Swot analysis of Black and Decker.

by pavan09 (student)

SWOT Analysis:

B&D is the world’s largest producer of power tools; power tools accessories, electric lawn and garden tools and residential security hardware. The company primarily started as a power tool company but gradually moved from ‘garage to the house’ after introducing the most successful hand held vacuum cleaner. This allowed the company to purchase the Housewares Division of General Electric’s for $212 million and use its name on its products but till 1987 only. Another acquisition of Emhart Corporation in 1989 gave a tremendous impetus to B&D and not only doubled the revenues of the company but also facilitated the emergence of strong brand. The negative consequence of this acquisition is that it raised the debt levels of the company to 84%. Out of the total Power tools market which constitutes 30% market share in US, 35% was constituted by consumer tools section and the remaining 65% was constituted by for work market. The company is doing quite well in the other two segments of Power Tools division but facing huge problems in the Power tools, Professional –Tradesman segment (Appendix 2)

1.2.1 Strengths

One of the biggest strength of the company is the large number of divisions, then segments and then products groups of the business. This wide portfolio comprising of a large number of products allowed the company to enjoy the benefits of diversification and hold 50% of the market share in United States. The company due to the well-functioning of other divisions and their segments made good acquisitions. Recently one of the most important acquisitions of the company was with Stanley Works in March 2010after which the company changed its name to Stanley Black and Decker Inc.

Strength of ...

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1.2.1 Strengths

Strength of the company is enhancement of its brands, in 2009 when due to adverse economic conditions companies decreased their brand support; B&D invested $20 million in its brands by launching various new programs. Thus the company’s strength was its consumer brand value in all other segments except the Professional –Tradesman Segment Buyers such as the Professional-Industrial segment which viewed B&D as a company offering high quality, differentiated products and excellent services. Innovating new products according to the needs of the countrymen helps the company to work fairly outside US. The company’s 50% of the sales are from outside US. The company has achieved efficiencies of a larger organization with increased size and scale.

Weakness

The biggest weakness of the company is its Professional Tradesman segment of Power tools division. The buyer attitude towards the Tradesman product is “just got to stay away from the Black and Decker”. The products of the company are viewed as not suitable for use at job for products designed specifically to suit job requirements. The company’s weakness is the ambiguity in the minds of Tradesmen about the tools and their performance.

Another weakness of the company is the selling and administration costs which are 25 % of the gross profit margin.

Opportunities

There are opportunities for the company to enter the market of the developing economies such as china, Southeast Asia, Brazil and rest of Latin America, Eastern Europe and the Middle East.

There’s an opportunity for B&D to tame retailers as they were not positive about Makita, and regarded it as “arrogant and dictatorial”. B&D by taming the weaknesses of its competitor Makita can capture the retailers market such as by offering channel protection and to produce the goods in a slightly different color than Makita.

Threat

The biggest threat to the company is from its strongest competitors, Makita and Milwaukee which satisfies the consumers a lot and at the same time offers a good baseline options in major categories. The strategy of the company was well planned, even if the company is priced at a premium from B&D; some of the products are priced at a much lower price than the price charged by the company in its home country. The biggest question posed in from of the company is that how the company is a foreign country is able to offer goods at a lower price than B&D to which US is its own nation.

The company also faces tough competition from the company Skil due to its strong particular product