Group 1

. ‡ Terminate or significantly restructure the agreement with Blackstone. ‡ There are problems which are fixable.1) What should CMR do about the Blackstone account? Alternatives available ‡ Hold on as it is as the problems are not unusual and will be sorted out in a sometime.

Solution ‡ Identify the areas of conflict ‡ Better flow of information by making InfoCentral an integral part of the information flow ‡ Get in touch with the other workers of the sub contractor in order to minimise the changes made due to misfit with other works ‡ Lay down a billing policy for the changes that have to be made depending on the past trends .

2) Profit generation by Commercial relative to Residential business .

2) Profit generated by Blackstone .

3) CMR relationship with Blackstone in retrospect ‡ Yes. it was a good decision ‡ It provided CMR with a constant flow of work in a seasonal industry ‡ It was as ambitious as CMR in its growth ambitions ‡ It had grown to be the largest homebuilder in 2 years so had a promising future for business for CMR ‡ Provided great volumes of work .

customised wood work for banks and doctors offices and other buildings. ‡ Project cycles were four to six weeks .4) Nature of CMR s business and how it varies across the two market segments Commercial ‡ Retail store fixtures. The Mike s Way had helped the company maintain premium pricing and good margins. ‡ $5 bn in 1996 ‡ Was two thirds of the projects and generated 80% of its sales ‡ Project cycles were generally six months or more and generally got paid at the end Residential ‡ Custom cabinets and millwork for both new and remodeled homes ‡ Kitchen and bathroom cabinetry ‡ $4. ‡ Evenly spread between new and remodeled buildings.8 bn market in 1996 ‡ Was the pride of the company. lobbies for office buildings. executive suites.

Commercial work ‡ Three roles Owner Ultimate customer Paid for the job Designing and developing detailed drawings Turning the plan into finished project by a specific date Architect / Designer General contractor General contractors solicited bids from subcontractors for portions of a project. . Had many project managers for subcontracting bids.

Blackstone relationship ‡ Blackstone was founded in 1995 and it had grown to be the largest homebuilders in the area.5) Evolution of CMR. ‡ Offered a partnership to CMR in 1997 ‡ It agreed to specify only CMR cabinets in its homes and CMR assigned Project Managers to work exclusively with Blackstone ‡ Blackstone directed all its customers to CMR and grew to be 25% of CMR s residential business ‡ Cost reduction initiatives by Blackstone ‡ There were problems in project co-ordination ‡ Differences in the estimated and actual costs due to changes at the last moment ‡ Rise of prices by CMR led to clashes between the two regarding the price reduction contract .

000 annually. hence so far the largest CMR account.6) Reasons for persisting in the Blackstone relationship ‡ Revenues of $400. ‡ Provides constant source of revenue ‡ High growth plans .

6) How would you remedy the situation ‡ Be involved with Blackstone in getting to know what the customer at the end of the value change wants ‡ Understand the process at Blackstone and suggest ways to improve it ‡ Rework on the flow of information between CMR and Blackstone ‡ Explain the reasons and the need for the price increase by CMR to Blackstone .


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