AMERICAN CONNECTOR COMPANY (A)

GROUP 10

SUMIT VAISHNAV 13PGP114

1.How serious is the threat of DJC to American connector

company?

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COMPETITIVE ANALYSIS OF US MARKET

Intensity of Rivalry

• 1200 competitors

• Fragmented market

• Matured market

Bargaining of suppliers

• Low (assumption)

Bargaining power of Buyers

• Low switching cost

Threat of New entrant

• New moulding technology is easily available

Substitutes

• Market declining indicating higher threat of substitutes

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Sr. Features ACC DJC

1 Competitive advantage Customization Mass manufacturing

2 Customer base Excellent technical solutions-

customer’s feedback

Existent 2nd tier player

New player in US market

3 Effective Utilization 30.2% 75.4%

4 Production flexibility Marketing & sales is

dominating over production

Production is dominating over

Marketing & sales

5 Technology Outsourced In house development

6 Contribution in

revenues

85% by standard products

15% by customized products

100% by standard products

7 Process 4500 SKU, frequent change-

over

640 SKU

8 Packaging Wide range Standard

2.How big are the cost differences

between DJC's plant and American connector's Sunnyvale

plant? Consider both DJC's performance in Kawasaki and its

potential in the United States.11/15/2014INDIAN INSTITUTE OF MANAGEMENT RAIPUR 5

• Total Cost Per year

DJC Japan Plant = $1899330

DJC’s US plant = $47314.1

ACC US Plant = $ 70613.7

• Cost difference = $23299.7 = 33% (Between DJC US Plant

& ACC’s US Plant)

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3.What accounts for these

differences? How much of the differences is

inherent in the way each of the two companies compete?

How much is due strictly to differences in the efficiency of the

operations?11/15/2014INDIAN INSTITUTE OF MANAGEMENT RAIPUR 7

DJC

• Mass Manufacturing

• In-house mold technology

• Customer & Supplier relationship

• Proximity to supplier & Customer

• JIT inventory management

• High finished goods inventory

• Job-Rotation system

• High level autonomy from corporate

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• Regular maintenance

• High effective utilization

• Continuous improvement

• Removal of waste

• Removal of non-value added

activities

• Pre-automation

• Inter-functional coordination

• Quality control

ACC

• Customization based strategy

• Close customer relationship

• Low finished good inventory

• High raw material inventory and

WIP inventory

• Outsourced mold technology

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• Marketing & sales domination

• Software system for production

schedule

• 4500 different models

• Responsive to customers needs

• High quality

Cost Difference Reasons

• Low raw material, electricity costs and high labor cost in US

• Raw material inventory and WIP inventory is low for DJC compared to

ACC

• High finished goods inventory for DJC

• Depreciation is high for ACC because average useful life for mold is 8

years compared to 3 years of DJC’s

• Regular preventive maintenance of mold enables 99.99% mold yield for

DJC

• High defects rate 26000 per million of products for ACC because of new

product designs

• Effective utilization for DJC is 75.4% compared to 30.2% of ACC11/15/2014INDIAN INSTITUTE OF MANAGEMENT RAIPUR 10

4.What should American

connector's management at the Sunnyvale plant do?

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•Cellular layout-Flexibility, WIP inventories

•Dependability-Vertical integration, In-house product

development

•Automation-to reduce labour cost

•Quality-inspection after every process level instead

of final product inspection

•Activity based costing- To segregate low profit and

high profit margin products

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THANK YOU

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