BLACK & DECKER
Black & Decker was founded in 1917 by S. Duncan Black and Alonzo G. Decke, they manufactured and sold a wide variety of electric and battery-powered power tools (and accessories), locks and hardware, household products, plumbing products, outdoor products and mechanical fastening systems.
Today, Black & Decker has become a global marketer and manufacturer of quality products used in homes and for commercial applications. With a strong products base marketed in over 100 countries and nearly half of its revenues from outside the United States, Black & Decker's product lines become a leader in their market by its outstanding leads in market share positions in their industries.
The company is the world's largest producer of power tools and accessories. Its household products business has become a leading brand in U.S. and among its global competitors in the small household appliance industry.
Black & Decker was in serious trouble before Nolan Archibald became chief executive officer in 1985. The down fall was due to the fact that the company had disjointed international product lines and policies, increase in the number of dissatisfy customers which lead to a tarnished in reputation. It also lost its main product lines to the Asian global competition and strong local competitors in all parts of the world.
In the late 1988, Mr Grunewald had been recruited to Black & Decker as the staff position of vice president, product and market development, Mr Grunewald is a key resources as a globalization initiative at Black & Decker. During his stay in Black & Decker, he concluded that base on his knowledge and experience, he concluded that the company's businesses would continue to become more diversified due to the wide variety of products it carry and the complexities will increase due to cultural difference as the company pursued its global imperative.
Mr Grunewald believed that the company has a solid base in power tools into house wares and other Black & Decker products that were not as well known internationally was important aspect to leverage on. He believed building a global base for house wares basically, a "metal-bending and plastics mouldings business." This is especially important to help the company move out of the 'no-win" box of the middle market in which the low-cost operators won on cost and the high-end niche players won on gross margin.
(Simmons 1979)Since the early days, when it comes to planning for the company's future, the management felt that a company's operating environment should involve political, governmental, and economic factors which should be monitored closely as it will influence the company's future potential and standings.
Mr Archibald wishes to restructure the organization by hiring new top managers, who began actively participating in the development of new products (sixty new or redesigned power tools; 40 percent of household products less than three years old). (Torrington and Holden 1992)This is a relatively challenging situation for the human resources management, as it is the management is constrained by national, cultural differences.
Black & Decker begin to operationalise its global approach by its identification and development of world products through a process of strategic manager, and operational activities. This approach is developed over the past few years as to help the company to set priorities for new-product projects and to review its status on a regular basis.
Compared to the past, where managers tend to look at product-line planning by its depth and breadth and purely on a country-by-country basis. But now, given its new system which will be monitored closely by the company managers .The effectiveness of the product was under a regular cycle of research, evaluation, goal setting, and review.
The shifting winds of change in today's business environment (Snyman and Kruger 2004) has force companies to be increasingly competitive and the rate of innovation has become a more and more important prospect, as many enterprises start to realize that knowledge is becoming a important asset to them.
Therefore, Mr Archibald came out with two key actions to savage the situation. It is to develop a worldwide visibility towards the global market for the company's products and also to reduce drastically the number of models needed to fill these markets. This is to help the company save resources, reduce cost and develop better products to suit the market. The company came up with solutions such as reverse-engineered its competition's product and setup just-in-time, continuous-flow production processes.
According (Child 1981) to that technology help to sets a certain type of standards or conditions for, certain types of job and help organizational design their structure. This is due to the fact that technology has start to become a part of the company's infrastructure it can help employees do video conference which reach out to all parts of the world with just a video camera and a laptop. It can also create new product which is achieving certain functionality or performance that seems almost impossible in the past.
Budgeting, strategies, and strategic management (Blumentritt 2006) all share the same goal, an orientation toward improving business performance, as each individual is used to set an organization on an appropriate path to help the company achieve success and guide its managers' decisions and activities. Therefore, business performance can be broken down into both strategic and financial components. Strategic performance (Blumentritt 2006) reflects the execution of the company's operational goals, which can be as simple as acquiring new customers, launching new products and services, or improving efficiencies. Financial performance considers money-based outcomes, such as increase in revenue growth, margins, and return on investments.
It is also possible to achieve one type of performance without the help of the other, at least in the relevant term. (Blumentritt 2006) A company might be able to achieve its strategic goals without having to improve its financial condition such as over-investing in its business activities or over-paying for increase in revenues. Vice versa, (Blumentritt 2006)financial goals can also be met in such a way as to mortgage the company's future through actions such as quarter-end discounting heavily, delay in its maintenance expenditures, or reduce or limit its investments into new developments.
These are some the indications that many firms will be at risk of making these such mistakes. For example, (Blumentritt 2006) surveys have shown that a significant portion of small- and medium-sized enterprises do not see the importance in strategic planning. On the other hand, it is a rare sight to find a company of any size who does not use budgeting to certain extend. One prediction may be that many firms which do not use planning at all is due to the fact that they are using budgeting as its substitute. While others may be using strategic management and budgeting concurrently, but integrate them wrongly and thus causing limitation to the possible contribution to business performance.
Therefore, in order to stay ahead of the competition, the company also came up with meetings attended by key appointment holders and engineering/manufacturing personnel. These day-long meetings were held at company headquarters in the United States. Agenda of the meeting is based on extensive research of the market, competitors, etc.; these meetings would set the capital-budgeting priorities of new product types, approve major new-product programs, and review and adjustment of the progress of previously approved programs. The data for these meetings were developed by product managers. The frequency of such meetings depend on how fast a market seemed to be evolving, a product would be reviewed on a twelve-month, eighteen-month, or twenty-four-month cycle.
Budgeting (Blumentritt 2006) is the process in which the organization will be allocating its financial resources to its units, activities and investments. Many such processes include a review of the previous period's financial report, estimation of the potential sales, expenses needed for its operation (fixed, variable, and semi-variable) and expenses needed to be financed, evaluating of proposals for capital expenditures, and means of increase and estimating possible figures from different relevant departments. This is to ensure that the proposal meet company-wide profit expectations.
Similarly, such meetings were held quarterly which involves the managerial level. They were held at the four design centres in which key engineering and marketing personnel tracked the progress of major product programs. Invaluable by-products of these meetings were exchanges of information and ideas on emerging market trends and on problem solving.
The importance of such meeting help at the managerial level and top management level is to keep a constant flow of information updated to the relevant personnel in order to keep them on a constant flow and react to situations before it is too late.
Additional to the company operational activity, Mr Grunewald came out with something he called "product-road bashing", this activity place continually among product managers at the same levels in the organisation but in different groups from different parts of the world. The top management will constantly encourage them, to communicate with their counterparts from different parts of the world to understand one another's situation and came out with solutions to meet one another's needs. With the solutions which the managers came out with during discussion through phone, fax and travelling, it will be showcased during the quarterly meetings to discuss upon and seek agreement from the higher management.
Mr Grunewald believes in actively studying the market and seeking out for problems and solutions will help the company stay ahead of their competitors and command a bigger market share. So by conducting frequent meetings to put all the heads together to understand the market and the problem consumers are facing will help in brainstorming with new ideas to solve the problems.
Venturing into a New Market
Mr Grunewald feels that the challenges facing the integration from the Emhart acquisition was not just internal; it is an equal task on how to conceptualize the global marketing of their products into the various regions of the world. Mr Grunewald believes that the door-hardware-products industry was bound by old traditions and complicated by highly fragmented thinking about market opportunities.
For example, the managers of from these industries tend to divide their markets and products into three major but narrowly constructed continuance:
- technology (from basic to electronic);
- security (from minimal to extremely high); and
- systems (from providing the internal cylinders only to providing the full trim hardware, electronic circuitry, switches, etc.).
Most companies seemed to only position themselves solely in only one or perhaps two markets to focus on. Due to this type of differentiating, the traditional companies also tend to only specialize either at the high or low ends of the price continuance, this not only allow competitors to venture into the middle, unexplored areas. Therefore, no one manufacturer ever made or offered products to the total market segments (residential, commercial, decorative, etc.). They only focus on expanding it's solely on their own target market, without even considering the possibility of integrating and outsourcing its global production to the centre of manufacturers with the expertise.
Therefore, Mr Grunewald conclude that the Emhart companies fail due to the inefficiency of brand proliferation, poor marketing strategies, poor market research, and inconsistent merchandising terms and policies. As (Porter 1980) identify that in order to be able to strive, grow and be profitable, any organization must seek a competitive advantage. It help businesses to strive in one way or another by producing low-cost and differentiating the company from its competitors. Teece (Teece 2002) commented that in order for the company to have competitive advantage, it has to depend on the company's ability to utilize resources, build new products and have patent right or make sure the product is difficult to imitate.
So Mr Grunewald believe that Black & Decker will be able to succeed in this new industry as the company had already a potential of $15 billion world market base on their current market share which is something that can be used to offset some of the infrastructural difference.
Research indicates that a great majority of sales were from the new-construction or building-renovation projects. This is something the Emhart companies had not focus on and built a strong distribution system to handle the international bid/contract business. Therefore, with the technology and skills obtain from the various Emhart companies; the company do not need to research on the industry from start before venturing in. On top of that, Black & Decker's current product presence and distribution abroad help to create opportunities for synergies.
Reasons of Resistance towards Changes
Resistance (Waddell and Sohal 1998) has been classified as the basic that causes conflict that is undesirable and disadvantageous to an organisational. Resistance can therefore be understood as the materialization of disagreeing choices that undervalue from the culture of the organisation and the resistant worker was classified as a seditious whose self-interest clashes with the general interest and well-being of the organisation health.
Resistance to change can appear in a few factors (Waddell and Sohal 1998) such as :
Rational factors: resistance can occur when the employees' own assessment of the outcomes of the proposed change does not match with the outcomes form mental picture of the management. Such differences in opinion will cause doubt in the employees' mind as to the merit or worth of the changes, which turnout that they may choose to stand in opposition or voice
- Non-rational factors: the feedback of an individual worker to a proposed change is also a function of potentiality and choices which may not necessarily be based on an economic-rational assessment of the change. These may include more personal instances of resistance workers who simply do not wish to move offices, prefer working near a particular friend, or are uncertain of the outcomes of implementing new technology
- Political factors: resistance is also influenced by political factors such as favouritism or "point scoring" against those initiating the change effort
- Management factors: inappropriate or poor management styles also contribute to resistance
In conclusion, other than coming out with a plan that can bring the company to attain a higher achievement, in order to go global (Child 1981), there is still a need for an analytical framework which takes account of all three salient arguments: from contingency, socioeconomic system and culture. Even though culture is always perceived as a mediate processes which stem from contingency and socio-economic system. This mediation processes tend to be particularly important in interpersonal characters or behaviour and authority relationships. Nevertheless, culturally influenced is a norm of both behaviour and social relationships that stem from values that cultivate themselves in a country's institutions as a whole, and these may not only modify the form of its socioeconomic system but also determine that certain predicaments are not socially acceptable.
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