Newell Rubbermaid 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 Rubbermaid: Strategy in Transition should strive to include more intangible value offerings along with its core products and services.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Newell Rubbermaid: Strategy in Transition, is just above the industry average. Newell Rubbermaid 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.
Aligning sales with marketing
– It come across in the case study Newell Rubbermaid: Strategy in Transition that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Newell Rubbermaid: Strategy in Transition can leverage the sales team experience to cultivate customer relationships as Newell Rubbermaid is planning to shift buying processes online.
Lack of clear differentiation of Newell Rubbermaid products
– To increase the profitability and margins on the products, Newell Rubbermaid needs to provide more differentiated products than what it is currently offering in the marketplace.
High operating costs
– Compare to the competitors, firm in the HBR case study Newell Rubbermaid: Strategy in Transition 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 Rubbermaid 's lucrative customers.
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 -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Newell Rubbermaid can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Newell Rubbermaid: Strategy in Transition, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Newell Rubbermaid is facing challenges because of the dominance of functional experts in the organization. Newell Rubbermaid: Strategy in Transition 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.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Newell Rubbermaid can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– Newell Rubbermaid can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
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.
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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Newell Rubbermaid can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Rubbermaid 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 Rubbermaid 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.
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.
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.
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.
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.
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 -
High dependence on third party suppliers
– Newell Rubbermaid 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.
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.
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.
Consumer confidence and its impact on Newell Rubbermaid demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
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 .
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 Rubbermaid can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Increasing wage structure of Newell Rubbermaid
– 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 Rubbermaid.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Newell Rubbermaid 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 Rubbermaid: Strategy in Transition .
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.
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.
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.