Case 1: Cj Industries and Heavey Pumps

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CJ Industries and Heavey Pumps Section 2 Case 1 Chris Stowe Student number: 14210009 2014.11.19 Word Count: 1719 CJ Industries has an opportunity to provide Great Lakes Pleasure Boats with key engine components for their luxury line of pleasure boats. They earned this through the development of a strong buyer-supplier relationship with Great Lakes and this 5-year, $10 million annual contract offers them the chance to have an extended relationship if they can satisfy Great Lakes’ needs. The opportunity is critical for the successful future of CJI and the main goal of the company should be to completely satisfy the requirements of the contract with Great Lakes, and secure their future business with Great Lakes. While they do…show more content…
CJI needs to analyze its value chain and decide if building the pumps in-house justify the capitalization costs, impacts on their relationship with Heavy, and whether it will dilute their business proficiency. From Heavey’s perspective: They are a small, local company that assumingly delivers quality products on time and at the convenience of their buyer’s needs. While their relationship with CJI appears to have been professional and successful, they will not be able to continue to supply CJI with all of their bilge pumps once the demand reaches 50 pumps monthly. This situation forces them to consider their options which are: to expand their production capabilities or maintain their current production levels and risk losing their business with CJI. Since they are a small company, they need to heavily consider whether expanding their production will benefit them in the long term. Certainly it would help them continue working with CJI, but it will be risky to invest that much in capitalization when it is entirely possible that CJI could choose to manufacture the pumps in-house anyways. The major uncertainty centers from the lack of a formalized contract with CJI. Also, they need

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