Please paraphrase the text below, make sure you mention all of the points in the new doc

Threat of New Entrants/Potential Competitors: Medium to High

Calphalon is a Commercial Aluminum Cookware Company. The capital requirements in cookware industry are fairly low. Newell acquired Calphalon for $149.1 in 1998. There is also no information about patents or government regulations that prevent competitors to enter the industry. The main problem to enter the industry could be the shelf space and connections to specialty retailers. Calphalon already has a big presence in all the relevant stores, which is why Newell bought them instead of trying to get into their business themselves. There is also no government regulations in place that would prevent competitors from entering the industry.

Threat of Substitute Products: High

The threat of substitute products is high. Calphalon main focus is on high­quality aluminum cookware. The price range from $250 ­ $500 for a 10­piece set, which is a fairly high price. Customer could just switch to cheaper cookware or eat out instead of cooking themselves.

The Bargaining Power of Buyers

Retail Stores: Medium

The main buyer of Calphalon products are major chains of better department stores like Macy’s, and houseware and specialty stores like Williams Sonoma. The bargaining power of the buyers in medium because the specialty stores are not big enough to impose a lot of bargaining power on Calphalon. Furthermore, there are also not many alternatives to high quality cookware.

Consumer: Low 

The bargaining power of consumer is low because consumers who buy Calphalon products already have enough money to spend $250 ­ $500 on high quality cookware, which indicates that they are not as price sensitive as the mass market consumer. Furthermore, Calphalon spends a lot of money of in store marketing to lure customers into buying.

The Bargaining Power of Suppliers: Low

The main commodity that goes into cookware is aluminum, which is widely available. Another resource that goes into cookware is the anodization process of the alumnium, manufacturing and design. Calphalon manufactured themselves in the USA and can source from various suppliers here.

Rivalry Among Existing Firms: Medium

The rivalry among existing firms is medium. The only significant competitor of Calphalon are All­Clad and Meyer. Meyers is able to sell their cookware for lower prices but is also known for poor service levels, due to shipping from Asia. There is no information of price war or that firms compete on price.

Cost of entry test

The cost of entry is the purchasing price of Calphalon. Newell acquired

Calphalon in exchange for 3.1 million Newell shares (1998 10k). At a stock price of $48.25 the purchase price for Newell was $149.6M. The value of acquisition for Newell is $241.1M assuming the “Newellization” is successful and Calphalon reaches EBIDA equal to Newell. Newell has an EBITDA of 610.7million, and the EBITDA / Sales ratio is 18.88%. Calphalon’s Sales are 101.9million. Assuming the “Newellization” goes well we can assume that Newell’s new EBITDA will be 18.88% of 101.9m, which is 19.2. Taking an EBITDA multiplier of 12.53 the company value comes out to $241.1. Newell would have a total value added of $91.5M (Exhibit 1, page 3) and thus the Cost­of­Entry Test is positive. Furthermore, the acquisition price.

Furthermore the acquisition price is relatively low, which makes it just a drop in the bucket for Newell.

VRIO Calphalon

The first valuable resource that Calphalon has is their Brand. Calphalon is an established name is the high­end aluminum cookware industry. In my opinion this resource is also rare because it takes years and years to establish a brand. Furthermore, in its segment calphalon only has a few competitors. However, in my opinion it is not hard to imitate for an established brand like Newell given the relatively low value of Calphalon.

The second valuable resource are Calphalon existing sales channels and their experienced sales force. Calphalon sells its products in department and speciality stores, where Newell doesn’t have an access yet. The resource is also rare because their are only a few competitors who sell to those stores. However, in my opinion it is not hard to imitate. If an established brand like Newell put in the time and effort they could get into those stores in a relatively short amount of time.

Last Calphalon, has proven product development skill in the past. In my opinion the resource is valuable because it allows calphalon to produce its own products without buying established companies like Newell does. However, in my opinion this resource is not rare because they are many companies out there with product development skill, like rubbermaid.

Value Chain Calphalon

When it comes to their Value chain Calphalon is able to add Value to their business through their product development skills and their Marketing /Sales. Calphalon employs a pull sales strategy that is new to Newell. Calphalon has a “store within a store” format and employees 250 selling specialist, some part­time and some full time. Furthermore Calphalon distributes their products in speciality and department stores where Newell doesn’t have access to yet.

Calphalon, however lacks skills when it comes to manufacturing. Calphalon’s manufacturing costs are 20­30% higher than the manufacturing costs of the closest competitor.

Why is Newell better off? 

The question why Newell is better off after the acquisition is easily explainable with the Value chain & VRIO. When it comes to the VRIO Newell to gain product development skill, and existing sales force and an established brand. Gaining access to Calphalon experienced sales force as well as their product development skills is an example of resource transfer. Furthermore, Newell will can also take advantage of resource sharing when it comes to their established Wearever brand.

Newell will be able to take advantage of resource sharing because it will be able to make Calphalon more profitable due to the overlap in secondary activities such as the administration. Newell has a centralized administration and is easily able to absorb a relatively small company like Calphalon without hiring much more employees, which will significantly decrease Calphalon’s cost and increase its value to Newell. Secondly, right now Calphalon lacks manufacturing skills. Their major competitor Meyer’s is able to produce for 20­30% less then them. Newell already has several cookware brands and is able to produce cheaper due to economies of scale. After the Newellization Calphalon will be able to produce cheaper, which will ultimately decrease their costs and increase the company value to Newell (Resource Sharing).

Question 2

A)

IDEOs functional strategy is innovation. IDEO main focus is to make products better or to invent new products. In the Video that we have seen IDEO tried to make a long existing product, a Shopping Cart, better by addressing issues customer have and coming up with new innovative design.

Their generic business strategy is differentiation. IDEO portfolio ranges from low tech items like a Shopping Cart to high tech items like a heart monitor or ideas for a powerful new use of nuclear waste. IDEO adds value to their business through a highly skilled workforce.

IDEOS Structure can be characterized as simple and multi functional at the same time. The process in which new ideas are created is characterized by a flat structure without titles. However, one could also argue that the structure is multifunctional because IDEO has a machine shop, sales department or a toy department.

B)

IDEO uses the tool “Adults” in the room as a way of personal control. The “Adults” are leading product developers who talk the ideas out with the team and make the final call on what to reject.

For output controls, IDEO uses a 24 hour timeline in which a new subdesign has to be finished. Furthermore, they have the goal that the new design has the same costs as the existing design.

For behavioral controls they have the “Bell”, which cuts off bad talk about a specific idea. Furthermore, they have a try first and then ask for forgiveness rule. People can do whatever they want but have to remove it or change it if someone says anything. The example given in the documentary was that someone hung his bike on the ceiling without asking before, which eventually became a standard for other employees.

c)

The first norm is a flat structure without titles. Everyone collaborates if developing new ideas and it’s not always what the boss tells you. Employees are encouraged to come up with “crazy” ideas.

Another norm is create your own workspace. Any employee can design his own workspace however he/she wants. Some employees used items from the aviation industry to create their workspace.

The last norm is be playful & cumulative, come up with new ideas and fail often to succeed sooner. Failing is not seen as a bad thing in the organisation but rather as a trial & error process to learn from.

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