Skil Corporation Case Analysis Essay

1202 Words Apr 19th, 2012 5 Pages
Skil Corporation
The acquiring company Emerson had a strategy of producing low cost and high quality products. It started on a program of acquisitions to meets its aggressive goals of growing sales 15% annually. It had acquired only financially successful companies. But in 1979, it acquired Skil Corporation, a financially mediocre and low performing company for $58 million. Skil was a leading manufacturer of portable power tools serving the professional and consumer markets, the circular saw being the strongest and best seller amongst those tools, which it also invented, and was amongst the top three in power tools market share holdings in U.S. Other power tools that Skil manufactured included mid-priced drills and roto hammers. Skil
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Some imp points • • • • • • • • • In 1979, portable electric power tools accounted for the majority of industry volume. A typical company product line consist of about 200 tools + accessories. A typical manufacturer had 15 models. Major use were woodworking, metal working & automotive repairs. Power tools divided as professional ( industrial) and consumer tools. Now, difference between consumer and professional tools were blurring. Both were being used interchangeably, in developing world. Powerful battery backed wireless consumer tools were emerging. Available lighter material reduced cost greatly. Design development of new tool took 3 years at a cost $450000 average a year. Mfg a new model took 500000$ average,

Buyers



Professional were very knowledgeable about tools and concerned with performance quality durability. Less concerned about Brand name. growing at 8% a yr. Consumer were hobbyist and do-it-yourselfers. More price conscious than professional. Fond of cordless tools. Major US Europe japan. In Europe tools used for concrete and in US for Wood.

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The major costs for consumer tools Material cost Final assembly Major Costs for Professional tools Material Machining

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With automation the cost get reduced by 5% With automation, more capital is needed and more sales are required to be break even.

Competition • More than 70 manufacturer worldwide. 20 in US. Rest in Europe and

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