Question

Using the strategic approaches described in CAPSIM, how would you characterize Black & Decker’s international expansion during the 1950’s and 1960’s? What strategy was the company pursuing? What was the key feature of the international organization structure that Black & Decker operated with at this time? Do you think Black & Decker’s strategy and structure make sense, given the competition at that time?

Answer 1

During the 1950’s and 1960s, this is the strong expansion in the power tools market of Black & Decker because this company had a “strong brand name and near-monopoly share of the consumer”. Black & Decker was the first company to sell and develop the products of handheld tools for crafting and support people to make changes by themselves. The company focused on differentiation strategy which is the strategy that aims to distinguish a product or service, from other similar products, offered by the competitors in the market (Business Jargons, 2019). By using differentiation strategy, it was easy for Black & Decker to expand their products internationally and “set up their own subsidiaries in a nation and giving them the right to develop, manufacture, and market the company’s power tools”. Black & Decker left their competitors far behind because of their pioneer.

Taking the advantages competitive at that moment, Black & Decker expanded their business internationally to get the opportunities in order to develop the power tools. To be more specific, Black & Decker utilized a wholly-owned subsidiary because according to Will Kenton, 2019, “a wholly-owned subsidiary is a company whose common stock is 100% owned by another company, the parent company. Whereas a company can become a wholly-owned subsidiary through an acquisition by the parent company or having been spun off from the parent company, a regular subsidiary is 51 to 99% owned by the parent company. When lower costs and risks are desirable or when it is not possible to obtain complete or majority control, the parent company might introduce an affiliate, associate, or associate company in which it would own a minority stake”. The key feature of this company is to be wholly-owned subsidiaries operated with the decentralized organization which enables the company to make its own business and subsidiaries. Wholly owned subsidiaries helped the company to hire their own staff to manage the whole firm and Black & Decker will be protected by the parent's company due to the fact that “the parent company may apply its own data access and security directives for the subsidiary as a method of lessening the risk of losing intellectual property to other companies” (Will Kenton, 2019). Moreover, when applying this feature to the company, Black & Decker can improvise any unexpected actions that happened to the company without a mission from the parent company.

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