Case Study: Black & Corporation (a): Power Tools Division

Case Study:Black and Decker Corporation (A): Power Tools Division

1)Introduction:

Black & Decker (B&D) corporation is a one of the most successful company that manufactures power tools, accessories, electric lawn, garden tools and residential security hardware. B&D’s sales reached a $4.8 billion in 1990, with nearly 50% of its product revenues generating from outside of the United States and 29% of its sales being from power tools and accessories. B &D is one of the world’s largest producer for power tools and ranks among the top corporations in the United States of America.

2) Problem Statement:

The Power Tools business is divided into 3 segments namely, ‘Professional-Tradesman’, ‘Consumer’ and ‘Professional-Industrial’ markets. B &D holds #1 market share position in Consumer and Professional-Industrial segments, but has a low market share of just 9% in the Professional-Tradesmen market segment. B &D needs to come up with a solution to increase its profits in the Professional-Tradesmen market.

3)Analysis:

B&D is weak in the Professional-Tradesmen market segment. This market mainly targets tradesmen or contractors such as electricians, plumbers, carpenters and people working in residential construction. This market segment has a good potential for the growth of the company. B&D has captured a huge market in the Consumer(45 %) and the Industrial segments (20 %) segments, but has a small market share of just 9% in Professional-Tradesmen market and is at near parity with Milwaukee Electric of Brookfield, Wisconsin. In this segment, Makita, one of the competitors of B&D, dominates with a nearly 50% market share.

There were several reasons as to why Makita was successful with the Professional-Tradesmen segment. Makita provided a good baseline option in all the categories of tools. The tradesmen were satisfied with Makita tools as it fulfilled their basic requirements for the tools at a minimum cost. However, one of the main reasons for Makita’s success was their new kind of distribution strategy, which involved rapidly growing collection of home improvement chain stores like the Home Depot. Using this strategy, Makita was able to stock more items in less space and thus make a good amount of profit with lesser investments. On top of this, it could provide better customer service.

On the other hand, the tradesmen perceived B&D to produce more of consumer-oriented products and believed that it could not produce good quality professional products. One of the factors related to this perception was the color of the product. B&D used Black color for consumer tools and charcoal-grey for professional tools. However, generally, the consumer tools in the market are colored as black or charcoal grey(both are nearly similar). Rival