Newell tries to create corporate advantage by introducing a “build on what we do best” philosophy started by Daniel Ferguson, the CEO. Ferguson describes this philosophy in more detail in the case by stating "We realized we knew how to make a high-volume, low-cost product, and we knew how to relate to and sell to the large mass retailer." This role for Newell was the foundation for how they would obtain their corporate advantage in the industry. Ferguson identified his focus for Newell as a market for do-it-yourself products and hardware. In order to gain access to new discount outlets for Newells existing products, they acquired Mirra-Cote, a producer of bath hardware. By acquiring Mirra-Cote along with several other sub-par businesses, Newell find a way to develop corporate advantage by “manufacturing and distributing volume merchandise lines to the volume merchandisers.” By doing this Newell would have more marketing impact with retailers and later down the line develop leverage.
Newell knew that in order to have corporate advantage they must create and explain a vision on how their resources would differentiate from its competitors across all business lines. After creating the vision, it must be executed correctly and used at all times.
2. What is the logic that underlies Newell’s combination of businesses?
The logic that Newell had for acquiring several businesses was to bring added value and improve marketing leverage to the world’s largest retailers. In addition, the business must be deemed strategic and remain suited to the company’s main focus. The logic behind all of these acquisitions was to ultimately increase Newell’s “profit growth not sales growth” and target products that were in high demand that would allow maximum “shelf space” as one Newell executive notes. For example, Montgomery mentions that “Calphalon broadened Newell’s access to the department and specialty store markets...