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Case Study

Blake Electronics

In $1979,$ Steve Blake founded Blake Electronics in Long Beach, California, to manufacture resistors, capacitors, inductors, and other electronic components. During the Vietnam War, Steve was a radio operator, and it was during this time that he became proficient at repairing radios and other communications equipment. Steve viewed his four$-$year experience with the army with mixed feelings. He hated army life, but this experience gave him the confidence and the initiative to start his own electronics firm.

Over the years, Steve kept the business relatively unchanged. By $1992,$ total annual sales were in excess of $$2$ million. In $1996,$ Steve's son, Jim, joined the company after finishing high school and two years of courses in electronics at Long Beach Community College. Jim was always aggressive in high school athletics, and he became even more aggressive as general sales manager of Blake Electronics. This aggressiveness bothered Steve, who was more conservative. Jim would make deals to supply companies with electronic components before he bothered to find out if Blake Electronics had the ability or capacity to produce the components. On several occasions this behavior caused the company some embarrassing moments when Blake Electronics was unable to produce the electronic components for companies with which Jim had made deals.

In $2000,$ Jim started to go after government contracts for electronic components. By $2002,$ total annual sales had increased to more than $$10$ million, and the number of employees exceeded $200.$ Many of these employees were electronic specialists and graduates of electrical engineering programs from top colleges and universities. But Jim's tendency to stretch Blake Electronics to contracts continued as well, and by $2007,$ Blake Electronics had a reputation with government agencies as a company that could not deliver what it promised. Almost overnight, government contracts stopped, and Blake Electronics was left with an idle workforce and unused manufacturing

equipment. This high overhead started to melt away profits, and in $2009,$ Blake Electronics was faced with the possibility of sustaining a loss for the first time in its history.

In $2010,$ Steve decided to look at the possibility of manufacturing electronic components for home use. Although this was a totally new market for Blake Electronics, Steve was convinced that this was the only way to keep Blake Electronics from dipping into the red. The research team at Blake Electronics was given the task of developing new electronic devices for home use. The first idea from the research team was the Master Control Center. The basic components for this system are shown Figure $3\mathrm{.}15.$

FIGURE $3\mathrm{.}15$

Master Control Center