Rayovac Corporation Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Rayovac Corporation Case Solution

In the year 2002, Rayovac purchased a German consumer battery company,“Varta AG” for $ 258 m (Rayovac gives about 6 times the earnings before interest and tax * of Varta's yearly’s). Varta was Europe's leading manufacturer of 2001 $390 m quality batteries. Before the purchase, 73% of Rayovac's sales came from North America, while 86% of Varta's sales came from Europe. The biggest development was in Latin America where combined working boosted Rayovac's market share, outside Brazil. And Rayovac became a market leader in consumer batteries in Germany and Austria, which made it the 2^nd dominant manufacturer in Europe.

Rayovac was the biggest producer of zinc element batteries in LA, a division where the firm enjoyed a strong product identification. However, LA was afflictedby usual economicdecreases, and consumers had lower buying capacity. Despite thegeographical uncertainty; Latin America played a crucial role in the firm’s strategic plan for planning and divisions.

Remington is considered to be the low-priced manufacturer with the highest revenues of about 1 % of its sales. Production was mainly exported to low-priced suppliers in the Far East, especially in China.

United Industries has been the biggest North American producer of consumer careitems, garden care items, home insect control items and specialty animal items.

Rayovac's interest in local animal service was registered again with the acquisition of German Tetra Holdings within two months after the United's acquisition of $ 555 m (acquisition of Tetra - to pay 10 tearnings before interest and tax yearly).

Qestion 3. Evaluate Rayovac’s corporate and global expansion strategies/entry modes by providing details in the case using the following table. Provide not more than two points each of the strategic rationale/benefits as well as the potential risks/challenges to Rayovac. (28 marks)

Company Acquired	Corporate Strategy & Global Expansion Strategy/Entry Mode	Strategic Rationale/ Benefits to Rayovac	Potential Risks/ Challenges to Rayovac
ROV Ltd.	Horizontal integration; overseas acquisitions/ wholly-owned subsidiary	1. Increase global battery market size outside the US. 2. Increase market power against consumers and suppliers.	1. Economic risks – economic downturns. 2. Due diligence issue – delinquent accounts increase found after the acquisition.
Varta AG	Horizontal Integration Related Diversification. As both firms are a consumer battery manufacturer that is trying to change and enter new possible markets.	1. Battery business for Varta consumer AG Germany - Battery consumer battery types are widely considered in Europe and Latin America. Their battery technology and production/distribution infrastructure are state-of-the-art. 2. Cost savings of $30-40 mevery year.	1: One of the major challenges will always be the economic decline that is uncertain. 2: Rayovac’s corporate responsibilities of managing the other firm would be a challenge
Remington Products Company	Mixed Mode Diversification	Remington is considered a low-cost manufacturer with resource spending of approximately 1% of revenues. Production is mainly contracted to low-cost suppliers, Therefore, any collaboration between the two firms would be limited to administration, buying,and arrangement, with estimated yearly savings of nearly $23 m	One of the biggest challengesthat Rayovac sees is its failure to surpassits competitors such as Duracell and Energizer, which control the market, particularly the North American market in terms of cost. In addition, one of Rayovac's challenges would be to overcome the inability to market their battery items correctly.

Microlite acquisition

Horizontal integration

Microlite SA, the biggest manufacturer of consumer batteries in Brazil and owns the Rayovac brand name in Brazil. It soon saw a 50% market share in Latin America's biggest consumer market. Rayovac replaced Microlite's administration team with the Rayovac group who decreased value, increased efficiency, improved product integration, and increased prices by 16%.

As the Microlite business also did not perform well and lost money. Lenders examine high risk and, as a result, are paying very high-interest rates. So this would be a challenge for the firm to overcome.

TetraHoldings

UnitedIndustries

Horizontal Integration

Different planning for any firm would be beneficial because they go into another industrial area to help out or get anaggressive edge with other items. With the acquisition of the type of consumer and the continued growth, Rayovac was able to reach a different of new suppliers who were not able to reach

Rayovac increased consumer recognition and ultimately helped brands gain profits that made them more competitive in their industry. Rayovac has been able to present new proceduresthat have improved all manufacturing functions.

1: One of the major challenges will always be the economic decline that is uncertain.

2: And the other biggest challenge would be to continue to hold its position and gain a competitive advantage over its competitors.

Question 4. Considering Rayovac’s products and markets, what are your evaluations of its acquisitions and global expansion strategies? Please use three acquisition examples to explain your answers. You may also consider the “limits of diversification”, if applicable..........................

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