Spectrum Brands Strategy for Diversification: Success of Failure?
Assessing the strategies of CEO David Jones to globalize Rayovac’s battery and flashlight business during 1999 to 2004 will determine if globalizing was strategically sound. An assessment on the attractiveness of each industry Spectrum diversified into will determine which business units have attractive degrees of competitive strength in their respective industries, and whether a strategy of related or unrelated diversification was pursued will determine which fits exists in both strategy and resources available within sister business units. An assessment of the company’s financial results will be based on data from the case and other sources. Recommendations from the assessments performed will be given on what it will take to …show more content…
In 2004, Rayovac acquired 85 percent of Ningbo Baowang Battery Company in Ninghai, China for a cash price of $17 million, plus $14 million in assumed debt. Ningbo Baowang was the producer of high performance Alkaline and heavy duty batteries with a modern manufacturing facility that was assumed to be the lowest cost for manufacturing batteries in the world:
Globalizing Spectrum Brands
Acquisition Timeline Continued with a capacity of up to a billion batteries per year. As of 2004, Ningbo was the leading battery brand in China with sales approximately $35 million and having established sales and marketing prepared would help Rayovac penetrate the rapidly growing battery market in China. The strategy probably did not make strategic sense due in part to the assumed debt of $14 million on a company they owned only 85 percent and of the societal, political, regulatory, and environmental factors of China and the United States (US); even though this strategy gave Rayovac strong access to export markets around the globe (p. C292). Rayovac acquired the Brazilian battery company Microlite S.A., headquartered in São Paulo, Brazil, for the negotiated price of $21 million with $8 million in assumed debt in 2004. There was also a contingent plan of cash payments of up to $7 million that depended on the