Business segments of Stanley Black & Decker
Stanley Black & Decker (SWK) markets its products through three business segments: Global Tools & Storage, Security, and Industrials. The Global Tools & Storage business provides tools and accessories such as electric drills and bits, grinders, saws, wrenches, nail guns, and staplers. The security unit provides equipment and services for door access and electronic surveillance and monitoring. The Industrials segment provides application-specific fasteners for the automotive industry. The company recently reclassified its tools and storage business. Now let’s understand the business rationale behind the change.
Why did Stanley Black & Decker reclassify its business in 2015?
Stanley Black & Decker (SWK) reclassified its Construction & Do It Yourself (or CDIY) and Industrial & Automotive Repair (or IAR) segments in 2015 as one business unit called the Global Tools & Storage. The IAR unit was previously a part of the industrial tools segment. The reclassification was based on shared commonalities and growth the businesses could achieve as a single unit.
The reclassification was thus an exercise in realigning the organization with the market arrangement. 70% of the customers and 80% of the products in these two businesses were common. But to be certain, the company tested the theory in the US and the European region in two separate phases. The pilot established a growth improvement of 100% from 5% to 10% in the integrated teams and paved the way for a formal integration.
Introduction to the Global Tools & Storage segment
The Global Tools & Storage is the largest business unit of Stanley Black & Decker (SWK), contributing to 61.6%, 62%, and 63.9% of total revenues in 2013, 2014, and 2015, respectively. In dollar values, these correspond to $6.7 billion, $7 billion, and $7.1 billion in sales for the respective years. Products sold under the segment can be classified into three categories: Power Tools, Hand Tools, and Storage equipment. The company sells its products primarily through retailers, hardware stores, and mass-merchant distributors.
The Power Tools unit added $4.9 billion to company revenues or 69% of total segment sales in 2015. Hand Tools and Storage were responsible for the remaining 31%. The segment serves the construction (XHB) and industrial (XLI) markets and competes with Snap-on (SNA), Bosch (BSWQY), Makita Tools (MKTAY), and Hitachi (HTHIY) via 12 brands.