International business strategy spectrum brands - Case study

Résumé du document

In 2005, Rayovac Corporation changed its name to Spectrum Brands in order to be coherent with the corporate strategy of growing and expanding its present markets. This new name shows the diversification of the company and its international trend.

Nowadays, Kent Hussey, appointed CEO of Spectrum Brands, defines this company as ‘a global consumer products company and a leading supplier of batteries, lawn and garden care products, specially pet supplies, shaving and grooming products, household insecticides, personal care products and portable lighting'1. Existing in the New York Exchange, Spectrum Brands is becoming more important in the market with approximately $2.8 billion in annualized revenues and 10,000 employees worldwide2. The company's brands are Varta, Rayovac, Remington, Spectracide, Spectracideterminate, Schultz, Garden Safe, Cutter insect repellent, Repel insect repellent, Hot shot, Tetra, Marineland, Jungle labs, Dingo, 8 in 1, Nature's miracle.

Does Spectrum Brands know only successes? Is its diversification strategy always adapted?

Extraits

[...] Besides the launch of these acquisitions there required an important cost that is why there are other important cash outflows since 2005. At the same time, we can see a dramatic decrease of Spectrum Brands' stock price. This fact can be explained also by these acquisitions because customers and shareholders don't understand why Spectrum Brands decided to diverse as quickly with two segments very different (Home & Garden and Pet supplies) and they trusted less in this company. It led to a bad perception of the market Financial Analysis Recommendations 1. [...]

[...] Strategic Analysis of Spectrum Brands Spectrum Brands International Business Strategy TABLE OF CONTENTS Introduction . p Strategic Challenge . p Situation analysis . a. Core competence . p p SWOT analysis . p PEST analysis Political and Legal Economical and Environmental Social and Cultural Technological Global analysis . [...]

[...] The pet supplies industry is highly fragmented and has a 4-6 percent of growth per year which can make even more competitors to appear. - Pros: Exploit the potential market growth for battery and grooming products Exploit the potential market growth for Home & garden products Use the resources of selling the Pet Supplies segment to finance the investment in the two remaining ones Cons: - The demand for Pet related products can keep on growing Losing the investment made on the acquisition of Tetra Keeping the Home & Garden segment might represent a risk in case that it's demand falls down affecting the whole corporation 4.3 Alternative 3 Restructuring the Global Battery & Personal Care segments while keeping the Pet supplies and Home & Garden This idea starts with the restructuration of the Global Battery & Personal Care segments, this segment will be divided into two and the Personal Care segment will be sold. [...]

[...] - Bargaining power of customers: Consumers are purchasing low-margin personal care products and preferring popularized brands, switching easily between brands. - Threat of substitute products: Hairdressers salons might be a substitute for these products. Any personal care product that doesn't need batteries, i.e.: non-electric shaving products. Rivalry among competitors: Conair is the biggest competitor by having a worldwide best-selling brand, low cost production and recognized products popularized in salons. - Potential new entrants: Competitors might be interested in entering this industry because of the sudden increase of segment profitability. [...]

[...] This means it should focus on Global battery business & personal care and pet supplies, mainly in North America, Europe and Latin America and China, respectively Spectrum Brands' equity amount is negative so its capital structure is made basically on debt. Because of having too much debt, and if assets can't support the debt anymore the company might go bankrupt. Thus the company has to reduce as soon as possible its debt and increase equity (that is to say, it has to cover the deficit in equity) Strategic alternatives In the case of Spectrum Brands, we can see how a company can choose to face the market changes through a more daring strategy as diversification. [...]