Summary Of Newell's Acquisition Of Anchor Hocking

Elaborate upon processes Newell put into place to execute acquisitions

Newell created an acquisition process where they focused on pursuing businesses that had high brand awareness, manufactured products, and had a top two market share position. Next there process looked for companies that were underperforming due to high costs and had operating margins less than 10%. The article talked about how McDonough searched for acquisitions that would add value to Newell’s multi product businesses. This is where Newell creates a type of heat map to look at market growth and their market share compared to competitors. By looking for businesses in their core competence they are able to focus on transferring key knowledge stocks to make it easier and

Newall starts with a process they call ‘Newellization’ that is headed by leadership and takes anywhere from 18 months or less. This is where they implement the integration of financial systems, sales and order procedures, and product manufacturing. Led by corporate teams and executives they work to centralize the administration, accounting, and computer systems. An example of these synergizes is with the acquisition of Anchor Hocking. Newell got rid of top executives and cut employees by 13%. They also closed stores, cut inventory and product lines and centralized business operations. Newell had them adhere to their order standards by reducing order times to 18 to 7 days. All of these alignments saved money and increased customer production. However, if the business didn’t align with their core business or show a strong profit they withdrew or divested the business

They looked for a company that could be put through the ‘Newellization’ quickly. The business would have similarities which they could easily compare financial statements and realign structures to cut costs. The ideal mark for Newell was get margins above 15% for each business. They looked for companies with complementary capabilities that were easy to synergize and provided growth opportunity. Rubbermaid was a good example as it opened up avenues for short term and future growth. The ideal acquisition will help Newell keep competitive advantage with a quick increase in market share and innovation