Black and Decker Case Analysis

Topics: Subsidiary, Parent company, Corporation Pages: 4 (1753 words) Published: June 19, 2012
Black and Decker a company that has a long history of innovation, is a great example of how an organization must constantly adapt to a changing environment. As a company that has a presence of over one hundred years it had to reengineer itself, when after years of dominating the market it started losing market share. It is easy to see why a company that was the first to introduce products like the first ½“ special drill was the first all-sleeve-bearing power tool offered at a price consumers could afford in 1923 or the world's first cordless electric drill an innovation powered by self-contained nickel-cadmium cells had a tremendous competitive advantage in terms of product innovation which in turn afforded Black and Decker a huge market share of the consumer and professional tool markets, their target market. According to Grant (1995) ”invention is the creation of new products and processes through the development of new knowledge or more typically from new combinations of existing knowledge Innovation is the initial commercialization of invention by producing and marketing a new good or service or using a new method of production” (p257). Black and Decker was one such company, and the technology competitive advantage they enjoyed in terms of bringing new products to consumers provided the company with ample lead time (Grant p267). This lead time combined with the fact that by the 1950’s and 1960’s Black and Decker had a strong brand name enabled the company to expand rapidly into foreign markets by setting up wholly owned subsidiaries. When company A owns 100% of company B’s common stock company B is the subsidiary and company A the parent company. When companies plan to enter a foreign market through subsidiaries, they either buy a domestic company or set up a subsidiary themselves. Historical data show that when U.S and European multinationals wanted to expand in foreign markets to keep ahead of the competition they used...
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