Strategic Management and Leadership of Black & Decker

Introduction 

Stanley Black & Decker (SWK) is a fortune 500 company and a leading toolmaker in the world. The company offers a variety of products that serve primarily in the industry of construction and the end markets of automobiles. Hand, power, garden, mechanical and hydraulic tools are what the company offers (Black, 2016). The company was founded in the year 1843 but proceeded to change its name to Stanley Black & Decker after it merged Black & Decker in the year 2010. The company has realized significant success since its merger all courtesy of its strategic management and leadership. 

Company Success Data 

The main aspect of the company success if the growth that the company has seen or rather experienced since it was formed. The success story lies primarily on the merger it made. Stanley Black & Decker was called Stanley Works Company before the merger (Black, 2016). It operated as a manufacturer of hand tools and equipment of construction earning a revenue of $3.7 billion in the year 2009 (Black, 2016). The target company by the name Black & Decker was a provider of power tolls and made $4.8 billion in the year 2009 with 73% of that amount coming from its business in power tools, 11% from solutions of fastener and the rest from home improvement and hardware business (Black, 2016). 

The two experienced a little overlap in their individual businesses despite being in the same industry. Therefore, the Competition Commission of the EU proceeded to approve of the merger and saw the deal materialize in March of the year 2010. The deal saw Stanley Works acquire Black & Decker in the stock swap that was valued at $4.5 billion. Black & Decker saw their shareholders receive 1.3 shares of Stanley for every share that Black & Decker had with an implied premium of 22% (Black, 2016). The decision of the company was based on the synergies of expected cost that stood at $350 million or rather 7% of the annual sales of Stanley Works. Stanley Works further expected the potential revenues synergies that came from the opportunities of cross-selling to expand the reach of the distribution of product of the combination (Black, 2016). 

Stanley Works was found by Frederick Stanley as Stanley Manufactory that was in concert with his brother in the year 1843. It attained the name Stanley Works in the year 1852 after receiving the charter of incorporation from the Connecticut state, The Company began with a capitalization of $30000 having made annual revenues of $ 7323 and $23371 in the years 1853 and 1854 respectively ( Cohen, 201) . The company attained significant revenues towards the end of World War 1 that saw the numbers increase from $480000 in the year 1872 5o $11 million in the year 1919 (Black, 2016). The company picked up a number of companies along its way rewarding shareholders via returns on dividends. However, the company underwent a serious event of rehab after the Great Depression. The performance of the company after World War 1 up to the 1960s was slow following the industries in manufacturing and construction suffering heavy losses during the depression. However, the fortunes of the company reversed when the company realized annual sales of $2 billion in the year 1992 ( Cohen, 2010) . 

Black & Decker was started by Alonzo Decker and Duncan Black in the year 1910. It started producing the power tools in the year 1916 and became the leader in that line courtesy of aggressive strategies of sales, acquisitions and widening the product offering by the 1950s. The company acquired Dewalt that is a leading player in the high-end power tools to date ( Cohen, 2010) . The company experienced a significant kind of stagnation from the 1990s to the early 2000s. It was eventually merged with Stanley Works in the year 2010 forming the Stanley Black & Decker Company. The combined sales summed up to $11.1 billion in the year 2015 with its key competitors being Illinois Tool Works and Tyco International as well as Snap-on in North America (Black, 2016). 

Reasons for the success of the company 

The company is successful because it employs innovation as its core strategy in business and as such always has something new to offer the market 

The management allows the employees to solve problems and as such problems get solved immediately without having to follow bureaucracies 

The company trains its associates from the time of inception and as such never has an employee or leadership vacuum 

The merger saw the company saw it gain more financial support and workforce making sure the company does not struggle to handle orders 

The company has diversified its enterprises into many tools and as such always has a customer base to feed 

The business understands the market and as such has localized its manufacturing making sure people believe it to be the best manufacturer hence acquire products from it 

Segments in the Company 

Stanley Black & Decker proceeds to market its commodities using three segments of business: Global Tools & Storage, the security and the industrials. The Global Tools & Storage business is responsible for providing the tools and accessories like electric drills and bits, saws, grinders, wrenches and nail guns as well as staplers. The unit of security offers the equipment and services for the door access and the surveillance and monitoring that is electronic. The segment of industrials offers fasteners that are specific to application for the industry of automotive. The company has recently reclassified its storage and tools business. Below is a chart ensuing the rationale behind the sudden reclassification. 

Power Tools $4.9B	Hand Tools & Storage $2.2 B
Professional  Consumer	Accessories  Construction  Industrial/Automotive
Current Business  Plus 8% Organic Growth  Operating Margin of 16.4%  9.5 Working Capital Returns Broad & Deep Footprint in Geography  Market Share Position across the Hand and Power Tools business	Since merger in 2009  $2.1 B plus Organic Growth  $400 M plus of the Revenue  New Product Revenue  Operating Margin plus 700 Bps  WCT

Strategies Capabilities of Stanley Black & Decker to Success 

Segmentation 

The company reclassified its key segments, the Construction and Do it Yourself and the Industrial & Automotive Repair in the year 2015 into a single unit of business called Global Tools & Storage, The IAR was before the segmentation, part of the tools segment in the industrial sector. The reclassification depended on the shared commonalities and growth of the businesses that could be attained as a single unit. Therefore, reclassifying the segments ensured a realignment of the organization with the arrangement of the market where 70% of clients and 80% of products in the two businesses were common (Black, 2016). The company proceeded to test the theory both in the US and in Europe in two distinct phases. The pilot revealed an improvement rate of growth of 100% from 5% to 10% in all teams that were integrated paving way for the formal integration (Black, 2016). 

The largest unit of business in the Stanley & Decker Company is the Global Tools & Storage with a contribution of 61.6%, 62% and 63.9% of the total revenues realized in the years 2013, 2014 and 2015 respectively (Black, 2016). The values relate to 6.7, 7, and 7.1 billion dollars when valued in dollars of the sales in the respective years. The sold products under each segment can be categorized into three namely Power Tools, Storage Equipment and Hand Tools. The primary means by which the company sells its products is retailers, hardware stores and mass-merchant distributors. 

The unit of Power Tools increased the company revenues by $4.9 billion or 69% rather of the total sales of the segments in the year 2015. The hand tools and the storage tools made the 31% that remained (Black, 2016). The segment provides for the markets in construction and industrial competing with Snap-on, Makita Tools, Hitachi and Bosch through twelve brands. 

The Capabilities of the Stanley Black & Decker company has been analysed using the VRIN table.

	V	R	I	N
Innovation	Yes	Yes	Yes	No
Local Manufacture	Yes	Yes	No	No
Variation of Product	Yes	Yes	No	No

Innovation 

Another strategy that the company employs is innovation and as such the company initiates innovative programs to ensure that all its innovations are above standards. The company launches at least 1000 products per annum at an average of three every day. Approximately 100 of the products have features that no other firm has ever launched. 

The company has special-forces breakthrough team of innovation that is modelled to fit the characteristics of the Silicon Valley start-ups (Black, 2016). The team is tasked with the responsibility of carrying out the disruptive ideas via a fast experiment and accelerated prototyping of the ideas in a bid to create leading innovations in the market. Therefore, it is only fit that the company comes at position eight in the list of the most innovative companies of consumer durables in the world. 

Local Manufacturing Strategy 

The tool market in the US provides the best possible margins across all the regional markets in the world. The Stanley Black & Decker not only stands at the top of the market in the US but further elaborates its numerous strategies in consolidating its share in the lucrative market. The company has a number of campaigns launched to capitalize on the segments against the outsourcing of local manufacturing among the companies in automotive and industrial sector. Such entail the American Pride Tour that takes place in a total of thirteen markets within the United States and inviting the customers to manufacture the Dewalt drills in its factories. 

It is imperative that the campaign be preceded by a good example and as such the company has made 40% of its power tool manufacturing local in the United States (Black, 2016). In terms of percentage, the value is at least six to seven times larger than the competitors in the market. The customers make the tag “Made in the US” equal with both quality and trust and this allows the company to sell its products at a premium. The accretion of the higher margins make it possible for the company to propose localization and further make the same happen regardless of the it being expensive. 

The segment of Global Tools & Storage is both the largest and one with highest margins in the company with its margins growing by 220 points of base in a span of two years from 14.2% in the year 2013 to 16.4% in 2015 (Black, 2016). The observed increase in the margins came about because of the higher volumes and prices realized on the side of revenue and enhancements of benefits from productivity on the side of costs. The figures of the margin were compared to the toolmakers based in the US such as the Snap-on Tools Groups that have their margins increased from 14.3% in the year 2013 to 16.3% in the year 2015 (Black, 2016). The margins were the lowest for the competitors having high exposure to the emerging markets that were extremely sensitive to prices and market externalities. 

Variation of Product 

The Stanley Black & Decker company employs the strategy of a product mix to increase the security of the business. The company experienced a steady decline in the past four years with its sales falling from $2.4 billion in the year 2012 to $2.1 billion in the year 2015 (Black, 2016). The key factors contributing to the decline in the sales were the external factors like weaknesses observed in the housing industry in key markets in the region and an unfavourable translation of currency in the year 2015. The poor conversion seen in the recurring service as well as monitoring business in Europe further contributed to the decline. The images below show the overview of the business courtesy of the strategy 

The company has its sales under the security solutions that are split between the mechanical access solutions and the convergent security solutions. Approximately 29% of the sales in security came from the mechanical access solutions whereas the convergent security solutions raked in the rest (Black, 2016). 

The MAS business offers solutions to electronic locking like the keyless entries and automatic doors. The CSS as a business unit deals with electronic surveillance having half of its sales emanating from the lucrative service and contracts of monitoring. The security solutions exist in an industry that is highly fragmented with many companies specializing mainly in parts of the broader offerings of the products having no presence in the security market of electronics ( Cohen, 2010) . The company is a key player in the electronic surveillance and assumes a second position in the security market of commercial electronics. The company enjoys a market share of 2% with complete seven percentage points trailing the Tyco International that is the leader in the industry (Black, 2016). 

The Stanley fulfilment system is the way of life for the company and it stands as a mind-set for the company in terms of how innovation works in the place. It is a means of working towards delivering the best to the customers. It entails more than the efficiency in operation or manufacturing. The SFS is the competitive edge of the company because it propagates the culture of business in order to achieve excellence in satisfying the clients ( Heinick, 2010) . The SFS offers the much needed tools to attain the objective of the business via involvement of all employees. 

The SFS works in a systematic way through the S& OP, Order-to-cash-excellence, global management of supply complexity of reduction and operational lean. 

S&OP 

The segment deals with checking to ensure that demand and supply are met and in substantial proportion or amount rather ( Rae, 2015) . It further ensures proper panning of capacity and making of decisions. 

Order-to-Cash-Excellence 

The particular area does well to handle all company receivables maintaining a balance between received orders and that amount that can be handled by the company. 

Global supply management 

The sector deals with solidifying the relationships of suppliers and partaking that the company is involved in social and environmental responsibility ( Rae, 2015) . 

Complexity reduction 

The sector ensures there is proper checking and maintenance of the SKU efficiency as well as the platforms of the products. It does well to foresee that the proper arrangements are made to make sure the company is in check with both demands and supplies in the most efficient manner possible for the firm. 

Contribution of Leadership to the Company 

The leadership at Stanley Black & Decker that is a giant in $8billion tools strive for innovation. It is thus an innovative style of leadership that has contributed greatly to the innovative tools that the company develops every year. John Cunningham, the president of the group of consumer products at the Baltimore Company insists that Black & Decker has at least two kinds of leadership styles. One, the company has a breakthrough innovation team under a leader that concentrates specifically on the “longer track” that entails the largest prospects and are more risky ( Cohen, 2010) . The company has capabilities of prototype and access to various universities that allows them to break through numerous challenges the company stands to face in its cause. The team managed to develop ideas on ten projects with one becoming a product to be launched in the forthcoming years and one that is highly revolutionary and will take at least four years from the market conception. 

The second kind of leadership that the company enjoys is a tack called Total Innovation that allows the employees in areas of finance, engineering, marketing, legal and other departments to take part in projects of innovation that are evaluated as a science fair in every six months. The leadership gives certain guidelines then lets the team of employees to proceed with solving the problem by coming up with innovative ways of doing things (Black, 2016). It allows the engineering team a certain amount of incentive that makes sure they facilitate whatever innovation they come up with and ensure it becomes a major success once it is done. 

Connecting People 

Perhaps the main contribution that the leadership of the company offers to the company is the connection with people. As Cohen (2010), insists, it is hardly just about tools being connected but rather people. Innovative companies have found a way of connecting everything that ranges from cars to jet engines and thermostats in a bid to offer more functionality and improved services. Stanley Black & Decker stands as the largest manufacturer of tools and is currently in the process of building a new generation of tools that are properly connected so that they may help the company connect with people ( Rae, 2015) . The result will be the ability to have every customer work better and smarter. The leaders of the company have enabled the Salesforce1 Customer Platform in order to help achieve the move. 

Technology has changed everything from expectations of service and products to speed. The Salesforce1 Customer Platform enables the building of smart tools and some that are of great ingenuity ( Rae, 2015) . The company through its leadership has seen a great opportunity in the salesforce1 and as such has decided to explore the opportunity in order to appreciate every sale they make and also encourage the employees to be more vigilant in their processes and innovations to meet certain key standards that allow the company to thrive ( Cohen, 2010) . The management of the company places great emphasis on the provision of services to the customers as it is a major priority for the company to offer consistent high quality in services. 

Detailed Analysis 

Competitive Advantage 

The above analysis insists that the company has great competitive advantage in areas of innovation and diversity of products. The company offers a number of products to the clients and as such manages to get multiple clients making sure it is always in business even when a particular enterprise is facing a scuffle in the market. The value chain evaluation insists that the company is well organized and as such allows review at all levels in the company making sure it meets its obligations and satisfies the customers. 

A high Benchmark for Innovation 

Stanley Black & Decker (SWK) is a fortune 500 company and a leading toolmaker in the world. The company offers a variety of products that serve primarily in the industry of construction and the end markets of automobiles. The main aspect of the company success if the growth that the company has seen or rather experienced since it was formed. The success story lies primarily on the merger it made. Stanley Black & Decker was called Stanley Works Company before the merger. Stanley Black & Decker markets its products using three segments of business: Global Tools & Storage, security and industrials. 

The Global Tools & Storage business is responsible for providing the tools and accessories like electric drills and bits, saws, grinders, wrenches and nail guns as well as staplers. The company through its leadership has seen a great opportunity in the salesforce1 and as such has decided to explore the opportunity in order to appreciate every sale they make and also encourage the employees to be more vigilant in their processes and innovations to meet certain key standards that allow the company to thrive. 

Leadership Development Program 

The Stanley Black & Decker company has institutionalized a leadership program that is comprehensive in its cause and one that is based on competency and designed to develop the future generation of the company ( Black & Decker, 2017) . The program is multi-year and offers a great potential and the associates in the early careers an opportunity to complement work experiences of great quality courtesy of the exposure to challenging experiences in the processes of learning and development ( Cohen, 2010) . The participants are able to build a great foundation for their careers that prepares them for a successful career in leadership with the Stanley Black & Decker company in various tracks. 

The key areas where associates from these training programs can dwell in include the operations or supply chain area, marketing, finance, information technology, engineering and human resource management ( Heinick, 2010) . The major contribution by the leadership of the company through the leadership program is the instilling of key values in the associates that will become the leaders in the company in the future hence ensuring its perpetuation. The members of the program sharpen their skills and end up becoming developed in their skills as they acquire tools that can drive them as leaders. The members further join a cross-functional team of associates and participate in the blended approach of learning where they acquire and develop skills in networking and experimenting arrangements of learning as well as taking part in activities of team building ( Heinick, 2010) . The key areas where the members become sharpness include excellence in commerce, breakthrough innovation, a core Stanley system of fulfilment, functional transformation and digital excellence. 

Problem with the Company 

Problem 1 

It is observed that the company has a good set of strategies in place that allow it to succeed in its cause. However, it lacks a proper method of customer relationship as most of its strategies though customer-based, no not deal with the customer but rather depend on resolutions made by the company. 

Problem 2 

Apart from the strategies being far from customer-based, the company has a serious problem with reachability. The problem is not an issue per se but stands as one because its stands to hinder the company from expanding into other territories. The firm has localized its manufacturing and as such has maintained a good profile especially with the local customers that firmly believe a local manufacturing company is the best when it comes to the kind of tools the company deals in and with. However, other nations may not really feel this as such. 

The company will face a serious challenge advocating to other nations that may feel the need to have products from its own manufacturers. The problem is thus going to make the company be unable to extend into other countries and offer the services and products to the other customers that are far from America. 

Recommendations 

Recommendation 1 

In regards to the problem above, it would be best for the company to employ a team that will be responsible for relating with the clients. The team will use social media and sometimes door-to-door talks with its major clients in a bid to seek means of improving the products in terms of design and preferences as per the wishes of the customers. 

The company needs to allow itself a strategy that sees it connect with the customers. Such strategies could include the allowance to have custom-made products for clients. The customers will be able to share their designs with the company and as a result the company will realize what the market craves to have and this will do well to boost its morale and innovation. 

Recommendation 2 

The company can solve the issue of being reachable by expanding branches into a variety of countries. It should thus have distribution branches that will serve to act as the customer bases for any clients abroad that need services such as confirmation, consultation and complaints. The company by having its branches will ensure to make it become bigger and thus obtain a stringent regiment that will make it have the best of the best in terms of sales and accessibility of market. The company by having the branches will make sure that more customers have reliance on it and are able to access it better. 

References 

Black, S. (2016). What You Should Know about Stanley Security's Business Mix - Market Realist. Marketrealist.com. Retrieved 6 December 2017, from http://marketrealist.com/2016/04/know-stanley-securitys-business-mix/ 

Cohen, L. M. (2010). Physical assets in the M&A mix: a strategic option. Journal of Business Strategy , 31 (6), 28-36. 

Heinick, R. (2010). Overcoming Merger Risks. Retrieved October , 4 , 2011. 

Rae, J. (2015). Design Value Index. Design Management Review , 26 (1), 4-8. 

Stanley Black & Decker. (2017). Two paths to innovation at Stanley Black & Decker - Innovation Metrics - Innovation Leader. Innovation Leader. Retrieved 6 December 2017, from https://www.innovationleader.com/two-paths-to-innovation-at-stanley-black-decker/