International Business-Comparative Management
The report length guideline is approximately 3000 words. Assessment criteria: ; Critical analysis and evaluation of international strategies in relation to theory and literature, the latter to include relevant and up-to-date journal articles. ; Well argued coherent recommendations and conclusions relevant to the case under scrutiny and the questions set. ; Appropriate standards of presentation. Please note the Importance of underpinning your answers with appropriate theory, derived from journal articles. You must use the Harvard referencing system to cite all bibliographies accessed via the electronic library.
The following case study is based on the Black & Decker case study in Hill, C. (2007), International Business: Competing in the Global Marketplace, 6th edition, NY: Mac Grab Hill: Strategic and organization change at Black and 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 asses had become a small multinational company with operations in Canada and Britain. Today the company has two well-known brands, Black & Decker consumer power tools and its Dealt 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 asses and asses 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.
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As a result, by the early asses, 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 a decentralized organization. In its 1979 annual report, the company described how, "In order to be effective in the market place, 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 its own business.
By the mid-asses, however, this structure was starting to become untenable. New competitors had emerged in the power tool business, including Busch, Making, and Panasonic. As a result, Black & Decker's monopoly position had eroded. Throughout the asses, the company pursued a strategy of rationalization. Factories were closed and the company unconsolidated production in fewer, more efficient production facilities. This process was particularly evident in Europe, where different national operating companies had traditionally had their own production facilities.
As the company noted in its 1985 annual report, "Globalization remains a key strategic objective. In 1985, sound progress was made in designing and marketing products for a worldwide market, rather than Just regional ones. Focused design centers will ensure a greater number of global products for the future.... Global purchasing programs have been established, and cost benefits are being realized. " During this period, while the company maintained a number of design centers, it cut the number of basic R&D centers from eight to Just two.
The autonomy of individual factories also started to with each other for the right to produce a product for the world market. Major decisions about where to produce products to serve world markets were now being made by managers at the corporate headquarters. Even so, national subsidiaries still maintained a fair degree of autonomy. For example, if a national subsidiary plopped a new product, it was still likely that it would get the mandate to produce that product for the world market. Also, if a national subsidiary performed well, it was likely to be left alone by corporate management.
By the asses, however, it was clear that this change had not gone far enough. The rise of powerful retailers such as Home Depot and Low's in the United States had further pressured prices in the power tools market. Blacker & Decker responded by looking for ways to garner additional manufacturing efficiencies. During this period, Black & Decker shut down overall more factories in its long-established subsidiaries and started to shift production to new facilities that it opened in Mexico and China. As this process proceeded, any remaining autonomy enjoyed by the managers of local factories was virtually eliminated.
Corporate managers become much more aggressive about allocating products to different factories based on a consideration of operating costs. In effect, Black & Decker's factories now had to compete with each other for the right to make products, and those factories that did riot do well in this process were shut own. In 2001, Black & Decker announced yet another restructuring initiative. Among other things, the initiative involved reducing the workforce by 700 people, to 4,500, shutting long-established factories in the United States and Britain, and shifting production to low-cost facilities.
By 2004 this process reached a logical conclusion when the company reorganized its power tools business into two separate global divisions-?one that was charged with the global development, manufacture, and marketing of Black & Decker power tools, and another that was charged with the name for the company's professional Dealt brand. At this point, the company operated some 36 manufacturing facilities, 18 outside of the United States in Mexico, China, the Czech Republic, Germany, Italy, and Britain.
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