CASE STUDY

BLACK AND DECKER INTERNATIONAL: GLOBALIZATION OF THE ARCHITECTURAL HARDWARE LINE

ORGANISATIONAL BEHAVIOUR II

PREPARED BY: KARAN RAI SECTION B ROLL NO. 083

BLACK AND DECKER INTERNATIONAL GLOBALIZATION OF THE ARCHITECTURAL HARDWARE LINE

Introduction:
Black & Decker was founded in 1917. It manufactured and sold a wide line of electric and battery-powered power tools and accessories, household products, outdoor products , locks and hardware , plumbing products , and mechanical fastening systems . It acquired Emhart Corporation In 1989. Mr. Archibald the then CEO of black and Decker had two main criterias and steps to develop a worldwide view towards the markets for the companys products and secondly to reduce drastically the number of models needed to fulfil the global markets. Black Decker's acquisition of the Emhart Corporation was a major change in the product portfolio of the organisation as it brought with it an architectural hardware (locks and locksets ) business.

Structure:
The structure of the organisation had been a mixture of three different components viz. functional units, product categories and geographical units. There were three group presidents under the president and CEO of the company. Each group president headed one of the three divisions Power Tools & Home Improvement, Household Products and Commercial and Industrial products. The power and Home improvement division had 5 divisions divided on the basis of product and geography, each headed by an individual president viz. U.S. Power tools, Europe, Hardware and home improvement, International and Accessories & Fasteners. Under the Europe division, in addition to the full marketing and manufacturing facilities, it was also responsible for sales of households products and for products of the hardware and home improvement division and the power tools accessories division.

International Division:
The international division had the responsibility of two plants manufacturing household products in Brazil and Mexico. It also took responsibility of the sales responsibilities for all company products in the world outside of Europe and the United States. Under the President of the International division Mr. Grunewald was employed as the vice president of product and market development. His main responsibilities were developing strategic plans and working with field managers to develop market research and functioning of the department and the organisation. He was also a critical resource in the top management meeting to set strategic product priorities.

Mr. Grunewald believed that it was important and better for Black and Decker to leverage the companys already established international brand name, distribution channel and base in power tools into housewares and other black and decker products that were not well known. He wanted to move the company from the no-win box of the middle market. As the company progresses towards globalisation there will be an increase in the amount of diversification and complexities in the organisation functioning.

Question1: What do you think of Grunewalds plan for creating a global lock business? What factors favour this action? What factors stand in the way? Answer1: Black & Decker had been very successful in extending and establishing its business globally. The acquisition of Emhart Corporation and its eight brands (which were scattered around the world) depicted not only a set of product and organizational challenges but also opportunities to expand its business and gain more market share. This acquisition could act as a perfect opportunity for the structural and dramatic changes in the organisation along with the increment in the profit and revenue percentage of Black and Decker. Mr Grunewald believed that Emharts acquisition would require black and Decker to restructure all the companies under the Emhart name and the way they will project themselves in the market. Moreover it was important to rethink and come out with strategy to integrate all the companies and businesses under a single umbrella in the global market.

Opportunity: This addition of global lock business will help in diversifying the companys existing portfolio. Mr. Grunewald believed that he would also be helped by the globalization momentum that had won the company favourable publicity. Moreover the already existing solid international base of the company could be used for building a global base for housewares. Mr. Grunewald believed that there was huge potential growth prospects for Black and Decker in the international market as it was growing at the fastest rate of 21% in 1989. The door hardware product industry was bound by old traditions and had immense competition between firms already present in the market. These firms very mainly focusing on three criterias viz. security (from minimal to extreme), systems (from providing internal cylinders, electronic circuit, switches etc.) and technology (from very simple to electronic). None of the existing manufacturers made products that could offer the entire market segments. The integrated company could bring in around $15 billion world market ($5 billion in locksets alone). The consolidation of the companies would improve market knowledge along the dimensions of competition, consumer segments and product requirements. It will enable black and decker

to enable a complacent distribution system around the world. Moreover it will help in setting global quality standards which will help in promoting product innovation and bring a unified force and credibility.

Challenges: There were various factors that would come in the way of making a global lock business. There will be problems in coordinating between the management of the acquired entities with the risk of alienating and loosing some of the key managers. There will also be issues in finishing marketing research, simplifying production design and engineering, rationalising distribution channels and overcoming regional differences. Each of the company working under Emharts management had been operating as an autonomous unit, with its own design, manufacturing, marketing and support functions. There will be a challenge in bringing them together under a single concept and corporate culture so that all the departments are linked together efficiently and effectively. The challenge faced in integrating various companies was not just internal but it was also difficult to implement and conceptualise the global market of their products in different regions of the world. Another challenge was that the companies under Emhart were thought of expanding only in terms of expanding their narrow line abroad without considering the possibility of integrating and sourcing its global production by centre of manufacturing and design expertise or manufacturing vs. assembly operations. This narrow approach had led to a weak overseas business in Asia, Latin America, the Middle East and Africa. There was a need to change this and maintain a good and strong business in the above mentioned continents.

Question 2: What are the organisational implications of this strategy? What kind of structure, culture, and systems are necessary to make it work? What would be your action plan for implementation? Answer2: The first implication will be to pull the former Emharts entities into an integrated operation. Organisational structure is represented in the organisational chart. The already existing char shows that the structure is mainly classified on the basis of geography and functions. There is hierarchy within the organisation. There are three main components of the organisational structure: 1. It should designate formal reporting relationships of the managers and supervisors along with the number of levels in their hierarchy and the level of control. 2. There should be proper distribution of individuals into different departments and the departments into the organisation.

3. There should be effective communication, coordination and integration across all departments. The organisational structure should be designed to provide both vertical and horizontal information flow. Vertical flow is necessary as there are so many companies and departments which will help in enabling control within the organisation. There should be centralised decision making within the organisation. Some horizontal linkage is required within the different departments in order to improve communication and coordination. As the product road bashing took place continually among product managers at the same levels in the organisation but in different groups in different parts of the world. If there will be some horizontal linkage there will be more sharing of information and ideas among managers which will help in reaching organisational goals more effectively. There should be a functional horizontal linkage structure within the organisation.

Culture: Organisational culture plays a vital role in improving the organisations effectiveness. It is defined as a set of values, rules and regulations that control the attitude, behaviour and interactions between members of the organisation. Black and decker should develop a culture which would be a unique combination of its management philosophy, management practices, relationships and the approach of coping with change. This should further be imparted to all of its companies across the world. Since it has offices across the world the culture has to be kept keeping in mind the values of all the employees. It should develop a clan culture which will provide loyalty, conventions and teamwork. Since there is an acquisition of another organisation so the employees already working in that organisation need to develop their loyalty towards black and decker only then they will be able to work effectively and efficiently. The employees should be such that they are willing to extend their obligation beyond their employment contractual duties and timings.

Systems: Open-system theory consists of the idea that some organizations are constantly interacting with their environments and offers several different possibilities of developing alternative design for organisations. An open-system organization is not passive. Black and decker follows an open systems approach. It reaches out, draws energy from the environment, and tries to shape the environment. Open-system organizations usually follow a simple cybernetic model of input -- throughput -- output, with special emphasis on throughput (how to change the inputs or alter and use the energy imported) and output (recurrent cycles of quality service to consumers). Black and decker should mainly focus on these three subsystems. A value and goals subsystem (culture, philosophy, overall organisational goals, group goals and individual goals), decision and control subsystem (goal setting, planning, organising, implementing and

controlling) and Social sub-system (communication, interpersonal relations and human resources). Question 3: Assume you were Grunewalds OD consultant. What coaching advice would you have for him in executing the strategic change? Answer: As on OD consultant I would suggest him to follow the Lewins planned change model. The systems model incorporates Lewin's planned change model comprising of three phases of change. The first phase (unfreezing) involves awareness of a need to change. It can be done by introducing information that shows discrepancies between behaviours desired by organisational members and those which are currently shown by the members. This can be related to the differences in the behaviour of the Emharts already existing employees and the expectations of the Black and Decker.

The second phase (changing or moving) involves the exploration and testing of new ways of doing things. This enables to shift the behaviour of the organisational members to a new dimension and level. It enables the change through developing new behaviours, values and attitudes by changing and developing the organisational structure and processes. As there will be changes taking place in Black and Decker in terms of structure and processes, Mr. Grunewald should focus on this stage for the change in behaviour and attitude of the employees in sync with the organisational goals and objectives. The third phase (refreezing) involves applying the new behaviour if it is evaluated well. It enables the organisation to reach at a new level and equilibrium that is accomplished through the new adopted culture, practices, processes, structures and norms. After all the changes in the organisation as described in the strategy of Mr. Grunewald, the organisation should be able to reach a new state of equilibrium. In this way a systematic approach could be used to

study the whole change in the organisation. This should help him to divide his strategy into three stages and implement and measure them accordingly.

In addition to the coaching advice I would also like to point out to him: The local champions in each factory location have mainly a liason role between the company and on the ground managers. Rather that that, he should train the existing heads of those lock factories to take care of that role. The company has already been functioning under the same head for a long time, so there should be a training programme for all the heads at the head office so that they could learn the culture and the work ethics of Black & Decker. It will be easy for the employees at the factories to learn and work with the head rather than a new local champion. There should be a marketing manager for Japan Operations as well. This will make the work and flow of information more systematic and effective. It will be difficult for the group product manager to cater to all the Japanese personnel. This could also lead to a conflict between the other marketing managers and sales personnel as in the case of absence of a on the ground manager for Japan will make them feel inferior. I would advise him that it is important for the managers at Black Decker to keep on measuring the performance of different parts of supply chain. The planning and information activities should be performed by the operations managers and senior executives if they have an up to date information regarding the performance of different supply chain firm, stake holders and the resources.