Paraphrasing

Question 1)

Five forces –Tests

This case has represented high rivalry due to the price war between the competitors of Rubbermaid and the corporations in the industry resulting in price reduction. The price the company was placing was high for the bargaining power of buyers. The buyers are home storages and commercial products which are bought by retailers and end-consumers. This is the reason why Rubbermaid could not be able to increase cost through high retail prices. The suppliers, on the other hand, also have a high bargaining power resulting to Rubbermaid incurring a high cost of sold goods. Considering substitutes, the company products have many locums which include any form of storage tools or home storage. There are no government regulations governing entry or making it harder thus making threat to entry high.

Cost of entry –Test

Newell's shareholders have to make certain operation synergies resulting from this transaction even though the whole transaction will cost $ 5 billion which counts for 49% of the paid premium to shareholders of Rubbermaid. Both the companies possess complementary assets, complementary capabilities, and consumer staples resulting from excellent customer relations and maintain a strong brand image. Moreover, Newell is expected to control the Rubbermaid distribution, manufacturing capacity, supply chain as well as its relations so as to increase their strength in market position and reduce the cost of goods that are sold.

If the Newell Company makes Rubbermaid's business more efficient and lean, and also give them a relationship to control their suppliers and buyers, it will be able to reduce the cost as well as restructure a new cost strategy. By doing so, Rubbermaid will assistNewell with customer service, manufacturing as well as expanding their line of products. Comparing Rubbermaid to Calphalon, its business style and management is just like Newell's. Financially, Calphalon is performing poorly than Rubbermaid since both have a high cost of goods sold of 70 and 73 percent respectively. The SG&A costs are 17% for Rubbermaid and 26% for Calphalon while the margins are 6% and 2.6% respectively.

Better-off-Test

Value is usually based on customer affiliation, strong brand name, shelve services and space, manufacturing and distribution, customer’s relation and customer services. The organization acquisition of the Rubbermaid Company will reduce chances of imitation of their simple products

Question 2

Newell organization is creating value for the company by acquiring new companies so as to improve its internal strength other than competing in the external bazaar. Newell Company has ventured into the market with common, simple and basic serving products. Since their products are easy to imitate by new entrants in the commerce, it has made imitation low. Newell organization business is promising because its well-structured system enables it to be controlled from their corporate offices. Its proper control enables it to integrate the new acquired companies smoothly with their already existing product line short of an impediment.

Question 3)

The acquisition of Rubbermaid is making an enough sense as per the harmonizing assets among the two business organizations. The newellization process in conjunction with proper management will enhance that both the companies grow and improve their financial gain and market position in the competitive market addressed above. This is well demonstrated by how Newell's main aim in the association is gaining access to the Rubbermaid brand equity and shelf space. By purchasing Rubbermaid Company, Newell organization increased its market cap value over $10 billion. This action resulted in an increase in market power which had been lessened by retailers.

Nevertheless, the $5 billion acquisition is more seemingly overvalued, but the subtle debt is alluring to pay a premium. My view is that newellization will modify the smaller firms to Rubbermaid as well as allow it to increase its margins and minimize the cost of goods sold. Capitalization of shelf space and brand equity and new opportunities for globalization is another positive thing about this acquisition. However, the dropping of the prices of share by 25% during the purchase was harming to the organization. Other problems such as shipping, services, and operational efficiency also went slowly affecting the overall company’s capability.