...D-1’s Analysis Of The Black & Decker Corporation in 2000 Executive Summary Black & Decker had always been a market leader in the power tools industry. Many changes took place that helped out in the company in the short run, but hurt in the long run. In 2000 Black and Decker Corporation was still reeling from the financial and strategic problems stemming from the company's acquisition of Emhart Corporation in 1989. In late 1998 Black & Decker management celebrated the completion of an almost decade-long effort to divest nonstrategic business gained through its 1989 acquisition of Emhart Corporation and expected the company to enter a long-awaited period of growth as its entire management refocused its attention on its core power tools, plumbing, and security hardware business. Archibald believed that "This portfolio restructuring will allow us to focus on core operations that can deliver dependable and superior operating and financial results." However the portfolio restructuring did little to improve the market performance of the company's securities. Yet Archibald and the management continued to express confidence that the company's streamline portfolio would allow Black & Decker to achieve revenue and earnings growth that the market would find impressive. So far the 1998 divestitures have not produced steady increases in the company's stock price, but look promising for the future due to the efforts to refocus efforts on the successful power tools line. Strategic...
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...exclusive use of S. Kaya, 2015. Harvard Business School 9-595-057 Rev. March 30, 2001 The Black & Decker Corporation (A): Power Tools Division Joe, I like you guys. But, look, I give Makita 10 feet of space. I give you 10 feet of space. They outsell you 8 to 1. What are we going to do about that? In January 1991, statements like this no longer surprise Joseph Galli. Black & Decker’s (B&D) vice president of sales and marketing for power tools had heard similar sentiments expressed by many trade accounts. Makita Electric of Japan had practically taken over the professional power tools for tradesmen business since it entered the United States market a decade ago. “Tradesmen” was one of the three major segments of the power tools business—the others being “Consumer” and “Industrial.” “Consumer” represented “at home” use, while both “Tradesmen” and “Industrial” covered professional users. The distinguishing characteristic of the Tradesmen segment was that these buyers, such as a carpenter, bought tools for their own use on a job site. In Industrial, the buyer was generally a corporation purchasing tools for use by employees. By late 1990, Makita’s success in the Professional-Tradesmen segment was such that it held an 80% share in cordless drills, the single largest product category, and a 50% segment share overall. B&D had virtually created the portable power tools business in the United States beginning in the early 1900s. While it maintained the #1 market share...
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...Black and Decker Corporation Progress Report Finance Group Project Focus G.T. Link The corporate image of Black and Decker has gone through many corporate changes to keep a competitive advantage and ultimately see larger increases in the share price. Black and Decker is concentrated as a global manufacturer and marketer of power tools and accessories, hardware and home improvement products, and technology-based fastening systems. Due to the maturity of the market, it is essential for Black and Decker to remain a leader in product innovation and to get out of unprofitable business lines. The acquisition of Emhart resulted in many unprofitable business segments. If the acquisition was to work it was vital for Black and Decker to refocus on its core power tools, plumbing, and security hardware businesses. When Nolan Archibald was hired as CEO, an intense restructuring period set in. Inefficient plants were closed down and the development of new and existing products was developed in the new and existing plants. This also resulted in a large loss in overhead expense due to the loss of 3,000 jobs. Many shareholders were uncertain about the potential success of the Emhart transition due to the large debt/equity ratio. It took 2.7 billion in financing to acquire the company. Black and Decker sold off a total of $566 million in assets. This was a great step forward due to the $560 million dollars in goodwill added back to the balance sheet, which will hopefully...
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...February 21 Black & Decker and Bosch The U.S Market for Power Tools The power tools industry in United States generates approximately $8.6 billion in boost growth and profit margin. The U.S. power tools industry is dominated by these major companies: Black & Decker that posses 9.3% market share., China’s TTI, Bosch., DeWalt and Craftsman . Thanks to all largest home centers these manufactures dominated the model of supply structure of this power tool market. Power tools as drills, saws, routers, and lathes with motor attachment that helps to reduce the work charge that are difficult to perform if you are using your hands. Black & Decker and Craftsman are the most popular brands among equipment owners, Black & Decker report 72% owning Sears Craftman brand. Far Away we can position Dewalt in the list owning 32%. Bosch increase in the year 2007 their global sales, but the company stated that the power tool sales fell in United States all of this due to the economic crisis. Bosch still the cordless strongest seller in this division. In the United States mostly 64 % of the people own some power tool equipment. These people share certain characteristics. The males are the ones that possess the mayor roll in the market of power tools corresponding to them the 68 % , by age between 35-64 posses 68% , race 70% corresponding white people and with a household income above $50K which is the 72% of the power tool owners. In the Market of power tools in terms...
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...The Black & Decker Corporation (A): Power Tools Division University of South Carolina MKTG 701 Spring II 2013 Jonathan Chandler Heidi DiFranco Pamela Hammond Telissa McElveen The Black & Decker Corporation (A): Power Tools Division SUMMARY Black & Decker franchise holds nearly 30% market-share overall of The U.S. Power Tools Market. B & D’s research on tradesmen’s perceptions of supplier’s quality has shown that they are ranked in the 3rd tier out of 4 tiers in the marketplace, which is due to the fact that B&D are viewed more as a consumer brand, and perception of tradesmen’s that B&D’s products are of inferior quality, less durable/rugged for the required work conditions. These coupled with the lack of color differentiation makes B & D’s products not product tradesmen are proud to own, reflected in the market-share. 1. Why is Makita outselling Black and Decker 8 to 1 in account which gives them equal space? Ever since Makita entered the professional tradesmen business in the United States, the company has been a major competitor for Black and Decker. In fact it is outselling Black and Decker in one location 8 to 1, mainly due to brand, durability, and quality perceptions. Black and Decker’s sales in the consumer segment are very strong, but unfortunately that does not have a good impact on the brand perception. Tradesmen view all Black and Decker products as for use at home rather than on the job. Products that are used at home (every...
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...Harvard Business School 9-389-005 rP os t September 15, 1988 Skil Corporation op yo On March 23, 1979, Emerson Electric Company acquired Skil Corporation, a manufacturer of portable power tools, for $58 million. With sales of $2.6 billion in 1979, Emerson Electric produced a broad range of electrical and electronic products and systems. Emerson Electric Company Emerson Electric, originally a manufacturer of electric motors and fans, had gradually expanded into a broad range of consumer and industrial products. It classified its businesses into commercial and industrial components and systems; consumer goods (including portable electric tools); and government and defense products (see Table A). Table A Sales and Pretax Income of Emerson Electric by Business Segments ($ millions) Sales $1,380 698 176 (20) tC Commercial and industrial Consumer Government and defense Intercompany sales 1978 Pretax Income $201 123 21 1979 Sales Pretax Income $1,570 865 199 (20) $232 141 24 Source: Company annual reports No Emerson’s business units manufactured products principally in electrical and electronic fields, such as electric motors, controls, drives, and heating, ventilating, and air conditioning equipment. The company also manufactured power chain saws, gas cutting and welding equipment, vacuum cleaners, bench power tools (which it sold to Sears), and other consumer goods. Do With a stated goal...
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...Skil Corporation On March 23, 1979, Emerson Electric Company acquired Skil Corporation, a manufacturer of portable power tools, for $58 million. With sales of $2.6 billion in 1979, Emerson Electric produced a broad range of electrical and electronic products and systems. Emerson Electric Company Emerson Electric, originally a manufacturer of electric motors and fans, had gradually expanded into a broad range of consumer and industrial products. It classified its businesses into commercial and industrial components and systems; consumer goods (including portable electric tools); and government and defense products (see Table A). Emerson’s business units manufactured products principally in electrical and electronic fields, such as electric motors, controls, drives, and heating, ventilating, and air conditioning equipment. The company also manufactured power chain saws, gas cutting and welding equipment, vacuum cleaners, bench power tools (which it sold to Sears), and other consumer goods. With a stated goal of being the so-called best-cost producer in as many of its markets as possible, Emerson stressed cost reduction. Emerson defined best cost as Table A millions) Sales and Pretax Income of Emerson Electric by Business Segments ($ 1978 Sales Commercial and industrial Consumer Government and defense Intercompany sales $1,380 698 176 (20) Pretax Income $201 123 21 Sales $1,570 865 199 (20) 1979 Pretax Income $232 141 24 Source Company annual reports 2 the lowest-cost producer...
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...Statement: The problem faced by the Black and Decker Corporation (A) is the zero profitability faced by the company in its Power Tools Division’s especially in the ‘Tradesmen” segment. Out of the three segments in this Power Tools Division, B&D was facing immense competition from Makita Electric of Japan which had practically taken oven the professional power tools for tradesmen business since it entered the United States market a decade ago. According to the trade practices the company needs to allow advertising allowances and rebate money on B&D’s Tradesmen products as the profitability in this segment was near to zero. The senior management of the company has resolved to challenge Makita for leadership in this segment and put an end to this “no win” game by developing and gaining corporate support program, but he could realize the sensitivity of the issue of capturing the market, where the B&D is just 9% with near to zero profitability. [->0] 1.2 SWOT Analysis: B&D is the world’s largest producer of power tools; power tools accessories, electric lawn and garden tools and residential security hardware. The company primarily started as a power tool company but gradually moved from ‘garage to the house’ after introducing the most successful hand held vacuum cleaner. This allowed the company to purchase the Housewares Division of General Electric’s for $212 million and use its name on its products but till 1987 only. Another acquisition of Emhart Corporation in 1989 gave a tremendous...
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...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...
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...Black and DECKER: power tools Case study Problem Statement Black and Decker has established its brand strength to be among the top ten firms in the United States. By creating the portable power tools business in the early 1990’s and being the world’s largest producer by the end of the decade, the firm has been vouched for offering high quality, differentiated products and excellent service in the Professional-Industrial segment. Powerful brand perception has helped Black and Decker attain the number one position in the Consumer segment. Although Black and Decker has been leading in two of the three segments of the $1.5 billion portable power tools market, it could not make a significant impact in the Professional-Tradesmen segment that was fast growing at 9%. Black and Decker has managed to occupy only 9% with no profitability of the total segment share against Makita and Milwaukee who stand at 50% and 10% respectively. Despite Black and Decker’s success in the Consumer and Professional-Industrial segment, according to surveys conducted of tradesmen, results showed poor quality perception and lack of proud ownership of the tools for the use of job specific applications and instead are perceived to be ideal for home tasks. The low favorability of Black and Decker’s power tools in the Professional-Industrial segment as compared to Makita’s and others may be attributed to (among other factors) the incompetence in product differentiation through the use of color schemes across...
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...The Black & Decker Corporation Household Products Group: Brand Transition 1. How good or bad is the acquisition by Black and Decker? Evaluate the same. The main objective of the acquisition was: * To gain access to house ware buyers * Resolve to develop a family of products that could address wide spectrum of house wares Following were the reasons for Black & Decker acquiring GE House wares division: 1. Black and Decker (B & D) was having slower growth rate in the power tool marker worldwide and at the same time it was the increasing foreign competition. 2. Black and Decker (B & D) saw an opportunity in American housewares market, B&D had expertise in small motor production and cordless appliance technology to produce ‘Dustbbuster’, which was proved with the success of its first product in this market - the rechargeable hand-held vacuum cleaner. 3. B & D had almost 40% sales in the European market, whereas GE had major presence in US market, this would help B & D capture the global market. 4. B & D products were sold only in the hardware market and to penetrate the market B & D had to have presence in the housewares sections of retail chains. The acquisition gave B&D access to housewares buyers 5. GE’s housewares Division was the largest competitor in the US electric housewares market and its products ranked first or second in most of the categories of appliances. Together the firms could trap global...
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...The Black & Decker Corporation : Power Tools Division Synopsis • 90 yr old and reputed company • Strong brand‐ranked 7th in US & 19th in Europe • Three product segments in power tool market – Comsumer tools – 45% – Professional Industrial tools – 20% – Professional Tradesmen tools – 9% Market Share Makita Milwaukee Black & Decker Ryobi Skill Craftsman Porter Cable Bosch – 50% – 10% – 9% – 9% – 5% – 5% – 3% – 3% B&D’s 9% vs Makita’s 50% • B&D positioning as a Consumer brand, not a professional Tradesmen brand “……B&D makes a good popcorn popper, and my wife just loves her dust buster, but I’m out here to make a living…” “…..on the job, what you are working with….if I came out here with one of those B&D grey things, I’d be laughed at.” • B&D’s absence from membership clubs B&D’s 9% vs Makita’s 50% • Tough competition by Makita‐ – Dominance in distribution channel patronized by tradesmen – Provided a good baseline option in all major categories – Perceived as better reliable for professional use – Enhanced goodwill by discussion of good performance on job sites – Trading down strategy (positioning as Father’s day giving) B&D’s 9% vs Makita’s 50% • Color‐No product differentiation between consumer and professional tools Consumer Goods Professional Tradesmen tools Buying Behavior Of Trademen • Perceive B&D as a consumer product, not a professional tool • Repulsive from its color resembling domestic goods • Patronize distribution channel dominated by Makita...
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...1. Was the 1984 acquisition of the small household appliance business from GE a related or unrelated diversification? Defend your position. What motivated that acquisition? Was the 1989 acquisition of Emhart Corporation a related or unrelated diversification? Defend your position. What motivated that acquisition? The acquisition of the small household appliance business from GE is a related diversification. Because before this acquisition, B&D was the world’s famous power tools manufacturers, and after B&D acquired the small household appliance division from GE, B&D was able to expand and transform into a consumer products company. Most importantly, the raw materials, the manufacturing process, and the assembly process for producing power tools and small house-hold appliances all bear similarities to some extent, therefore, B&D could create related diversification by using its capabilities and resources into other settings. The motivation behind this acquisition is the extra clout that being able to offer retailers a full line of housewares would have in competing for shelf space. The acquisition of Emhart Corporation is an unrelated diversification. Emhart was a diversified manufacturer of industrial products, information and electronic systems, and consumer products. Emhart’s business and product categories were broader than B&D’s, and included many categories that B&D did not have. Although Emhart had some businesses that seemed to fit with those...
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...1. What are the reasons underlying Black & Decker’s poor performance in the tradesmen segment? Explain your answer. (20%) a) Competitive intensity: The Professional – Tradesmen segment was highly competitive with a dominant leader - Makita (~50% share) and stacked with other prominent brands– e.g. Milwaukee (~10% share), Ryobi (~9% share). Despite being a broad market in terms of products – 3 primary segments and 9 individual sub-segments, there was strong competition from Makita across the board with leadership position in every sub-segment. b) Poor brand perception: While the strength of the brand had helped B&D establish leadership position in the consumer segment, the same possibly worked against them in the tradesmen segment. There was clearly a strong association of B&D’s popular consumer segment products – e.g. Dustbuster, Spacemaker etc. that was spilling over in to the tradesmen segment. The male-dominated nature of the user base conflicted with the “household” tool perception that B&D had unwittingly acquired. c) Channel Strategy: Despite the “arrogant and dictatorial” perception among channel partners, Makita had a leadership position across channels. Makita had been selling the same products across channels, offering no “channel protection” for its retail partners, whereas B&D stayed away from the discount oriented Membership Club channel. Effectively B&D was choosing to participate in only 90% of the potential overall market...
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...Joseph Galli, the vice president of sales and marketing for power tools in Black & Decker Corporation, is presented with options for the next steps to solve the company’s problem of having low sales in the Professional-Tradesman segment where profitability is practically zero. B&D only holds about 9% of the market share which is shockingly low considering its high quality and its success in its other two segments. Galli is now considering three options: I. Focus on its successful segments (Consumer and Professional-Industrial segments) while trying to harvest any profitability in the Professional- Tradesman segment II. Sub branding to rebuild the B&D name III. Drop the B&D name from the Professional-Tradesman segment, ultimately creating a new brand Before we look at which option(s) is most appropriate, we need to conduct a thorough analysis. Also, it is important to note that this is a decision case, since the company is facing a well-defined problem (which I will go into detail later) with multiple alternatives. The purpose of this paper is to evaluate which alternative(s) are most suitable for B&D SWOT ANALYSIS Strengths The company has an amazing brand strength as it is ranked #7 in the US and #19 in Europe. Among its competition, B&D has the highest awareness at 98%. Furthermore, the company sells quality products at competitive prices (it is 5%-10% lower than its competitors). B&D conducted 2 tests to determine the quality...
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