Organizational Transformation of Black & Decker

Ishita Aditya 11BM60074

Black & Decker Corporation is a corporation based in Towson, Maryland, United States, that designs and imports power tools and accessories, hardware and home improvement products, and technology based fastening systems.
In 1843, Frederick Stanley started a small shop in New Britain, Connecticut, to manufacture bolts, hinges, and other hardware from wrought iron. With superior quality, consistent innovation, and rigorous operational improvement, Stanley’s company defined excellence, and so did his products. In 1910, S. Duncan Black and Alonzo G. Decker started their shop, similar in size at first, in Baltimore, Maryland. Six years later they changed the world by obtaining the world’s first patent for a portable power tool, and the company they built has been changing the world ever since.
Both companies grew in parallel over the ensuing decades, amassing an unparalleled family of brands and products and an even more impressive wealth of industry expertise. In 2010, the two companies combined to form Stanley Black & Decker, to deliver the tools and solutions that industrial companies, professionals, and consumers count on to be successful when it really matters. Just as it was in 1843, the company’s passion for excellence is seen around the world in disciplined operations, purposeful business growth, and loyal customer relationships.

Transformations in Black & Decker
During all these years of operation, Black & Decker has experienced several major transformations. These transformations were brought about under the leadership of Mr. Nolan Archibald. He has been the Chairman, President and CEO of Black & Decker since 1986. * Bringing in his own management team, he initially cut 3,000 jobs by 1987 and spurred product development. The company's worldwide operations were restructured into product groups. * In 1986 the household-products group introduced a number of successful products, including the Cup-at-A-Time coffee maker. Greater efficiency at Black & Decker led to record sales of $1.9 billion and improved profits in 1987. * Once he had returned Black & Decker to efficiency and profitability, Archibald set out to expand the company's operations through acquisition. The company turned around again in 1992 with the launch of the DeWalt line of high-end power tools. This was actually a re-launch since B&D took the existing line of Black & Decker brand professional power tools, improved their quality, guaranteed 48-hour service center repair, increased their price (to be slightly higher than the competing Makita brand), and resurrected the 1960-acquired DeWalt brand, which was still highly respected by contractors. The company was now able to offer the low-end Black & Decker line of power tools aimed at do-it-yourselfers and the high-end DeWalt line aimed at professional contractors. This brilliant strategy--in part the brainchild of marketing whiz Joseph Galli, who soon headed B&D's entire worldwide power tool group--was immensely successful. The company's share of the domestic professional power tool market increased from 8 percent in 1991 to more than 40 percent in 1995. Sales of the DeWalt line increased from less than $30 million during the launch year to more than $600 million by 1997. * Early the following year, the company announced plans for another restructuring, termed a "strategic repositioning," intended to heighten the firm's focus on its core operations and improve its financial performance. After selling an Australian household appliance business , Black & Decker sold its household appliance operations in North America and Latin America (excluding Brazil) in June 1998 to Windmere-Durable Holdings, Inc. (later renamed Applica Incorporated) for $315 million. B&D retained, however, its profitable Dustbuster and SnakeLight lines. In September the company sold Emhart Glass to Bucher Holding AG of Switzerland for $178.7 million and True Temper Sports to Cornerstone Equity Investors LLC for $177.7 million. These divestments enabled Black & Decker to refocus on its core power tools and hardware lines, particularly the DeWalt line, which was now generating nearly $1 billion in annual revenues, or fully 20 percent of the company total. The repositioning also involved the repurchase of 10 percent of the company's stock by the end of 1999 and a restructuring of the remaining operations in order to reduce fixed costs. * Black & Decker continued to churn out new products in the early 2000s, but sales and earnings growth stagnated in the sluggish economic environment. A number of cost-saving measures were enacted, including a three-year restructuring plan launched in early 2002. The key objective of this plan was to reduce manufacturing costs by shifting production from the United States and England to lower-cost facilities in Mexico, China, and the Czech Republic; and by sourcing more products from third-party manufacturers. Several U.S. plants were closed that year and the following one, including the facility in Easton, Maryland, the last of B&D's home-state plants. Restructuring charges for 2001, 2002, and 2003 totaled $99.7 million, $46.6 million, and $31.6 million, respectively. * Implementation of CRM “RightNow” has been another change. The company is now considering expanding that relationship to include the marketing module and perhaps the sales module. They currently use the Service module in the call centre to track calls and emails. But its vision is to apply this to our service network, certainly throughout the United States, creating a network of service centers that are owned and operated by Black and Decker.
The company has transformed itself roughly every five years, which seems to be a necessity in today's dynamic, competitive world.

Types of Organizational transformation in Black & Decker
The following types of changes took place in the company: * Structural change :
The structural changes included a. Changes of Competitive conditions b. Move from a decentralized (1950’s-1960’s) to a more centralized organization. c. During its globalization phase, Black & Decker strengthened the functional organization by giving functional managers a larger role in coordinating with the country management.

* Process Change :
The major process change undergone by the company was during Globalization, that is a world wide product division approach strategy.
In the past decade, Black & Decker was threatened by external and internal pressures. Externally, it faced a powerful Japanese competitor, Makita. Makita's strategy to produce and market standardized products worldwide made it a low-cost producer, and enabled it to increase steadily its share in the world market. Internally, international fiefdoms and nationalist chauvinism at Black & Decker had stifled co-ordination in product development and new product introductions, resulting in lost opportunities.
In response, Black & Decker decisively moved toward globalization. It embarked on a major program to coordinate new product development worldwide to develop core standardized products that can be marketed worldwide with minimal modification. The streamlining in R&D also offers scale economies and less duplication of effort, and new products can be introduced more quickly. It consolidated worldwide advertising by using two principal agencies, gaining a more consistent image worldwide. Finally, Black & Decker purchased General Electric's small appliance business to achieve world-scale economies in manufacturing, distribution, and marketing.
The globalization strategy initially met with skepticism and resistance from country management due to entrenched factionalism among country managers. The CEO took a visible leadership role and made some management changes to start the company moving toward globalization. Today, in his words, "Globalization is spreading and now has a life of its own."

* Cultural Change :
This was the most major kind of change. In 1998,when about 5,000 employees were laid off and several facilities were closed, including four overseas production plants,the culture was adversely affected .It changed during globalization process. Again,when a legacy system was being replaced that had been in place for 12 years at the time, a huge cultural change took place. There was a huge issue of changing from that system to RightNow Service because the workforce were set in ways and did not have the most technically savvy group of people.
Barriers to change The barriers to change included * During “RightNow” implementation, employees had a lot of challenges learning to use the new processes. The company took a bit of a hit in the first 90 days as agents went through the learning curve but then things improved and it started to see the benefits. The employees perhaps didn't embrace the new technology immediately or as quickly as management would have liked but they have come on board since and things are now running smoothly again.

* Existing power structures also served as a barrier when moving from decentralized to centralized administration.

* Structural inertia came into the picture when functional managers were given a larger role in coordinating with the country management during globalization.

Strategies for Organizational Transformation

* The ubiquitous and motivational leadership of Archibald served as the most powerful strategy for bringing about the transformation.

* For successful implementation of the CRM system, a program was developed with a local community college. The college came on site after hours and ran a keyboarding class for 5 weeks. That helped with the agents typing skills. They also did some of the RightNow computer based training modules as well as having a RightNow trainer come into the call centre and doing a one day training course. The RightNow test site was also made available to the agents so they could have a play with it and become comfortable with the system prior to launch.

* Cross-country co-ordination, global planning, global budgeting and performance review/compensation served as the other strategies for handling globalization by Black & Decker.