Concrete Masonry Corporation (CMC), after being a leader in the industry for

over twenty-five years, decided to get out of the prestressed concrete business.
Although there had been a boom in residential construction in recent years, commercial
work was on the decline. As a result, all the prestressed concrete manufacturers
were going farther afield to big jobs. In order to survive, CMC was forced to
bid on jobs previously thought to be out of their geographical area. Survival depended
upon staying competitive.
In 1975, the average selling price of a cubic foot of concrete was $8.35, and
in 1977, the average selling price had declined to $6.85. As CMC was producing
at a rate of a million cubic feet a year, not much mathematics was needed to calculate
they were receiving one-and-a-half million dollars per year less than they
had received a short two years before for the same product.
Product management was used by CMC in a matrix organizational form.
CMC’s project manager had total responsibility from the design to the completion
of the construction project. However, with the declining conditions of the
market and the evolution that had drastically changed the character of the marketplace,
CMC’s previously successful approach was in question.
THE CONCRETE BLOCK BUSINESS
CMC started in the concrete block business in 1946. At the beginning, CMC became
a leader in the marketplace for two reasons: (1) advanced technology of
manufacturing and (2) an innovative delivery system. With modern equipment,
specifically the flat pallet block machine, CMC was able to make different shapes
of block without having to make major changes in the machinery. This change,
along with the pioneering of the self-unloading boom truck, which permitted efficient,
cost-saving delivery, contributed to the success of CMC’s block business.
Consequently, the block business success provided the capital needed for CMC to
enter the prestressed concrete business