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ON TOOLS CORPORATION
lntroduction
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Snap-on Tools is the world's Iargest manufacturer and
distributor of tools and related service items for professional mechanics. Its principal products are hand tools,
including wrenches, screwdrivers, hammers, and similar
products, as well as pneumatic impact wrenches and chisels, power-assisted drills, tool cabinets, and electronic automotive diagnostic equipment. In all, 12,000 different
products are manufactured by Snap-on. These products
are used primarily for automotive service and maintenance, but they are also used in manufacturing and other
repair and maintenance activities.
Company History
The history of Snap-on Tools begins in 1919. The nation
was recovering lrom World War I and many tactories
were attempting to shift from military to cMlian production. One of these factories, American Grinder Manufacturing Company based in Milwaukee, had just promoted
an employee to manager of the socket division. This division was in the business of making one-piece wrenches
(see Exhibit 2),
572
incorporated.
During the depression, Snap-on salesmen introduced two new sales strategies that kept them (and the
company) from sinking. The first idea, still rather novel at
that time, was referred to as time payrnent selling-that is,
extending credit and accepting monthly payments. The
Company
History
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second ideawas so successful that Snap_on Tools adopted
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Case
salesmen with cars loaded with tools and mechanical accessories. In effect, their cars and trucks became both
need by matching manufacturing with marketingdeveloping a myriad of new and innovative products and
marketing them aggressively through its dealers. As market share and profits grew, Snap-on was one of the first
U.S. companies to own its own mainframe computer for
order processing and inventory management, With this
strong grounding in manufacturing, marketing, and distribution, Snap-on was well prepared for the 1970s, and
the next ten years would show the biggest growth in the
history of Snap-on. Between 1969 and 1973 sales doubled; between 7973 and 1979 sales doubled again to $373
million.
In the early 1980s a recession led to a significant decrease in demand for new tools and, hence, sales growth
slowed during the first few years of the decade. Then in
the mid-l980s sales picked up so that, by 1989, salcs had
more than doubled over the 1980 level.
standard of customer service that is unique in the industry. The dealers bring a wide assortment of products directly to the mechanics in their places of business, when-
The independent dealers replenish their inventories, usuallyweekly, from the branch inventories. Because
managers,
re-
DiscussionQuestions b7b
ment with its dealers, They are required to sell only Snap_
on products and no other competitive or even comple_
mentary products. Third, Snap-on expects dealers to
carry a full assortment of Snap_on products in their mo_
bile vans so that customers are provided with high levels
of selection and choice in tools and equipment. Finally,
Snap-on supplies much of the inventory to its dealers on
a consignment basis whereby the clcalers do not have
to
pay for an item until ir is sold. Snap-on believes that
this
Discussion Questions
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