Academic Work

Executive Summary

Statement of the Problem- Black and Decker is loosing its reputation for having quality power tools (core products).

Background- During the 1980’s Black and Decker had established themselves as a leader in the power tool industry.  It was their feeling however, that the market for such tools was maturing to the point where expansion within the industry would provide little or no additional revenues so they decided to diversify.  Black and Decker began their expansion operation by acquiring General Electric’s small household appliance segment, the leader in the industry.  The success of the GE deal, and the reorganization efforts of their new CEO Nolan Archibald, led Black and Decker to continue on this path of acquisitions and diversification in other areas. 

Discussion- By diversifying, Black and Decker lost focus of its core products (power tools).  Customers began to think that Black and Decker tools were losing quality, because of their lack of specialization.  When they decided to divest the other business ventures the customers’ view of Black and Decker tools was positively affected as they regained market share.  However its image could be better, so by advertising and sponsoring home improvement television shows, Black and Decker could have a better image and gain more market share.

Recommendation- Black and Decker has divested much of its broad enterprises including its household and recreational outdoor products in favor of a more focused business model in the power and professional tools market, but they also need to regain their reputation of quality by advertising and sponsoring home improvement television shows.

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