Newell / Rubbermaid Case Study †Strategy Essay

In October 1998, Newell Company was considering a merger with Rubbermaid Incorporated to found a new company, Newell Rubbermaid Incorporated. The amalgamation would be through with(predicate) a tax-free exchange of shares valued at $5.8 billion. Newell had three major ware groupings ironware and Home Furnishings, Office Products, and Housewares. Rubbermaid is a renowned manufacturer of a considerable range of plastic products ranging from childrens toys through housewares.Acquisitions are the foundation of Newells return strategy and the company has an aggressive and disciplined approach to achieving its growth tail ends. Newell focuses on acquisitions that are generally mature businesses with unrealized profit capableness, and pass a function of clearly defined screening criteria.If the exercise is completed, Newell will begin the execute of assimilating Rubbermaids operations through a process called Newellization. The companies expect 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 presidency. The first step in this analysis is that of Newells screening criteria applied to the Rubbermaid opportunity.The first criteria is that the target judicature must be a mature business. Rubbermaid was started in 1920 when five businessmen who made toy balloons launched Wooster Rubber. The organization has been continuously run since 1920 and has had a great(p) deal of success over the years. The company name has become equivalent 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 troubled by rising competition, increased demands from retailers and skyrocketing-raw materials costs. By taking advantage of Newells strengths in these areas, increased profits whitethorn be realizable.Strategic Fit with existing businesses is the next criteria defined. This takes a confederacy with broken technology products, low in fashion and seasonal subject and interchange through mass distribution channels. Rubbermaid primarily makes plastic products much(prenominal) as household and childrens products. These items are generally fairly low technology although there is some specialization and a degree of high 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 large retailers.Another criteria is that the target organization should be Number one 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 life 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 the latent to reach Newells pecuniary Performance standards. Based on the above strategic fit and the electric current difficulties and tensions faced within the Rubbermaid corporation, there appears to be the potential for increased fiscal performance with the right leadership and structural changes.From this analysis, Rubbermaid appears to be an extremely upright fit to the Newell organization. All criteria set by Newell appear to be met, by varying degrees by Rubbermaid. This analysis process is some what objective and the potential flaw in this analysis is obviously the possible prejudice of the individual(s) playacting the comparison. That being said, I feel that in this particulair instance, there is a gruelling fit between the criteria and Rubbermaid.