Case Study Notes Essay

Submitted By tdashman
Words: 559
Pages: 3

Situation Analysis Internal Factors: * BD virtually created the power tools industry in the 1900s, maintained #1 share position in position in consumer and professional industrial segments, its entry in the relatively new P-T segment held a 9% share. * Trade was asking for advertising allowances and rebate money on BD tradesmen products, profit was near 0. * Research studies showed BD to be among the brand names of the world, tools being highest quality * BD was the world’s largest producer of power tools * P-T segment was growing fastest at 9% compared to a 7% growth rate for consumer and none for professional industrial * Drills, saws, and sanders represented nearly 80% of the total sales in P-T * P-T revenues at approx. $35 mil. In 1990 for BD translates into $3 mil. In operating income, gross margins ran about 35% but SG+A costs were about 25%

External Factors: * Top 3 manufacturers offered broad product lines at approx. 175 sku’s each * Since its entry in the P-T, Makita had staked out leadership positions in virtually all products and distribution types * P-T shares: Makita 50%, Milwaukee 10%, BD 9%, Ryobi 9%, Skil 5%, Craftsman 5%, Porter Cable 5%, Bosch 3% * “you just have to stay away from that BD” * Some people viewed BD as home use rather than on the job * There had been instances of BD product designed for at home use being subjected to demands of the job site and failing * Typical tradesmen working in residential construction had about $3000 invested in about 10 or so tools * Spend an average $1000 per year on replacements

Competitive Analysis * “I give Makita 10 ft of space I give you 10 ft of space. They outsell you 8 to 1.” * Makita Electric of Japan had practically taken over the professional power tools for tradesmen business. Late 1990s Makitas success in P-T segment was such that it held 80% in cordless drills, 50% share overall. * Survey showed BD’s brand strength ranking #7 in the US and #19 in Europe * 1990: portable power tools in the US was a $1.5 bil. Market * BD brand power tools held nearly a 30% share of the US market overall * Knowledgeable decision makers viewed BD offering high quality products and