Acc group10
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Transcript of Acc group10
1.How serious is the threat of DJC to American connector
company?
11/15/2014INDIAN INSTITUTE OF MANAGEMENT RAIPUR 2
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
11/15/2014INDIAN INSTITUTE OF MANAGEMENT RAIPUR 3
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)
11/15/2014INDIAN INSTITUTE OF MANAGEMENT RAIPUR 6
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
11/15/2014INDIAN INSTITUTE OF MANAGEMENT RAIPUR
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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
11/15/2014INDIAN INSTITUTE OF MANAGEMENT RAIPUR 9
• 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?
11/15/2014INDIAN INSTITUTE OF MANAGEMENT RAIPUR 11
•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
11/15/2014INDIAN INSTITUTE OF MANAGEMENT RAIPUR 12