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Idas Essay

4570 words - 19 pages

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. ...view middle of the document...

He could not help but see the
irony of a 9% Tradesmen segment share and no profitability against the results of two recent research
studies: one showing B&D to be among the powerful brand names in the world, and the second
establishing B&D’s professional tools to be the highest quality in the industry.

Black & Decker
In 1910, Duncan Black and Alonzo Decker, Sr., started a machine shop and, in 1917, received
a patent on the world’s first portable power drill with pistol grip and trigger switch; 73 years after
receiving its first patent, B&D was the world’s largest producer of power tools, power tool
accessories, electric lawn and garden tools, and residential security hardware. Headquartered in
Professor Robert J. Dolan prepared this case as the basis for class discussion rather than to illustrate either effective or
ineffective handling of an administrative situation. Certain non-public data have been disguised.
Copyright © 1995 by the President and Fellows of Harvard College. To order copies or request permission to
reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to
http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system,
used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying,
recording, or otherwise—without the permission of Harvard Business School.

1
This document is authorized for use only by Sinan Kaya in Marketing Management (2015-2016 Fall) taught by Ozge Turut, Sabanci University from September 2015 to December 2015.

For the exclusive use of S. Kaya, 2015.
595-057

The Black & Decker Corporation (A): Power Tools Division

Towson, Maryland, B&D’s sales reached $4.8 billion in 1990, with nearly 50% of product revenues
from outside the United States. Alonzo G. Decker, Jr., was honorary chairman of the company and a
member of the board of directors. He had been chairman of the board and chief executive officer
from 1968 to 1975. Prior to his becoming CEO, the CEO post had always been held by his father or
co-founder Black. From its roots in power tools, B&D began a move “from the garage to the house”
®
in 1979 with the introduction of the very successful Dustbuster hand-held vacuum. This “into the
house” thrust led to the purchase of General Electric’s Housewares Division in 1984 for $212 million.
As part of the sale agreement, B&D could use General Electric’s name on products only until 1987.
Nolan Archibald, a Harvard Business School graduate and a former group president at
Beatrice, became president and CEO in 1986. The early 1980s had been volatile years at B&D. It
began the decade with a 19% net revenue increase to $1.2 billion in 1980, but sales stagnated at this
level through 1983. In 1985, with net revenues at $1.7 billion, B&D posted a $215.1 million
restructuring cost and a $158.4 million loss. For the 5-year period from 1981 through...

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