Newell Strategy

Essay by peace09University, Bachelor'sB, November 2004

download word file, 3 pages 0.0

Downloaded 207 times

Was Newell right in acquiring Calphalon and Rubbermaid?

Newell's strategy is making high-volume products at low cost and selling them to volume retailers. It normally looked for acquisitions that would add value to Newell's multiproduct offering and increases their importance as a supplier to volume retailers. Attractive acquisitions include brand-name staple products that will bring in more shelf space for Newell, and also small businesses to round out its existing product lines and consolidate industry capacity.

Newell - Calphalon: Newell's point of view

Newell was right in acquiring Calphalon.

At first glance, it looks to be a wrong move as Calphalon's way of operation is totally opposite from that of Newell. Calphalon sells high end cookware in department and specialty stores in low volume which went completely against Newell's strategy of selling high volume products to mass retailers. At the same time, Newell already has their own cookware products in the good, better and best categories in mass retail stores.

There looks to be no need for additional cookware products in Newell's extensive product package.

However, acquiring Calphalon need not be viewed as a clash with Newell's strategy. It is also not an acquisition for the basic reason of increment in shelf space. Instead, this acquisition brings about high learning value for Newell.

Despite actions taken by Newell to reduce the power of its buyers, it cannot be denied that large retailers like Walmart still held considerable amount of power over Newell. Over dependence on them as the only buyers will leave Newell vulnerable. Should there be any hiccups in the negotiation in one of Newell's products with the large retailer, it may result in the failure of other deals too. Hence, Calphalon acts as the bridge to Newell to expand its distribution channels in areas other then through volume...