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The Black & Decker Corporation

In 1910, Duncan Black and Alonzo Decker, Sr., started a machine shop and in 1917 received a patent
on world’s profitable power drill ; 73 years later, receiving its first patent, B&D was the world’s
largest producer of power tools and its accessories, electric lawn, garden tools and residential
securities hardware.

Alonzo G. Decker, Jr. had been chairman of board and chief executive officer from 1968 to 1975.
Prior to his becoming CEO, this post had always been held by his father or co-founder of Black.

1979, B&D moved from garage to the house with a very successful introduction of Dust buster hand
held vacuum.

Nolan Archibald became president and CEO in 1986.

In January 1991, Joseph Galli (Vice presented of sales and marketing of power tools) ---------

Segments for power tools:

Tradesmen (Business) -------- represented to professional users

Consumer (represented to Home use)

Industrial ---------------- represented to professional users

By late 1990, Makita held 80% shares in “cordless drill” (a single largest product category) and 50%
shares over all, for the segment of “Professional Tradesmen”.

By early 1990s, B&D maintained the No.1 market share position in the Consumer and Professional
Industrial segments but relatively in Professional Tradesmen segment, it held only about 9% share,
as it entered newly.

In 1990, B&D sales reached to $4.8 billion with nearly 50% revenues from outside the United States.

Early 1980s had been volatile years at B&D. For the 5-year period from 1981 to 1985, company
overall lost money. B&D’s $2.8 billion acquisition of Emhart Corporation in 1989 more than doubled
B&D’s revenues and brought new strong brand but raised the company’s long term debt to $4.2
billion, representing about 84% capital.

The five largest product groups and their percentage of B&D’s sales of 1990 were:

 Power Tools and Accessories 29%

 Household Products 15%
 Information Systems and Services 11%
 Outdoor Products 9%
 Security Hardware 9%
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In 1990, 29 products were introduced, including the heavy duty cordless vacuum. An independent
survey (Landor Associates survey) of 6000 brands showed B&D’s brand strength ranking to be No.7
in United State and No.19 in Europe.

In 1990, portable power tools’ market was 1.5 billion in United States

Segmentation of the U.S power tools market:

Professional Industrial Tools

$550 MM Commercial Contractors

Professional Tradesmen Tools

$420 MM Residential Contractors

Consumer Tools

$530 MM Home Use

$530 million or 35% accounted for Non-professional (consumers) segment and $550 million for
Professional Industrial segment and $420 million or 28% share for Professional Tradesmen segment.

Professional Tradesmen was growing fastest at 9% as compared with a 7% growth rate for Consumer
and 0% for Professional Industrial.

B&D held nearly a 30% share of U.S market overall for its family names as follow;

Approximate
B&D B&D
Segment Segment
U.S Market Segment Product Colour Share 1990 Revenues 1990
Professional Industrial Charcoal Grey 20% $110MM

 Size=$550MM
Professional Tradesmen Charcoal Grey 9% $35MM

 Size=$420MM
Consumer Black 45% $250MM

 Size=$530MM
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While the “just got to stay away from that Black & Decker” view was perhaps extreme, from a
consumer, taken by Galli. By this, Galli understood that B&D’s strength as a consumer brand was not
necessarily beneficial for the Professional Tradesmen segment.

Product development had been a B&D focus since 1985 and B&D tools were highly regarded in the
demanding professional industrial segment, so Gilli belived that the source of B&D’s share problem
in the professional Tradesmen segment was not inherent product quality. This belief was tested in
two ways;

B&D conducted laboratory tests on its own and competitive products to assess performance
reliability and durability.

B&D did extensive field tests. All of its identification were removed and then used in actual work
situations for one month to get the comments and feedbacks.