B&Dwrite Up

Topics: Strategic management, Power tool, Million Pages: 7 (2093 words) Published: January 23, 2013

Background of the Company
Black & Decker was incorporated in 1910. Begun by Duncan Black and Alonzo Decker, Black & Decker’s first power tool was an electric drill in 1916. They went on to develop and offer the first portable screwdriver, electric hammer, as well as finishing sanders and jigsaws all the way up to the hugely successful dust buster in 1978. Over the next 70 years, the company established itself as dominant name in power tool and accessories, first in the United States and then accros a broad global front but particularly in europe. Growth was achieved by adding to its lineup of power tools and accessories and by increasing its penetration of more and more foreign markets

Symptons, Issues and Problems
Issues in this case is diversification strategy runned by Black & Decker corporation. As a diversified global manufacturer and marketer of household, commercial, and industrial product, Black & Decker need to develop and choose the right strategy for diversification.

This case particularly discuss diversification of Black & Decker corporation during late 1980’s to early 1990’s, where Black & Decker which is established as dominant name in power tools and accessories, began to pursue diversification. It is because the continuing maturity of its core power tools business.

During the 1980’s Black and Decker had established themselves as a leader in the power tool industry. However, they were feels 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, the leader in the industry, 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. Then, various acquisitions and acquisition attemp made by Black & Decker in their strategy to diversified. But the biggest and most noticed was the acquisition of Emrat Corporation, a diversified manufacturer of industrial product, for a $2.8 billion in March 1988. This steps is considered to be very bad decisions made by Black & Decker. Analysis

Change in strategy
In the mid 1980s, Black & Decker feels that the power tool market had matured to the point where there is no much room for further growth. Black & Decker then decided to change their corporate strategy from single business firm into diversified company.

In 1984 they began to diversify. First they tried to get into the small household appliance market. Rather than create their own line, Black & Decker decided to acquire General Electric’s unit of household appliances for $300 million. Although it was a small part of GE’s company, it held more market share than other houseware distributors (25 percent of the market and the leadership position). That acquisition gives an additional $500 million a year in revenue for Black & Decker because it was able to offer products like irons, coffee makers and toasterswhich.

This began a trend of acquisitions by Black and Decker expanding into various related and unrelated markets with varying levels of success. This various acquisitions allowed Black & Decker to offer even more new products such as portable woodworking tools and stronger drill bits. After all the new changes, Black & Decker Manufacturing Company also changed its name to Black & Decker Corporation to help market those changes

The successful story of GE’s household appliance division
acquisition in 1988, has triggered Black & Decker to tried again. Only this time the company of interest was American Standard Inc. American Standard had an impressive $127 million profit in 1987, which towered above the mere $70 million for Black & Decker. But...
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