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BSM 495

International Case Analysis

Strategic and Organization Change at Black & Decker

Known primarily for its power tools, Black & Decker is one of the world’s older multinational corporations. The company was founded in Baltimore, Maryland, in 1910, and by the end of the 1920’s had become a small multinational company with operations in Canada and Britain. Today the company has two well-known brands, Black & Decker consumer powers tools and its DeWalt brand of professional power tools. It sells its products in over 100 nations, and has revenues in excess of $5 billion, more than half of which are generated outside of the United States.

The company grew rapidly during the 1950’s and 196’s due to its strong brand name and near monopoly share of the consumer and professional power tools markets. This monopoly was based on Black & Decker’s pioneering development of handheld power tools. It was during this period that Black & Decker expanded rapidly in international markets, typically by setting up wholly owned subsidiaries in a nation and giving them the right to develop, manufacture, and market the company’s power tools. As a result, by the early 1980’s, the company had 23 wholly owned subsidiaries in foreign nations and two joint ventures.

During its period of rapid international expansion, Black & Decker operated with decentralized organization. In its 1979 annual report, the company described how “In order to be effective in the marketplace, Black & Decker follows a decentralized organizational approach. All business functions (marketing, engineering, manufacturing, etc.) are kept as close as possible to the market to be served.” In effect, each wholly owned subsidiary was granted considerable autonomy to run it own business.

By the mid 1980’s, however, this structure was starting to become untenable. New competitors had emerged in the power tool business, including Bosch, Makita, and Panasonic. As a result, Black & Decker’s monopoly...