Nov 19, 2020 in Case Studies

Black and Decker Case Study Analysis
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Outline:

A) Introduction

 

B) Discussion

C) Conclusions

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D) Figures

Black and Decker case study analysis

There are many companies that face the difficulties of market segmentation since global market players enter their area of location. Black and Decker is one of these companies, and the strategies which have previously been applied by the company are no longer valid in the complex economic conditions. Besides the fact that the company is recently at the stage when a major market segment (Professional-Tradesmen) is at a loss, the power tools by Black and Decker start losing their brand strength among construction workers all over the United States. For this reason, the evaluation of the entire company strategy is required.

This report focuses on evaluating the potential threats that the available options can provide. At the same time, another option is proposed within the scope of the three options provided. All options are reviewed from the point of view of company image, corporate structure, values, product types, and market segmentation. At the same time, competition analysis helps see the wider picture of the current situation.

The case describes Black and Decker as the company which has been successful at the market for a long period of time. However, the SWOT analysis conducted within this report shows that there have always been some essential threats to the company, and the entry of Makita Electric only strengthened these threats and gave them speed to develop.

Figure 1 shows the SWOT analysis for the company in terms of its general strategy during the whole period of operation from the early twentieth century. It is obvious that the stagnation of the company already started in 1980s when the company focused on acquiring acquisitions of Emhart Corporation. It was a step backward which undermined company cost control and provided a change of strategy towards profitability.

It is the potential reason why the market segment Tradesmen which was poorly developed (only 9% of the total company revenue) resulted in failure. Black and Decker simply did not find meaning in investing more money in the unprofitable market while they gained more and more popularity for their consumer tools.

Market segmentation which is shown in Figure 2 provides a clear picture of the generic strategy which is applied by the Black and Decker. The strategy is focus and therefore all forms and attempts for changing this strategy into differentiation result in failure. From the very beginning of the company history, it started a move from the garage to the house, which became the major foundation for marketing strategy of Black and Decker for the future. This move should be consistent and remain stable in the next couple of years.

Positioning map clearly points at the existence of the large gap in the field of consumer products. As shown in Figure 3, other companies actively take the market share on Tradesmen segment, while all companies share the Industrial tools together with consumer power tools. However, only Black and Decker has a solid reputation in this target market. Figure 4 also reveals the necessity of developing the company strategy in the area of consumer products and growing within this market segment.

 
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The analysis conducted within the case related to the options that are proposed. The first option which is focusing on profitability is not considered an option at all as this would substantially harm company reputation. The second option which is to get the sub-brand for Black and Decker in Tradesmen segment is also not good due to the strong negative associations with the brand. Therefore, even if the company chooses the third option (which out of three is the best one), there still will be problems with the brand awareness among the consumers. Notably, Makita Electric and other companies already have a strong market position. It will be extremely difficult to retain this position. For this reason, another option is proposed which is to leave the Tradesmen segment and move all forces into Consumer segment with lower share for Industrial segment. It will not only keep the company image, but also increase profitability in the future.

Figures

Strengths

Opportunities

Knowledge of the market

Specialty area power tools

Wide range of products

Development of consumer products

Potential in customer loyalty programs

Fair distribution system for retailers

Weaknesses

Threats

Poor presentation of professional tools

Failure to focus on tradesmen segment

Costly acquisition in 1980s

Poor development with support of changing market share

Focus on profitability at the cost of brand image

Figure 1. SWOT Analysis

Source: Authors analysis.

Segment of the market

Market features

Future vision

Consumers (45%)

Specialized products, positive brand image

Ease of further development, high probability to succeed

Companies (20%)

Specialized products, high value at high price

Risks of further development connected with other segments (tradesmen)

Tradesmen (9%)

Good quality products, non-specialized products, high value at high price

Difficulties in further development, very low probability to succeed

Figure 2. Market segmentation

Source: Authors analysis.

A

B

A Brand awareness, from low to high

B Product type, from consumer to technical (for tradesmen and industrial companies)

C Proposed positioning

D Current positioning

Figure 3. Positioning map

Source: Authors analysis.

Market Growth

Market share

High

Low

High

Consumer tools

New consumer tools

Low

Industrial tools

Tradesmen tools

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Figure 4. BCG Matrix

Source: Authors analysis.

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