Thesis
Newell Rubbermaid has a proven track record of success due to a combination of strong financial performance, key operating systems and efficiencies, and a desire to focus on the consumer's needs, all while allowing the organization to grow through innovation for future years.
Introduction
With a vastly diversified portfolio of consumer goods, Newell Rubbermaid is able to outlast their competition in nearly every sector they enter. Due to unique and effective marketing strategies, Newell Rubbermaid is able to gain brand recognition in nearly every product that gets put on shelves of large retailers. Not only is Newell succeeding externally, but also internally, where the company is growing exceptionally well through the Growth Game Plan (Exhibit A) that CEO Mike Polk (2011) uses as a key competitive advantage. In only four short years, Polk has been able to bring all the brands in Newell's portfolio together under one roof, allowing for cross-functional teams to grow ideas and expedite innovation. It is through this innovation
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that Newell Rubbermaid is recognized as number 1,539 of Forbes.com's Global 2000 companies for sales numbers (Forbes). Organizational Mission Newell Rubbermaid's mission is to create "Brands that Matter." Additionally, it is the goal of the organization to bring about products that "helps people to flourish every day, where they live, learn, work and play" (Newell Rubbermaid Homepage). As stated in the text Understanding Business, a mission statement is "to outline the organization's fundamental purpose" (Nickels 2013, 183). It is the purpose of Newell to be able to adapt to the changing times and offer the consumer a product that will fit their needs and make their lives easier. "Brands that Matter" is a way of making meaningful products that help people's day-to-day lives, just a little bit easier. See Exhibit B for a visual diagram of Newell's vision and mission. I can see the impact of the mission statement in a lot of the work that Newell Rubbermaid is doing because they are always trying to find ways to make people's live easier through product innovation. This mission is easy to identify because the people creating these products can see themselves using products such as these and know that the rest of the marketplace would as well. Not only does a lot of time go into new proposals that the company brings, but also a lot of thought because they want the product to truly mean something and actually be of value to the consumer, showing that Newell has a desire to focus on the customer and the longevity of brand awareness from the products that it produces. Form of Organization Newell Rubbermaid operates as a corporation that is publically traded.
A corporation, according Understanding Business, is "a state-chartered legal entity with authority to act and have liability separate from its owners, its shareholders" (Nickels 2013, 123). An advantage that is explained in Nickels' text is the "ability to raise more money for investment" (Nickels 2013, 123). This is extremely pertinent to Newell Rubbermaid because it is an organization that thrives on innovation, and there needs to be access to enough capital to bring many of the new, creative ideas, into the marketplace in mass quantities. Secondly, the "ease of ownership change" is extremely important to Newell Rubbermaid due to the financial crisis in 2009, when the ownership of Newell Rubbermaid had changed hands between a variety of institutional investors, showing just how easily the ownership of a large corporation can be transferred (Nickels 2013,
124). One of the largest disadvantages to working as a corporation is the size of the organization. Nickels states that "large corporations can become too inflexible and tied down by the red tape to respond to the market" (Nickels 2013, 126). I believe that this disadvantage is extremely apparent in Newell Rubbermaid because the company operates in nearly every continent, making communication and change a very long, slow process. By moving towards becoming an innovative and operating company through growth, the size of the organization is a downside that Newell faces. According to Yahoo Finance, nearly 92% of Newell Rubbermaid shares are held by institutional & mutual fund owners, some of those top holders include: Vanguard Group, Capital International Investors, State Street Corporation, Invesco Ltd, and Mass. Financial Services Co. I spoke with Investor Relations Senior Manager Alisha Dubique, and she described the investment by banks, which can waver slightly here and there. She went on to say that: "A lot of the time, it is in the eyes of who is investing in us. We know that some people were burned in the recession and lost a lot of money with Newell, but we also know that with a new CEO who is very reputable, there is a great chance of success in the coming years, and investors are beginning to see that." By speaking to Alisha, I was able to see that dealing with institutional banks can be difficult because there can be some favorability towards the future or a high chance of risk that many of the institution's don't want to take on. From my analysis of the institutional investor's investment history with Newell, I am able to see that these investors are in favor of Newell Rubbermaid's current plans for the future, mainly due to the innovation and strong revenue model that the company has formed for future growth (Finance Yahoo). Size and Scope Newell Rubbermaid is operating with around 17,400 employees according to Forbes.com. Within in that number, many of those employees are located abroad due to outsourcing the product development and packaging processes, due to the low cost of production overseas. Through mergers and acquisitions, Newell has been able to add new employees into the organization to continue new operating activities (Newell Rubbermaid Webpage). However, in recent months, Newell has seen a stable level of employees and has taken the initiative to lower overhead cost to increase the overall revenue of the organization. In regards to sales revenue from operations, Newell Rubbermaid was able to secure nearly $5.7 billion in sales last year according to Yahoo Finance. In light of the Growth Game Plan, CEO Mike Polk is looking for a gradual increase in those sales numbers of the next three years (Newell Rubbermaid Webpage). As seen in Exhibit C, Newell is nearing an acceleration stage and looks to increase the core sales growth by more than 4%, as well as increase EPS by upwards of 6-9% by 2016 and 2017 (Newell Rubbermaid Webpage). This goes to show that Newell has created a strong financial plan for the future, which allows them to show great signs of growth to the investing community. Operations Newell outsources a significant portion of their product portfolio to help reduce the bottom line cost of production. With Newell being a global organization, it requires extensive financial analysis to ensure that outsourcing is the correct decision when producing the product. When it comes to the writing products, Newell utilizes outside suppliers in Asia to produce the products at a much lower cost compared to being produced in the United States. Outsourcing is the process of "searching for the best model to enable them to reduce costs, improve service levels, and identify new channels for growth" (Kamauff 2010, Page 178). The production process of creating a product for Newell begins with marketing and research & development teams coming together to test ideas that they believe would add value to a customer and would allow them to see the benefit when using that product. The next step in the process is to gather quotes on costs both internally (domestically), and out-of-house (overseas) and calculate the overall cost of making the product. If the product has a lower cost overseas, the product specifications will be sent to a partnered manufacturing plant, which will then make a prototype and return it back to the research & development teams at Newell's headquarters. If the prototype passes thorough inspection and testing, it is then put into mass production and is then packaged and shipped to global retailers. This process can take some time, however, if the plant needs new machinery, it will have to be installed before production can begin, adding more time to the project. From an inventory standpoint for mass selling efforts, retailers are supplied with excess inventory that they can use while more products are in production. Newell has an extensive network of manufacturers for every product that the company creates, proving that the company has high growth and market share potential in the near future. Organization structure Please see Exhibit D for a visual diagram of the organizational structure at Newell Rubbermaid. Newell is a very structured organization with the CEO at the very top of the structure, with five supporting executives underneath him. Newell uses a very mechanistic system, where "higher level departments set or approve goals and budgets for lower level departments" (Sims 2002, Page 279). This is very apparent in the corporate environment of Newell because of several approval processes that are in place as regulations for approving budgets. This type of process works well for Newell because it avoids too many decisions being made in mid-level management and allows the executive team to guide the organization to success. Many organizations, Newell included, have utilized restructuring to reduce the layers of management within the organization, helping to ensure that everyone has the same operational goal and allows those employees to know the role they play within the company (Sims 2012, page 279). This top-down leadership has its disadvantages however, one being that the large employee base under the executives could feel pressured into performing in a way that could hurt the company financially in the long run that the executive team is unaware of. In addition, the executive team may be disconnected with many of the operations that are taking place, causing some of their decisions to not fully benefit the company. The current organizational structure allows for Newell Rubbermaid's executive teams to create and execute an aggressive plan for the company, without much resistance. This process allows for Newell to continue their success both operationally, and financially in the long run.
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