Newell / Rubbermaid Case Study †Strategy Essay

In October 1998, Newell Company was considering a merger with Rubbermaid incarnate to form a new gild, Newell Rubbermaid Incorporated. The amalgamation would be through a tax-free exchange of sh ars precious at $5.8 billion. Newell had three major(ip) product groupings Hardware and Home Furnishings, Office Products, and Housewares. Rubbermaid is a renowned maker of a wide range of plastic products ranging from childrens toys through housewares.Acquisitions are the foundation of Newells step-up strategy and the company has an aggressive and disciplined approach to achieving its growth targets. Newell focuses on acquisitions that are generally maturate businesses with unrealized pro insure potential, and pass a number of clearly defined screening criteria.If the deed is completed, Newell will begin the parade of assimilating Rubbermaids operations through a process called Newellization. The companies look for that the merger will create synergy through the leveraging of Newell Rubbermaid brands. By 2000, these efforts areANALYSISThe Newellization processThe Newellization process is based on the prospective acquisition target having a number of attributes that correlate with Newells requirements of a target organization. The depression step in this analysis is that of Newells screening criteria applied to the Rubbermaid opportunity.The first criteria is that the target organization must be a mature business. Rubbermaid was started in 1920 when five businessmen who make toy balloons launched Wooster Rubber. The organization has been continuously run since 1920 and has had a great deal of success over the years. The company name has become synonymous with plastic dishware and storage units.The next attribute desired of a company to undergo the Newellization process is the existence of Unrealized Profit Potential. In 1995, Rubbermaid at 75 was affect by rising competition, increased demands from retailers and skyrocketing-raw materials costs. By taking adva ntage of Newells strengths in these areas, increased profits may be realizable.Strategic Fit with existing businesses is the next criteria defined. This includes a corporation with low engine room products, low in fashion and seasonal content and change through mass distribution channels. Rubbermaid in the first place makes plastic products such(prenominal) as household and childrens products. These items are generally fairly low engineering although in that respect is some specialization and a degree of higher technology required in the plastics industry. The products are definitely low in fashion and have very little seasonal influence. The products are sold through mass distribution channels, including big(a) retailers.Another criteria is that the target organization should be Number cardinal or two position in their markets and have established shelf space with major retailers. Although there is no indication in the case as to where Rubbermaid exists within their markets , Rubbermaid has obviously held a very large market share in their product areas. In addition, Rubbermaid has established shelf space with many major retailers.Long product behavior cycle is an attribute that is definitely applicable to Rubbermaid products. Rubbermaids products include housewares such as plastic containers, storage units, brooms and toys, all of which have a very long product life cycle.The final criteria defined is that the target organization must have thepotential to reach Newells financial Performance standards. Based on the above strategic fit and the current difficulties and tensions faced within the Rubbermaid corporation, there appears to be the potential for increased financial performance with the right leadership and structural changes.From this analysis, Rubbermaid appears to be an super good fit to the Newell organization. All criteria set by Newell appear to be met, by varying degrees by Rubbermaid. This analysis process is somewhat objective and th e potential flaw in this analysis is obviously the workable prejudice of the individual(s) performing the comparison. That being said, I feel that in this particulair instance, there is a strong fit between the criteria and Rubbermaid.