Paraphrase

FINAL EXAM

1.

A) In order to determine the industry attractiveness of Newell’s acquisition of Calphalon, we must first analyze their Five Forces using the first of Porter’s three tests. Newell is a worldwide marketer of consumer products and other home organization products such as home solutions commercial items, writing, baby and parenting products in the consumer goods industry and Calphalon is a leader in premium cookware and kitchenware, also in the consumer goods industry. Since both Newell and Calphalon use raw materials for their production whether it is ink, plastic, fibers and other performance materials for Newell or metals, steel and other electrics for Calphalon, they are exposed to countless suppliers with weak power to manipulate prices and are open to choosing the price that is most adequate for them. Newell deals with large retail stores such as Home Depot, Wal-Mart, and Target who have strong buying power, they have to hedge with these companies in order to offset increasing raw material prices and low return margins. Whereas Calphalon, being a low end of the market brand, deals with smaller stores that have less buying power than the stores Newell works with, since the buyers of Calphalon products have no room to negotiate much prices since their payments terms are already late. Newell’s products are simple and serve basic purposes, which make them easy to substitute with, and Calphalon’s cookware and kitchenware products compete with similar products from other brands that make their products substitutable. The rivalry in both markets is moderate at best since there isn’t a competition in price for any of the products that Newell or Calphalon produce. Since there are no major government regulations that prevent businesses from entering the market, the barriers to enter such an industry are low, whether it’s making pens, markers, and home solution goods like Newell or cookware and kitchenware like Calphalon, but Newell manages to keep those new entrants from competing by building strong relationships with its suppliers and buyers. Nonetheless, it’s tough for new entrants to compete in such economies of scale while suffering low margins from price competition.

B) As per the 10K, the costs of entry to acquire Calphalon are $28.8 million, which is a drop in a bucket for Newell. However, Newelization is limited through this purchase and Calphalon is only 3% of Newell’s sales.

C) Newell creates value in this acquisition, since their financials weren’t looking good, and they were challenged by the change in the CEO, lower stock price and the recession, which declined demand, balancing customer needs, and having less negotiation power from Wal-Mart because Wal-Mart was growing bigger and struggling with dealing with new products, and by bringing more to the table such as cookware and kitchenware products with their acquisition, Newell will reduce these large retail store’s increasing bargaining power. The transferring of new skills such as new product development, new distribution channels, and marketing from Calphalon will benefit Newell. Newell and Calphalon’s products are both simple, and not rare to find since there are other brand producers of cookware, kitchenware, writing, commercial products, and home solutions in the industry. However, in my opinion, Newell is better-off without acquiring Calphalon since they both provide completely different products to different customers, and both companies face high threats of new entrants, substitutes and high bargaining power of their customers. Besides the fact that there is little resource sharing between both companies, the transferred skills, new distribution channels and marketing that Newell will gain from acquiring Calphalon are irrelevant to Newell’s business design, since the new distribution channels and customers that Calphalon distributes to are not the same as the ones that Newell works with, and they both work with different price points. Newell hasn't needed to market before because they only produce staple goods and the only marketing needed was store shelf space, so this marketing skill will just cost them more money to invest in more marketing strategies, high customer service, relationship building and in store needs to market for Calphalon’s kitchenware. Newell already has it’s own Wearever cookware brand as its high-end brands and doesn't need to overlap the two.

2.

A) IDEO is an innovation design firm in the design industry. The structure of their design group is simple, with Dave Kelly being the “Boss” with the final decision, but the employees are free to be creative and introduce new ideas and fresh innovations. The machine shop, sales, and toy division is multidivisional since each division mentioned is responsible for a distinct business area. IDEO functions with an innovative strategy by understanding their customer’s needs and offering latent user needs creatively. IDEO demonstrates a differentiation generic business strategy by creating a unique value in their products that customers perceive as distinct, which allows them to charge a premium price.

B) IDEO uses the personal control system by having a face to face with their “Boss,” Dave Kelly and what they refer to as “adults in the room.” They measure their output with a strict timeline of 24 hours for their sub-design goals for breakout teams to keep it within reason and also within budget to keep it within the same cost range as a regular cart. The behavioral control that IDEO uses is the one conversation at a time and my favorites, which is the try first and ask for forgiveness later.

C) IDEO builds a culture of innovation and freedom. A few norms or values in the IDEO company are that there are no titles for each other until the “adults” are in the room, it has a flat structure with Dave Kelly as the boss making the final decisions, and they want their employees to be creative by being playful, communicative and work as a team by failing often, and succeeding sooner.

3.

A) E-harmony’s functional strategy is one of quality. They provide a wide range of potential candidates as well as services in order to facilitate communication between each other. E-harmony invests into their scientific linking of profiles and matching algorithms to find potential candidates to make available for their customers. The quality of candidates found on E-Harmony is of better quality since they’re serious enough to answer a 200-question survey to see if they are credible users or could be rejected as well.

B) E-Harmony has a differentiation focus business strategy, as they try to differentiate themselves from other online match making websites with the quality of their candidate pool using their scientific linking of profiles, matching algorithms, and 200-question survey to enhance their customer base by quality, and not quantity.

C) I believe E-Harmony should move into a Standard Globalization Strategy to sustain their competitive advantage by staying on the course they are in with their advancements in technology applications, matching algorithms, 200-questionaire survey, and scientific linking of profiles but moving internationally since their matchmaking seems to be of success in the United States and they already have the database to do so. Also by expanding their niche to where demand seems to be stronger.