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Jewell Company (JC) is a $2 billion diversified manufacturer and marketer




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 Wal-Mart;Target, and Kmart. JC operates each line of business autonomously (separate manufacturing, R&D;and selling responsibilities for each line). 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% of its growth has come from internal new;product development), it has had difficulty controlling costs and is losing ground against powerful;customers like Wal-Mart. JC believes that the market power it wields with retailers like Wal-Mart;will help it turn Plastico?s prospects around.;How might JC's related diversification strategy result in economies of scope and market power?;Why would the acquisition of Plastico be good for JC?;What difficulties might you expect JC to encounter related to its acquisition of Plastico?


Paper#19436 | Written in 18-Jul-2015

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