Aa Connector Company Case Analysis
Autor: goude2017 • February 9, 2018 • 827 Words (4 Pages) • 715 Views
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- Present higher utilization (80 to 90%) viz., American Connector company (about 70% by 1991)
- DJC has a better control on quality than ACC i.e. far fewer defects than ACC. ACC relied more on the old fashioned inspection method for reducing defects in final outputs.
- DJC’s in house technology ensured that their products remained proprietary and that the technology need not be shared with outside vendors. So, DJC could learn competitors technology if the vendors switched over, but same would not happen other way round.
- Less product variations which could lower cost on raw materials and also reduce inventory level.
- The other factors mentioned under product attributes are easy to replicate in US.
Above attributes of DJC make it a serious threat to ACC in US
Cost Difference: Quantitative Analysis
Two scenarios have been considered: 1) DJC in Sunnywale, US to compete with ACC and 2) DJC in Kawasaki, Japan and ACC in Sunnywale, US (original case). It is being assumed that DJC, on entering USA, will produce 420 million units. The difference in costs is being entirely attributed to Strategy. Also, cost indices are taken into account when calculating DJC’s cost in US. The cost difference is calculated in Exhibit1
In the second case, first costs when both companies produce 420 million units are compared. This difference is attributed to Strategy. This cost is then compared with scenario where 700 million units are manufactured by DJC. This difference is attributed to Market conditions. The difference is calculated in Exhibit2.
So what can ACC do to reduce threat from DJC? Qualitative Analysis
- Improve technology development, develop in-house technology so that the products are difficult to imitate.
- Improve productivity of employees by introducing automation in processes.
- Improve utilization by focusing mainly on increasing plant operating time.
- Reduce WIP inventory by increasing standardization. Reducing inventory will also reduce depreciation costs.
Exhibit1:
[pic 2]
Exhibit 2:
[pic 3]
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