Rayovac Corporation's strategy calls for the corporation to expand globally through acquisitions. The company specializes on high-quality products, with quality secured by purchasing companies with market leadership in many parts of the world. Varta, for example, was the market leader in general battery manufacturing in Europe prior to the acquisition, as well as in Latin America and Germany. Remington Products, on the other hand, was the most popular personal grooming and dry shaving brand in the United States. Further, Tetra holding held the first or second position in market share in all the major global market segments, including France, Japan, the U.S, the U.K, and Germany. Rayovac is ranked third in the United States’ market, but it is the global leader in hearing aid batteries, the leading manufacturer of zinc carbon batteries in the Latin and North America, and the leader in marketing battery-powered lights and rechargeable batteries in the U.S (Boeh & Beamish, 2007). Rayovac managed to acquire a large global market share by raising brand awareness and increasing the number of its distribution channels, which enabled Rayovac to take better advantage of the market growth in the global battery market, compared to its key competitors, Energizer and Duracell.
Rayovac’s strategy demonstrates several strengths, including increasing the company’s global presence by acquiring leading companies in the major global markets, a factor that has led to the company’s growth in sales from $400 million in 1996 to $2.8 billion in 2005. Moreover, the strategy focuses on product diversification, which makes the company more competitive compared to Duracell and Energizer, and hence the company’s global leadership through value positioning. The company’s value positioning, which involves offering high quality products at relatively lower prices compared to Duracell and Energizer distinguishes the company from its key competitors, leading to the company’s large market share (Boeh & Beamish, 2007). However, the strategy demonstrates such weaknesses as failing to incorporate premium products, especially for the U.S market, which has led to the low market share in the region compared to the company’s competitors. On the other hand, the emergence of large retailers, who control access to a large number of consumers in the global market, poses the threat of hindering the company from progressing effectively in the global markets.
Rayovac’s Diversification Strategy
The company’s diversification strategy involves acquiring firms who specialize in diverse products to overcome the challenges encountered in the highly competitive battery market. Rayovac’s business is diversified to include shaving products, the battery business, and personal care products. The acquisition of Remington, the second best personal care products’ brand in North America, presented Rayovac with diverse growth opportunities, whereby Remington’s products could be marketed outside North America for greater profitability since the products had not effectively penetrated the global markets (Boeh & Beamish, 2007). On the other hand, Remington was a low cost producer, which indicated greater profitability for Rayovac. Moreover, the acquisition of the United Industries, a leading supplier of pet, insect control, and garden care products in North America presented Rayovac with excellent opportunities to gain additional market share and profitability taking advantage of the extensive pet supplies market in the U.S and Europe, estimated at $8billion and $4billion respectively.
Additionally, the acquisition of Tetra Holdings, which specialized in pet supplies, supported Rayovac’s goal of becoming the leading pet supplies company globally, whereby the position is crucial in helping Rayovac to leverage its worldwide operations. The logic behind Rayovac’s acquisitions is that the company would gain market leadership in producing and supplying diverse products globally by acquiring companies whose products are market leaders in the existing markets, which gives the company a competitive advantage over its key competitors (Dess, 2014). Rayovac would focus on expanding the distribution of its diversified products with the aim of becoming a global leader, which would help the company to leverage its business operations globally.
Rayovac’s Corporate Strategy in 2005
The company’s corporate strategy in 2005 involved changing the company’s name from Rayovac to Spectrum Brands after realizing a significant amount of growth in sales from its acquisitions (Boeh & Beamish, 2007). The change of name is crucial as it is part of the value addition process, whereby embracing the new name indicates company growth through the incorporation of more products for its market. Maintaining the old name, which is synonymous with the company’s battery business, would be inappropriate since the market needs to be informed of the new developments in the company. The changes that I would recommend to the company’s top management team include the need to embrace horizontal integration and related diversification in acquiring new firms, to ensure that the company remains competitive by ensuring minimal competition and market leadership globally.
References
Boeh, K. & Beamish, P. (2007). Mergers and acquisitions : text and cases. Thousand Oaks: SAGE Publications.
Dess, G. (2014). Strategic management : creating competitive advantages. New York, NY: McGraw-Hill Education.
