CMR Enterprise Essay

This particular case depicts the history and issues faced by a relatively small company active in the custom architectural millwork industry for the past 25 years. The new owners wanted the newly-acquired company to grow even further. The first few months seems to have been a success – Marcus spent a lot of his time with employees and customers, learning the field since he was, as mentioned in the text, an â€Å"outsider†. However, keeping the company’s integrity and image intact was a priority. However, the problems outlined in the case seems to start – or at least have been worsened – with what will become CMR’s largest account, Blackstone Homes. Problem Identification After reviewing the text in question, three major problems stand out: 1) Customers change requests: When Blackstone Homes sell a house, it does – of course! – come with a pre-finished and installed kitchen, included in the price. However, if the customer wishes, he or she would visit CMR’s showroom and they would build these woodwork according to their new specifications. The added cost will then be charged to the contractor, which will later add it to their bills. This takes time and lead to price increases. This is, in part, what contributed to the clash with Blackstone Homes. 2) IT solution not adapted: InfoCentral, the software implemented by Marcus, does not work out as intended and do not fit the business needs. It is not always updated as required by the employees. According to the text, it may be helpful for the commercial and financial/accounting side, but is lacking several features for its residential counterpart to be really as useful as it can be. 3) Deteriorating business relationship The business relations between the two companies started well and was fulfilling for both part. When the business expended, so did the problems. The root cause seems to be the change requests made by the homeowners. This lead to late delivery, poorly reviewed performance and then the 7% price increase. Future homeowners started considering the prices charged by CMR to be too high. We could therefore expect lower level of sales and revenues in the future. Alternatives generation While we will mostly concentrate our alternatives on the three points mentioned above, we will also include other alternatives, even if they may not be realistic or feasible in the short/medium term. 1) Review customers change requests: We obviously cannot stop change requests and modifications made by the customers. The company and its employees pride themselves by offering flexibility and higher customers’ satisfaction. It would be therefore self-destructive for CMR to put a term to these showrooms. Any person also deserve to have reasonable alternative options when they are buying an object, a home more than anything. However, there is a clear misunderstanding between CMR and Blackstone Homes regarding the fixed allowances for kitchen ($6,000) and the final cost of the installation. In order to solve this issue, it may be a good thing to review the billing part: Instead of having the installation costs â€Å"forwarded† to the contractor, all expenses over $6,000 (parts + labor) should be charged to the homeowners themselves; customers can have access to all options made available by CMR, whilst eliminating cost forwarding and the said related disagreements. 2) Software adaptation It seems clear from the text that the whole issue also come in part from InfoCentral. In order to remediate this issue, we would suggest that all account managers from CMR and employees involved with this software should meet and discuss its performance. What should be changed, what must be kept, or what should be included in order to fit everyone’s needs. However, for any IT solution to bring tangible additional value, it must be easy to use and should not impose additional work. It is supposed to simplify the work, not making it more complicated. 3) The right people on the right place Again, according to the text, there was a clear misunderstanding between both parties; it was even referred as a â€Å"shouting contest†, which is far from being a normal and healthy business relationship. The Key Account Managers (from both sides) could not agree on contract terms and conditions. It could therefore be a good thing to change points of contact and see if the situation can be resolved; a stronger relation, transparency, honesty and â€Å"business awareness† between the two companies might also help straighten things out. 4) Additional ideas The solution to increase profit may not be by simply increasing selling price. We would suggest CMR to run an audit on their Supply Chain, Logistics and Selling, General & Administrative Expenses to see if cost reductions are possible. Could modern machinery help cut their production costs? Could they outsource some of their non-core business or reduce raw material costs by creating a joint-venture with a competitor? Chasing down inefficiencies in the production line can be even more effective than a price increase. Recommendations Using the previous points, we would suggest the three following recommendations: 1) Change the billing process: If possible, all additional costs over $6,000 should be charged to the homeowner directly. In order to make this easier for the customers, offering various financing options may be a good idea. 2) Adapt InfoCentral: Review, correct and revamp the software in order to meet real business needs. May be a good thing to check what competitors are using. 3) Organize recurrent meetings: The situation with Blackstone did not get bad in one day. It may be a good idea to set up weekly or monthly operational reviews; meetings lasting no longer than 30 minutes, where all potential issues can be discussed among stakeholders and managers. The idea is not to let such situation worsen and take the correct actions as soon as possible.