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?
[...] Several key trends show that this industry will keep on growing (such as a continued growth rate of number of households owning pets, increased number of pets per household, pets viewed as a family member, etc) which might induce new companies to enter the market Spectrum Brands Home & garden market International Business Strategy Bargaining power of suppliers - The differentiation input brought by the suppliers is very important in this industry. The main supplier for Spectrum Home & Garden Brands is Agrium to whom they have a multi-year supply agreement. [...]
[...] Applying this, the corporation will have three remaining solid segments: Global Battery, Pet Supplies and Home & Garden Spectrum Brands International Business Strategy - Pros: Get rid of a ‘small margin' segment Cons: - Demand in Latin America and Europe is increasing 5. Recommendation Decisions grid ( 10= High correlation, low correlation) Alternatives Profitability Time Risk Growth expansion Total = 100% Weight According to the different decision criteria the alternative that better suits Spectrum's situation is the alternative N1. This is the best alternatives because: The outcome of this option will allow Spectrum to pay part of its debt and have some resources to concentrate on developing the other segments Spectrum Brands is keeping its strategy of focusing on its core business while having one diversified business unit 19 Spectrum Brands - International Business Strategy The Home & Garden unit has shown no profitability during the last two years and for that the company decided to sell part of it a couple of years ago. [...]
[...] Financial analysis 3.1 Profitability Analysis 5 According to the 2007 financial statements , the following ratios are computed to analyze how profitable Spectrum Brands is: 5 Company annual report Spectrum Brands Profit Margins International Business Strategy Operating Margin Net Profit Margin Gross Profit Margin 7.88 - Operating Margin is very low, which means that the revenue left over after paying all the production costs is small. By having a low operating margin, Spectrum Brands is having the risk of not being able to pay for its fixed costs as interest or debt. [...]
[...] Company annual report p Spectrum Brands - International Business Strategy Spectrum Brands' products are very often groundbreaking products and very innovative in terms of technology. Besides, Spectrum Brands' products are well-known for their high quality, their high performance and their good value for money with very competitive prices. Spectrum Brands has a diverse portfolio of world-class brands so it offers to its customers a wide-ranging choice in each of its segments. Spectrums Brands' products are available in a wide network of distribution. [...]
[...] - Rivalry among competitors: Procter & Gamble (Duracell) and Energizer Holdings (Energizer) are the two biggest competitors in all regions Spectrum Brands International Business Strategy - Although the industry as a market has been growing since 2001, the global growth had slowed to an average of by 2006, mainly because of the increase in demand of the private-label batteries market. - Potential new entrants: There is a low possibility of potential new entrances because of high entry barriers since new competitors will need to invest a lot in technological research. [...]
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