...Black & Decker Corporation Series Instruction: 1. Each student will read the case(s) ahead of time before attending to the class. 2. Your group will be assigned to one or several questions in class. 3. After a thorough group discussion, your group will outline/summarize your answers into a PPT file and drop it onto the Blackboard’s drop-box. 4. Your group will present and lead the discussion of the question(s) assigned to you. Although the group in charge will be the major discussants for the assigned question(s), it is highly recommended to have the rest of the class involved and participated in the discussion. Discussion Questions: 1. What is the cause of B&D’s 9% share vs. Makita’s 50%? 2. How does the buying behavior of the tradesman impact the situation? Since tools and performance were a constant topic of conversation at the work place for tradespeople, they have negative perception toward B&D products because they viewed B&D products as consumer products, not professional products. Even product color is never a key attribute in purchase decision for tradespeople, no differentiation between B&D consumer and professional products also give a negative impression while they are purchasing the products. Tradesmen bought most frequently in independently owned stores served by distributors such as the Two-Step. B&D own less than 10% market share in the biggest channel type (Two-Step). Moreover, B&D...
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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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...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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...------------------------------------------------- Caso: The Black & Decker Corporation: Power Tools Division 1. El menor market share conseguido por Black & Decker en el segmento de Tradesmen puede explicarse principalmente por no haber comprendido al consumidor de este segmento, no haber podido lograr una diferenciación con el segmento Consumer y por no haber aprovechado los canales de distribución para poder llegar al consumidor. El consumidor del segmento bajo análisis es el electricista, el plomero, el carpintero, etc. Son aquellos profesionales que se presentan al trabajo con sus propias herramientas. Una parte importante de su imagen viene dada por las herramientas que utilicen y la calidad percibida que tengan las mismas. Utilizar una marca asociada a los productos domésticos como B&D podía llegar a ser hasta motivo de burla para quien las utilizase. El segmento industrial elije sus productos en base a otros atributos, basándose en la calidad y en el excelente servicio postventa. Por esto, no haber logrado una diferenciación con respecto a los productos domésticos no influye en el share de este último segmento. Por otro lado, B&D no contaba con una buena estrategia de canales para este segmento. En cambio, Makita supo ubicarse fuertemente en los Home Centers (Ej.: Home Depot) de fuerte crecimiento, donde los tradesmen compraban sus herramientas, y de esta forma apalancar su dominio en el segmento. 2. Opción | Pros | Cons | 1 | Asegura la rentabilidad...
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...BLACK & DECKER Black & Decker Corporation (B&D) tried to run a diversification strategy. During the 1980’s Black and Decker had established themselves as a leader in the power tool industry. However, they had a feeling that that the market for such tools was maturing to the point where expansion within the industry would provide little or no additional revenues so they decided to diversify. Black and Decker began their expansion operation by acquiring General Electric’s housewares business for $300 million in 1984. The success of the GE deal, and the reorganization efforts of their new CEO Nolan Archibald, led Black and Decker to continue on this path of acquisitions and diversification in other areas. B&D then tried to acquire American Standard Inc. which had an impressive $127 million profit in 1987 and was in excess of the $70 million that was generated by B&D. But then, the acquisition was unsuccessful. Even after the failure, they did not hold back from their diversification strategy and acquired Emhart Corporation, a diversified manufacturer of industrial product, for a $2.8 billion in March 1988, a price that was over by 33% of the Emhart’s preannouncement value. The deal was considered unfavorable for B&D because its stock price dropped 15 points after the announcement of the acquisition. With this acquisition, B&D incurred a debt of &4 billion. So from 1993 – 1996, they started to sell the segments of Emhart that did not prove to be strategic...
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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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...Marketing y Distribución Caso: Black & Decker La fuerza de la marca Black & Decker entre los consumidores hogareños no era necesariamente beneficiosa en el segmento de los profesionales autónomos. Estos tenían la percepción de que Black & Decker era una marca para aficionados, o en el mejor de los casos maridos que intentaran dárselas de habilidosos en sus casas. Creían que si llegaban a su lugar de trabajo con una de estas máquinas, se reirían de ellos. Adicionalmente, algunos usos profesionales de los artículos pensados para uso doméstico habían colaborado con la fama negativa que la marca tenían entre los profesionales autónomos. De acuerdo a las pruebas realizadas no había razones objetivas vinculadas con la calidad de las herramientas que sustentaran la percepción que había aprovechado la japonesa Makita para liderar la franja cómodamente, seguida por Milwaukee y dejando en un inaudito tercer lugar al gigante del sector. Recomendaría ir adelante con el cambio de marca para este segmento, por más que ello hiera algunas sensibilidades en la compañía. La marca De Walt, bien posicionada en la mente de los consumidores, es la solución menos onerosa. La campaña publicitaria tendría que enfatizar que Black & Decker desembarca en el segmento de profesionales autónomos con su marca De Walt, lista para brindar todas las prestaciones que requiere el uso intensivo de estos profesionales. Así Black & Decker podría acompañar a la nueva marca, apadrinándola....
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...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 the three distinctive market segments and...
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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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...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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...Introduction Black & Decker (B&D) is a global manufacturer and the world’s largest producer of power tools, power tool accessories, electric lawn and garden tools, and residential security hardware. The company was a pioneer in innovation and development of power tools and has used that position to build strong brand names that enjoy worldwide recognition. {text:change-start} Key Causes for Poor Performance in the Professional-Tradesmen Segment The reason B&D has performed poorly in the professional-tradesmen segment is due to the positioning of the B&D brand in this segment. Poor positioning of the brand has resulted in customer confusion and negatively impacted customer perception of the brand in terms of being a quality product. B&D Performance in *the P*ower *T*ool* Industry O*verall Any adjustments to B&D’sstrategy in the professional-tradesmen segment must not have an adverse impact on their success in the consumer or professional-industrial segments. Therefore, a thorough understanding of the needs of each segment will be important in building a viable strategy to challenge Makita in the professional-tradesmen segment, while continuing to maintain share in the other two segments. _Consumer _Segment Professional-Tradesmen Segment This category consists of professionals who are buying a product for their own use on a job site. Their livelihood depends on the quality and performance, as well as the reflection on their skills that using a particular tool brings from...
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...1) Since arriving in Singapore, Lancaster has formulated several opinions about the health of the Eastern Hemisphere Organization. What are his concerns both now and for the future? Bill Lancaster’s concerns stem back to his initial impression when he arrived in Singapore as the new President of Black & Decker Eastern Hemisphere. Lancaster found several concerning areas including: “major disparity” in the management styles of the people in the Eastern Hemisphere, conflicting management styles (employee empowerment and old authoritarian school), and even some just bad managers. Additionally, there was a lack of growth and development. Finally, the most obvious concern to Lancaster was that current managers were using a Management By Objective (MBO) type plan which is believed to be an outdated system that the United States has long since replaced. These areas of concern he found during his initial assessment of the Eastern Hemisphere organization led him to have fear for the future because without immediate attention and action, the future productivity and profitability of the Eastern Hemisphere was grim. Lancaster believed major reform in replacing outdated management systems was pertinent. 2) What problems does Lancaster want ADP to address? Lancaster wants to update the current employee review process with a more modern approach called the Appraisal Development Plan (ADP). Under the previous MBO program, superiors would meet on an individual basis with each...
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...DECISION SHEET FOR BLACK & DECKER: POWER TOOLS DIVISION Problem: How can I, Joseph Galli, increase the market share of B&D within the professional-tradesmen segment share from under 10% to 20% within three years, with major share “take away” from Makita? Options: 1) Harvest Professional- Trade Channels 2) Get behind B&D Name with sub-branding 3) Drop the B&D name from the professional-tradesmen segment Decision: Drop the B&D name from the professional-tradesmen segment, using the brand of DeWalt, change the color of its tools, price it higher by 5-10% and focus on the Two-Step channel and Home Depot Reason: 1) Dropping the B&D name: An advertising campaign to push sales in tradesmen category might hurt the consumer category. B&D’s name hurts sales in the tradesmen category and hence must be changed. Using the DeWalt brand name, which comes with a 70% awareness, would ensure that the tradesmen tools would have brand recognition apart from B&D, and hence this name would increase sales in the professional tradesmen category, from those who avoid B&D name. They should also optimize the products for this category 2) Changing color to yellow would allow DeWalt to differentiate itself from the earlier B&D products 3) In this category of professional tradesmen, higher prices are seen to indicate higher quality and service. Pricing DeWalt 5-10 percent higher to match prices of Makita would help DeWalt differentiate...
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...Black and Decker (B&D) has one of the strongest brands in U.S. (ranked in top 10) and is a leader in the U.S. power tools market, yet, it struggles to gain a strong market share in the Professional-Tradesmen (Tradesmen) segment. For a multitude of reasons, B&D must remain in the Tradesmen segment but, going forward, should leverage the DeWalt brand name in its possession as its primary brand (Option 3), in order to steal market share from its main competitors – Makita and Milwaukee. The Tradesmen segment offers a tremendous growth opportunity for B&D. This segment is experiencing the largest growth of the three segments in the U.S. power tools market. Even though it is the smallest of the three segments, the Tradesmen segment had a growth rate of 9% in 1990; by comparison, the Consumer and Professional – Industrial (Industrial) segments only grew 7% and 0%, respectively. There is also a great risk of losing market share in the other segments if B&D leaves the Tradesmen segment to build on its presence in the other segments. Despite having an extremely strong brand identity (ranked one of the top 10 brands in the U.S.), the Tradesmen customer base has a perception that B&D’s products in this segment are inferior to other company’s products (despite that the results of recent product tests prove that B&D’s products are comparable in both quality and performance). The leader of the Tradesmen segment, Makita, could take advantage of this weakness if it decided...
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...For the 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 ...
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