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Case Analysis: Rubbermaid Market Orientation List of Facts The Rubbermaid Division of Newell Rubbermaid, Inc. is world-known manufacturer of a wide selection of products for consumer, commercial and industrial use that make life more productive and enjoyable. The companys main objective is to grow as a leading global business by creating the best value solutions as defined by its customers. In 1920 s the company started its way to innovations and occupied the niche in rubber houseware products such as rubber dustpans, soap dishes, drain board mats, sink stoppers, etc. In 1943 the Rubbermaid brand was created. In 1957 the companys name was changed to Rubbermaid.
During 1980 s the companys sales increased by a factor of five from over $ 300 million to over $ 1. 5 billion. Rubbermaid experienced phenomenal growth. The company made great strides toward good business positions and implemented an acquisition strategy to improve its positions in the market. Rubbermaid acquired Cont-Tact (decorative coverings) (1981), Little Toys (plastic toys) (1984), Gott leisure and recreational products (1985), SECO floor products (1986), Microcomputer Accessories (1986), and Viking Brush (cleaning supplies) (1987).
In 1984 Rubbermaid was enlisted in the Fortune 500 list of Americas Most Admired Corporations. Rubbermaid continued its growth through acquisitions until the late 1990 s. Surprisingly, the late 1990 s Rubbermaid was unable to meet the service demands of Wal-Mart, a major retail customer. The main problem was that Rubbermaid didnt meet Wal-Marts stringent on-time delivery schedule. In response, Wal-Mart significantly cut back the companys shelf-space. At the same time, due to increasing rubber prices, Rubbermaid insisted on passing along higher raw material costs.
Wal-Mart refused and replaced Rubbermaid's place of shelves by smaller competitors like Sterilite. In result, the companys selection of products disappeared from Wal-Marts stores and, as a consequence of it, Rubbermaid reported approximately $ 240 million lost. In 1998 Newell Co. acquired Rubbermaid and created Newell Rubbermaid Company. Stanley Gault did his best to improve the companys positions and correct declining customer service that was an area of chief concern.
The company undertakes numerous efforts to retain market positions, however, not long after the merger the company cuts profit forecasts three times. As per 2001, the new income was down 42 %. In order to improve situation, the company places high emphasis on restructuring, refocusing, inventing new products, and marketing divisions. It tries to change public attitudes concerning the environment by utilizing recyclable plastic and making easy-recycle containers. Rubbermaid invests in state-of-the-art technologies to retain its positions as a low-cost and high-quality manufacturer. It upgrades computer systems, introduces new technologies, expands production capacity, purchases molds for new products, and continuously conducts surveys of the customer needs and preferences.
According to CEO Stanley Gault, there were six key strategies for leap growth: to develop new products, to enter new markets (every 18 - 24 months), to continue acquisitions, to diversify through joint ventures with outside partners, to strengthen bonds with suppliers, and to create specialized products for customers. As far as it begins with the customer, a new product strategy is market driven rather than technology driven. Rubbermaid's researchers consistently explore customers homes and study competitors activity. Despite of all this, the company received a great deal of feedback from consumer complaints.
However, the consumers claim that Rubbermaid provide them with unsatisfactory and improper service. Instead of undertaking measures, the company simply replaces defect products without charge to the customer, and copies each complaint to the companys executives. Instead of improving customer service, Rubbermaid launches new products with record speed, moves away from a product and price focus and positions its products as problem solvers in different spheres of life. What concerns price, Rubbermaid's average product price is higher than those of competitors. It is explained by higher quality content and stellar reputation. However, customer service still remains very poor.
The main Rubbermaid's problem is that the company understands the consumer, not the customer. Fact Analysis The main stakeholders in the case study are: Rubbermaid the company, and Rubbermaid's customers the customers. The company started facing problems in 1992 after retirement of Rubbermaid's CEO Stanley Gault. Rubbermaid was unable to meet Wal-Marts service demands. In result, the companys selection of products disappeared from Wal-Marts stores and was replaced by Fischer Price and Sterilite.
The companys reorganization also failed. Rubbermaid consolidated its distribution units, manufacturing and mass dismissals. However, the company failed to solve its operational problems. In result, Rubbermaid was acquired by Newell Corporation. In addition to operational problems, the companys customer service was poor due to several reasons. The company relied too much on its previous success and strong brand name and disregarded the importance of perfect customer service.
Rubbermaid utilized confrontational policy. The company ignored Wal-Mart and did nothing to solve delivery problems. Rubbermaid failed to meet Wal-Marts requirements and missed the idea that making business with giant customers is a great risk. Criterion for success in cooperation with such giant retailer as Wal-Mart was capability to meet all its requirements, as far as Wal-Mart has special suppliers obligations. In order to achieve success with Wal-Mart Rubbermaid had to be aware of cost estimates and had to accept high risk probability. Problem Statement The case study examines Rubbermaid Company and its business strategy.
The case dwells on man problems the company faced over a long period of time. The central problem in this case is to develop the best strategies and recommendations in order to improve the companys position in the market by enhancing customer service and reshaping the companys strategy to help Rubbermaid's market orientation. Alternative Solutions There are several alternative solutions available. First of all, as far as working with giant customers is synonymous to high risk, the company may try focusing on smaller retailers. The second solution is to re-examine Rubbermaid's policy, to take into account that Wal-Mart positions itself as a retailer utilizing low-cost strategy, and to develop appropriate solutions that may be accepted by Wal-Mart. Rubbermaid should remember that working with Wal-Mart means stable and continuous business contracts to mutual benefit.
Additionally, the company should re-examine its delivery system in order to be able to correspond to Wal-Marts requirements for suppliers. Recommendation One of the most important problems faced by company was failure to anticipate increasing customer consolidation. In result of this Rubbermaid had no success to pass on cost increases to Wal-Mart. Rubbermaid should undertake all efforts to retain high customer relevance. Development, implementation and execution of customer loyalty programs will help Rubbermaid retaining the companys shareholder value and increase the level of customer loyalty. Rubbermaid should undertake all efforts to meet the customer expectations and a set of values.
Additionally, the company should reexamine and reshape its business strategy to make it more focused. Financial controls should be more tightened and administrative functions should be more centralized. These steps will help the company to solve its operational problems and enhance its effectiveness. Among other recommendations is proposition to place higher emphasis on its major customers: to reestablish fruitful cooperation with Wal-Mart by corresponding to Wal-Marts strict suppliers requirements and keeping promises. Finally, the company may examine possibility of complete restructure to develop new attitude to the customers, new product orientation and new positive and customer-friendly image under the old, well-recognized brand name.
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Research essay sample on Case Analysis Rubbermaid Market Orientation
