Case Scenario 2: Jewell Company

question 73

Essay

Case Scenario 2: Jewell Company.
Jewell Company (JC)is a $2 billion diversified manufacturer and marketer of simple household items, cookware, and hardware. In the early 1950s, JC's business consisted solely of manufactured curtain rods that were sold through hardware stores and retailers like Sears. Since the 1960s however, the company has diversified extensively through acquisition into such businesses as paintbrushes, writing pens, pots and pans, and hairbrushes. Over 90 percent of its growth can be attributed to these many small acquisitions, whose performance it improved tremendously through aggressive restructuring and its corporate emphasis on cost-cutting and cost controls. While JC's sixteen different lines of business may appear quite different, they all share the common characteristics of being staple manufactured items and sold primarily through volume retail channels like Walmart, Target, and Kmart. Because JC operates each line of business autonomously (separate manufacturing, R&D, and selling responsibilities for each line), it is perhaps best described as pursuing a related linked diversification strategy. The common linkages are both internal (accounting systems, product merchandising skills, and acquisition competency)and external (distribution channel of volume retailers). JC is presently contemplating the acquisition of Plastico, a $3 billion U.S.-based manufacturer of flexible plastic products like trash cans, reheatable and freezable food containers, and a broad range of other plastic storage containers designed for home and office use. While Plastico has been highly innovative (over 80 percent of its growth has come from internal new product development), it has had difficulty controlling costs and is losing ground against powerful customers like Walmart. JC believes that the market power it wields with retailers like Walmart will help it turn Plastico's prospects around.
-(Refer to Case Scenario 2). What difficulties might you expect JC to encounter related to its acquisition of
Plastico?

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Definitions:

Gradual Introduction

The process of slowly implementing or presenting something new in stages over time.

Presenting Bad News

The careful and considerate communication of unfavorable news or feedback.

State Law

Legal provisions enacted by a state's legislative body that govern the behavior of residents and organizations within that state's borders.

Broken Seal

A condition indicating that a seal or closure preventing access or contamination has been compromised or damaged.