American Connector Company - a Competitive Assessment
INDUSTRY OVERVIEW
Connectors are used to attach wires to wires and other electrical components. In 1991, this was a fragmented $16 Billion Industry. DJC and American Connector Corporation were companies in the second tier of the market, with sales in the $500 million to $800 million range.
IMPACT OF DJC’S ENTRY INTO THE US MARKET
The year 1991 witnessed a sharp decline in sales (3.9%). The abundance of suppliers forced competition on the basis of quality, cost and quick delivery. Hence, the already struggling American companies like ACC were wary of the entry of DJC in to the US market.
THREAT OF DJC TO AMERICAN CONNECTOR COMPANY
Mr. Larsen, VP of ACC believes the plant at Sunnyvale is struggling with operating problems including deteriorating quality and increased cost. With better manufacturing methods and superior quality, DJC would be able to snatch some portion of ACC’s market share. Some of the important factors that might tilt he balance in favor of DJC are:
• Manufacturing excellence has been the strength of DJC, driven by continuous process improvement and careful attention to customer needs. Their cellular manufacturing approach by breaking the factory into small, homogeneous and cohesive productive units makes production and quality control easier. Continuous plant operation and good plant layout ensured maximum asset utilization and low work-in-process inventories and relatively higher finished goods inventory.
• Pre-automation meant that production process could be automated after it was understood, designed and laid out which ensured quick identification of problems and correction, ensuring quality manufacturing. In-house technology development and inter-functional coordination of all its technology development activities creating customer value, process efficiencies, and differential advantage for the firm.
• Emphasized high supplier quality by enforcing strict quality standards. Emphasis on just-in-time delivery of raw materials ensured low
Connectors are used to attach wires to wires and other electrical components. In 1991, this was a fragmented $16 Billion Industry. DJC and American Connector Corporation were companies in the second tier of the market, with sales in the $500 million to $800 million range.
IMPACT OF DJC’S ENTRY INTO THE US MARKET
The year 1991 witnessed a sharp decline in sales (3.9%). The abundance of suppliers forced competition on the basis of quality, cost and quick delivery. Hence, the already struggling American companies like ACC were wary of the entry of DJC in to the US market.
THREAT OF DJC TO AMERICAN CONNECTOR COMPANY
Mr. Larsen, VP of ACC believes the plant at Sunnyvale is struggling with operating problems including deteriorating quality and increased cost. With better manufacturing methods and superior quality, DJC would be able to snatch some portion of ACC’s market share. Some of the important factors that might tilt he balance in favor of DJC are:
• Manufacturing excellence has been the strength of DJC, driven by continuous process improvement and careful attention to customer needs. Their cellular manufacturing approach by breaking the factory into small, homogeneous and cohesive productive units makes production and quality control easier. Continuous plant operation and good plant layout ensured maximum asset utilization and low work-in-process inventories and relatively higher finished goods inventory.
• Pre-automation meant that production process could be automated after it was understood, designed and laid out which ensured quick identification of problems and correction, ensuring quality manufacturing. In-house technology development and inter-functional coordination of all its technology development activities creating customer value, process efficiencies, and differential advantage for the firm.
• Emphasized high supplier quality by enforcing strict quality standards. Emphasis on just-in-time delivery of raw materials ensured low