Publications
Publications
- March 2004 (Revised September 2005)
- HBS Case Collection
Newell Rubbermaid: Strategy in Transition
By: Cynthia A. Montgomery, Rhonda Kaufman and Carole Winkler
Abstract
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.
Keywords
Change Management; Corporate Strategy; Transformation; Problems and Challenges; Acquisition; Product Development; Brands and Branding; Manufacturing Industry; Retail Industry; United States
Citation
Montgomery, Cynthia A., Rhonda Kaufman, and Carole Winkler. "Newell Rubbermaid: Strategy in Transition." Harvard Business School Case 704-491, March 2004. (Revised September 2005.)