American Connector Company Case Summary

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In the case of DJC establishing a Kawasaki – style plant in the US, Sunnyvale would be competing directly with Kawasaki’s high volume / low cost products and faces the possibility of losing lower margin, price sensitive customers. The extent of threat of DJC to American Connector Company can be analysed based on the following factors:
1. Increase in competition
While only 15% of ACC’s total production volume was custom orders, 1% was prototype orders and 10% were very low volume orders, the remaining share of the volume can be assumed as high volume / standard product. This will be the market segment that will be the hardest to compete with DJC’s low cost products.
This would mean that along with the price penetration strategy that DJC is sure
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This can give DJC an advantage over ACC when it enters the US since ACC continues to rely on outsourcing for its equipment.
A superior production setup with a straight-line layout allows it to minimize material handling and waiting costs.
Consequently, one worker is able to simultaneously handle 2 lines at a time. Thus, total indirect labor costs are only 32% in comparison to Sunnyvale’s 46%. All this leads to a smaller workforce (DJC’s 94 vs. ACC’s 396). DJC could easily replicate this US if it chooses to relocate.
The product design strategy of DJC was more oriented towards making the operations more streamlined and reliable. It believed that efficient manufacturing was the basis of its competitive strategy. This is in contrast to the batch production process followed by ACC which accommodated greater customer flexibility but at the cost of efficiency with some product lines being as long as 1.5 to 2 days

4. Quality
Unlike ACC, which adopts end product inspection techniques for quality control, DJC follows a process-centric model where each process is monitored for quality. This has subsequently led to lower quality losses of 0.7% over total production in comparison to ACC’s 1.6% (Exhibit
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