Black & Decker 2015 Annual Report Download - page 22

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the Company is not successful in effectively applying the SFS disciplines to its key business processes, including those of
acquired businesses, its ability to compete and future earnings could be adversely affected.
In addition, the Company may have to reduce prices on its products and services, or make other concessions, to stay
competitive and retain market share. Price reductions taken by the Company in response to customer and competitive pressures,
as well as price reductions and promotional actions taken to drive demand that may not result in anticipated sales levels, could
also negatively impact its business. The Company engages in restructuring actions, sometimes entailing shifts of production to
low-cost countries, as part of its efforts to maintain a competitive cost structure. If the Company does not execute restructuring
actions well, its ability to meet customer demand may decline, or earnings may otherwise be adversely impacted; similarly if
such efforts to reform the cost structure are delayed relative to competitors or other market factors the Company may lose
market share and profits.
Customer consolidation could have a material adverse effect on the Company’s business.
A significant portion of the Company’s products are sold through home centers and mass merchant distribution channels in the
U.S. and Europe. A consolidation of retailers in both North America and abroad has occurred over time and the increasing size
and importance of individual customers creates risk of exposure to potential volume loss. The loss of certain larger home
centers as customers would have a material adverse effect on the Company’s business until either such customers were replaced
or the Company made the necessary adjustments to compensate for the loss of business.
Low demand for new products and the inability to develop and introduce new products at favorable margins could adversely
impact the Company’s performance and prospects for future growth.
The Company’s competitive advantage is due in part to its ability to develop and introduce new products in a timely manner at
favorable margins. The uncertainties associated with developing and introducing new products, such as market demand and
costs of development and production may impede the successful development and introduction of new products on a consistent
basis. Introduction of new technology may result in higher costs to the Company than that of the technology replaced. That
increase in costs, which may continue indefinitely or until and if increased demand and greater availability in the sources of the
new technology drive down its cost could adversely affect the Company’s results of operations. Market acceptance of the new
products introduced in recent years and scheduled for introduction in future years may not meet sales expectations due to
various factors, such as the failure to accurately predict market demand, end-user preferences, and evolving industry standards.
Moreover, the ultimate success and profitability of the new products may depend on the Company’s ability to resolve technical
and technological challenges in a timely and cost-effective manner, and to achieve manufacturing efficiencies. The Company’s
investments in productive capacity and commitments to fund advertising and product promotions in connection with these new
products could erode profits if those expectations are not met.
The Company’s brands are important assets of its businesses and violation of its trademark rights by imitators, or the failure
of its licensees or vendors to comply with the Company’s product quality, manufacturing requirements, marketing
standards, and other requirements could negatively impact revenues and brand reputation.
The Company’s trademarks enjoy a reputation for quality and value and are important to its success and competitive position.
Unauthorized use of the Company’s trademark rights may not only erode sales of the Company’s products, but may also cause
significant damage to its brand name and reputation, interfere with its ability to effectively represent the Company to its
customers, contractors, suppliers, and/or licensees, and increase litigation costs. Similarly, failure by licensees or vendors to
adhere to the Company’s standards of quality and other contractual requirements could result in loss of revenue, increased
litigation, and/or damage to the Company’s reputation and business. There can be no assurance that the Company’s ongoing
efforts to protect its brand and trademark rights and ensure compliance with its licensing and vendor agreements will prevent
all violations.
Successful sales and marketing efforts depend on the Company’s ability to recruit and retain qualified employees.
The success of the Company’s efforts to grow its business depends on the contributions and abilities of key executives, its sales
force and other personnel, including the ability of its sales force to adapt to any changes made in the sales organization and
achieve adequate customer coverage. The Company must therefore continue to recruit, retain and motivate management, sales
and other personnel sufficiently to maintain its current business and support its projected growth. A shortage of these key
employees might jeopardize the Company’s ability to implement its growth strategy.