Newell Company grew to be a diversified manufacturer and marketer of simple

household items, cookware, and hardware. In the early 195s, Newell Company!s
business consisted solely of manufactured curtain rods that were sold through hardware
stores and retailers like "ears. "ince the 19#s, however, the company has diversified
e$tensively through ac%uisitions of businesses for paintbrushes, writing pens, pots and
pans, hairbrushes, and the like. &ver 9' of its growth can be attributed to these many
small ac%uisitions, whose performance Newell improved tremendously through
aggressive restructuring and its corporate emphasis on cost cutting and cost controls.
(sually within a year of the ac%uisition, Newell would bring in new leadership and install
its own financial controller in the ac%uired unit. )hen, three standard sets of controls
were introduced* an integrated financial accounting system, a sales and order
processing and tracking system, and a fle$ible manufacturing system. &nce these
systems were in place, managers were able to control costs by limiting e$penses to
those previously budgeted. +dministration, accounting, and customer,related financial
accounting aspects of the ac%uired business were also consolidated into Newell!s
corporate head%uarters to further reduce and control costs.
-hile Newell Company!s 1# different lines of business may appear %uite different, they
all share the common characteristics of being staple manufactured items sold primarily
through volume retail channels like -al,.art, )arget, and /mart. 0ecause Newell
operates each line of business autonomously 1separate manufacturing, research and
development 23456, and selling responsibilities for each7, it is perhaps best described as
pursuing a related, linked diversification strategy. )he common linkages are both internal
1accounting systems, product merchandising skills, and ac%uisition competency7 and
e$ternal 1distribution channel of volume retailers7. 0eyond its internal systems and
processes, Newell was also able to control costs through outcome controls. )hat is,
business managers were paid a bonus based on the profitability of their particular unit8
in fact, the firm!s strategy is to achieve profits, not simply growth at the e$pense of
profits. Newell managers could e$pect a base salary e%ual to the industry average but
could earn bonuses ranging from 95' to 1' based on their rank and unit profitability.
In 1999, Newell ac%uired 3ubbermaid, a (.".,based manufacturer of fle$ible plastic
products like trash cans, reheatable and free:able food containers, and a broad range of
other plastic storage containers designed for home and office use. -hile 3ubbermaid
was highly innovative 1over ;' of its growth has come from internal new product
development7, it had difficulty controlling costs and was losing ground against powerful
customers like -al,.art. Newell believed that the market power it wielded with retailers
like -al,.art would help it turn 3ubbermaid!s prospects around. )he ac%uisition deal
between these two companies resulted in a single company that was twice as big and
became known as Newell 3ubbermaid Inc. 1N<"=* N->7. In ?1, @ortune named
Newell 3ubbermaid the number A B.ost +dmired CompanyC in the home e%uipment and
furnishings category.