Cmr Enterprises

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  • Topic: Revenue, Price, Blackstone Group
  • Pages : 4 (1322 words )
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  • Published : November 6, 2011
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CMR Enterprises
The budding entrepreneur Sam Marcus along with investor Mr. Walter saw the potential of dynamic growth in Mike’s cabinet making company and purchased a small 25 year old cabinet-making company from its founder 2 year earlier. The company competed in basically two segments, commercial and residential construction markets. Sam envisioned the company to grow to 70 Million in sales by 2007. Though commercial market offered the growth opportunity, the operating cycles were rigid because of bidding process which only has 32 % success ratio. On the other hand, the residential market was small but has the ‘got’ ratio of 70 %. The case raised many interesting facts about the value of the customer for an organization perspective. Blackstone being the biggest customer offered annual sales of about 2.4 % to CMR, but does this relationship offered any value add to the CMR? In the end Sam Marcus must decide whether to continue this relationship without increasing prices or to increase prices thereby threatening a relationship with CMR’s biggest customer. Relationship with Blackstone:

Clearly, initiating a relationship with the Blackstone was a complete strategic fit for the CMR enterprises. CMR wanted to increase its revenue 10 times in coming 10 years by creating a scalable and replicable business model. Blackstone will not only offer CMR high volume of sales but also will give them the strong foothold in the residential market share. More so, with aggressive growth strategy in mind, alliance with the Blackstone will gave CMR an opportunity to standardize its business processes in order to benefit from improved operational efficiencies that comes because of scale of operations. The following calculation specifies quantitative value of relationship of black stone for CMR enterprises. Blackstone contribution towards the CMR for year 1998

Fiscal year 1998 | Revenue|
Total Residential | 1596000|
Blackstone Contribution| 210314|
% of...
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