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Blake Electonics

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Blake Electronics

Version 1: September 17th, 2014
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Case Study for Blake Electronics
Company profile
Blake Electronics was founded in 1979 by Steve Blake. Based in Long Beach, California, Blake Electronics manufactures various types of electronic components including resistors, capacitors, and inductors. Blake Electronics supplies components to companies that manufacture more complicated electronic equipment.
Total annual sales increased $8M between 1992 and 2002
More than 200 highly skilled employees by 2002
Began seeking government contracts for electronic components in 2000
Business situation
By 2007 Blake Electronics had overextended itself and was unable to consistently fulfill all orders. As a result the company lost its government contracts. Overhead costs and a lack of new orders threatened to hand Blake Electronics its first financial loss in its 30 year history. With the goal of returning the company to profitability, Steve Blake decided to explore entering the home electronics market. His team developed a potential new product called the Master Control Center (MCC). Estimates indicate it will cost $500,000 to set up manufacturing capability for the MCC. The estimated increase in sales is $2M if the MCC is successful.
Technical situation Outcome | Favorable | Unfavorable | Total | Successful | 35 | 20 | 55 | Unsuccessful | 15 | 30 | 45 | Total | 50 | 50 | 100 |
In house research at Blake Electronics estimates a 60% chance that the MCC will be a successful venture. Steve Blake is considering hiring a market research firm to help him develop a clearer picture of the market for his potential new product. Two firms have responded with proposals; Marketing Associates, Inc. (MAI), and Iverstine and Walker (I&W). In addition to a price quote $100,000 for a market survey, MAI provided the following information about

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