Llbean

In: Business and Management

Submitted By cnteacher
Words 9826
Pages 40
9-704-491
REV: SEPTEMBER 2, 2005

CYNTHIA A. MONTGOMERY

Newell Rubbermaid: Strategy in Transition
Joe Galli, 43, was recruited to be the CEO of Newell Rubbermaid in January 2001, two years after the two companies were combined. His mission was to forge a turnaround after a string of disappointing earnings. As he moved ahead, Galli took a personal, hands-on approach. Always in motion, whether walking the aisles of retail stores, meeting with customers, or training his new cadre of managers, Galli’s energy seemed boundless. He strove to embody the attitudes and behavior he felt were vital to achieving his far-reaching agenda for the company. It was an agenda Wall Street seemed to like. In December, 2000, the month before Galli took over, Newell’s stock price dipped to $19.50; it closed at $35.99 in August of the following year.1 While still below the company’s historic high of $54.44 four years earlier, the momentum was forward.2 By the spring of 2003 Merrill Lynch, Prudential Financial, Fahnestock & Co., Inc. and Banc of America Securities maintained ‘buy’ ratings on the stock while Raymond James & Associates reiterated a ‘strong buy’. What did the future hold for the 100 year-old company?

Newell’s Former Strategy
Newel defines its basic business as that of manufacturing and distributing volume merchandise lines to the volume merchandisers. — Newell Company Strategy, 1967

In 1966, Daniel Ferguson became CEO of Newell Company, a privately held curtain rod manufacturer. At the time, discount retailing was taking the country by storm. Ferguson recognized the opportunity and leapt. Rather than selling one product, curtain rods, to many channels, he flipped the strategy on its head and announced that Newell would sell a variety of products to one channel – the discount retailers. To do so, Ferguson assembled a stable of businesses via acquisition and built an…...

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