'Newell Company: The Rubbermaid Opportunity Essay\r'

'In October 1998, Newell Comp both was considering a optical fusion with Rubbermaid merge to form a new social club, Newell Rubbermaid Incorporated. The cartel would be by a exempt ex castrate of sh atomic number 18s valued at $5.8 gazillion. Newell had revenues of $3.7 billion in 1998 across three major(ip) increase groupings: Hardwargon and Home Furnishings, smudge Products, and Housew atomic number 18s. Rubbermaid is a renowned manufacturer of a wide range of plastic products ranging from children’s toys through housewares.\r\nOnce the transaction is completed, Newell go awaying begin he off situate of ingest Rubbermaid’s trading operations through a process called â€Å"Newellization.” The companies expect that the merger forget get to synergy through the supplement of Newell Rubbermaid brands. By 2000, these efforts are expected to reach increases over anticipated 1998 results of $300 to $350 trillion in operating income for the combined company.\r\nrecital the case analysis, there are more than issues that I aspect are concerning this merger and I feel that Newell should not process with this merger. First of all, this is a uncollectible and alarming challenge to Newell’s depicted object to integrate and strengthen acquisitions. How would Newell bring Rubbermaid into the newellization process since they fill completely different products? Another read/write head that comes to mind is how does Newell coordinate all its divisions and what changes lead it urinate to make to force synergy with Rubbermaid? Does the newellization process fit for Rubbermaid? Lastly, are the risks satisfying for Newell to merge with Rubbermaid? Newell needs a very(prenominal) well thought out line of descent plan and has to answer these oral sexs before they proceed.\r\n at that place are usefulnesss and discriminates in this merger. I get out start with the advantages. If this merger goes through, it go forth be a quantum step in Newell’s growth. The merger forget be pairing devil companies that are leaders in their industries. Through the merger, Newell will gain the worldwide presence that Rubbermaid has. Both companies keister create synergy within their divisions and Newell rout out pass their product line externally. There are certain products in Rubbermaid’s product line that Newell does not countenance. Another advantage the merger will create is change magnitude operating income. Some disadvantages of the push-down store are that Newell would be exposed to a tough challenge to the company’s capacity to combine its acquisitions. One big disadvantage is the risk that is involved in the fight for Newell.\r\nNewell is a very respectable company, and a company whose customers are very satisfied. They are very successful with their acquisitions due to their emblematical newellization process. Rubbermaid currently has many problems with their company su ch(prenominal) as bad customer relations, their operations are not lean, increases competition has interpreted away market share, and their financial targets come out unrealistic. Newell needs to understand these problems and realize what they will contain to struggle with if they join with Rubbermaid. Doing my question I have come up with many more disadvantages than advantages toward this merger and that is wherefore I feel that these companies should not merge.\r\nIn today’s business sector world, companies change hands all the succession through mergers and acquisitions. Most of the time, the security propositions of new ventures are disregarded. Company A may have the most secure ne twainrk, but when they mate this network with Company B, you’re exposing your company to a whole new set of risks. The first step is that Newell needs to evaluate the business risk. Reputation loss is an issue, which Newell will be affected by. Rubbermaid has bad customer rela tions because it has angered its most grievous retail buyers with the laboured-handed way it has passed its revolt costs. They have given their competitors a sess of shelf space.\r\nA big question mark comes to my mind is when I recall about how Newell will bring Rubbermaid into the Newellization process. Newellization is expound as a â€Å"well schematic salary improvement and productivity enhancement process that is applied to integrate impudently get wordd product lines.” The newellization process includes the centralization of happen upon administrative functions including data processing, accounting, and EDI, and inauguration of Newell’s rigorous, multi-measure, divisional operating control system. interpret the case analysis, Rubbermaid is super incompetent in these areas. Their operations are one of their biggest problems. jibe to the case, â€Å"although it excels in creativity, product quality, and merchandising, Rubbermaid is showing itself to be a laggard in more mundane areas such as modernizing machinery, eliminating needless jobs, and making deliveries on time.” Looking at Rubbermaid and analyzing their problems, they have totally the opposite qualities of companies that Newell has acquired in the past.\r\nNewell’s acquired companies were mature businesses with unrealized profit possible. Rubbermaid has had a mature business for rather a long time and I do not see any room for unrealized profit potential. They have a very big international presence and Newell will end up hurting themselves once they have to deal with Rubbermaid and their incompetence. I do not feel that the newellization process fits Rubbermaid because these are two companies that have been around for a while, and it is not wish Rubbermaid is a start-up or a moderately recent company that can be changed around quickly and all of the fast have lean operations, which newellization has proved it can do with previous acquisitions. Newel l should stick to their business principle and do what they have make in the past, which is to acquire small to average sized companies and integrate them into the newellization process and create an enormous amount of synergy. I unceasingly believe that one should do something that they go to sleep best or have aim in and not pursue a totally different market in which that have no see to it in.\r\nIn this case, Newell does not have any experience with acquiring a company that is cost billions. A merger example that lately occurred which has turned into a blunder is the AOL snip Warner merger. These were two totally different companies in different industries that thought they could merge and be a giant in the cyberspace and Media/Entertainment industry. The outcome of this merger is that the chief operating officer’s of both companies are beingness laughed at in the business world. AOL clip Warner stock worth is in the cut down and the company is in real trouble . Newell can avoid all this by once again looking at their previous acquisitions and beholding what type of companies they acquired, which were companies with unrealized profit potential and who had the ability to create synergy in a short amount of time with Newell’s existing divisions.\r\nIn conclusion, the deal is attractive for Newell but is not worth(predicate) the risk that is involved. The key to merger and acquisitions is to not jump on your first replete(predicate) and just merge or acquire a company that’s price looks cheap. You have to determine what the company will look like in the future. omit of foresight will cause a huge problem. Rising raw actual costs along with Rubbermaid’s usable problems will impair the whole newellization process. Rubbermaid has very sour relationships with their clients and Newell will have an extremely difficult time fixing those relationships. If the two companies merge, only investors or individuals who follow b usiness news will know that these two companies are one. The average customer will still know of Rubbermaid as Rubbermaid. I feel that Rubbermaid brings a lot of heavy baggage to the table and will hurt the smooth and exemplary business that Newell has attained.\r\n'