American Connector Company - 1
American Connector Company
ASSIGNMENT #1: Answer the following questions based on the case study for American Connector Company. Write succinct responses and include supporting references, tables, or graphs where appropriate.
1. How serious is the threat of DJC’s entry into the U.S. market to the American Connector Co. (ACC)? Competitors are a treat to American Connector Company but ACC is its own biggest threat. ACC is very inefficient in its operations – Sunnyvale has an effective utilization of 30.2% whereas Kawasaki has an effective utilization percentage of 75.4%. Complacency. Time base roll out strategy. DJC was a market aggressor.
2. Consider DJC’s relative costs in the Kawasaki plant and its potential cost structure in the United States.
a. How big are the total cost differences between DJC’s plant and ACC’s Sunnyvale plant? DJC plant is more 148% more efficient then ACC based on number of units per employee. Additionally DJC’s cost to produce a 1000 units is $4.15 vs, $7.21 for ACC. DJC has a $3.06 labor cost advantage over ACC per 1000 uints.
b. Is there a trend in costs that should concern management at either DJC or ACC? Over the last 5 years the COG’s for Kawasaki has decreased 37% (41.74% to 26.10%) and the COG’s sold ACC rose 3% (32.91% to 33.79%)
3. Three potential sources of cost difference can be examined: 1) utilization-driven cost difference, 2) differences inherent in each company’s strategy, and 3) operating effectiveness. Explain what accounts for the following three cost differences between ACC and DJC.
Utilization-driven cost differences: ACC has an advantage in lower material costs but DJC has a per employee productivity cost that is higher then ACC. Core Leadership. Mr. Osaka emphasis is on asset utilization of 100% with a yield of 99% on raw materials. The customer complaint ratio for DJC was 1 per 1 million units.
Differences inherent in each company’s strategy: Inefficiency. DJC has a standardized
ASSIGNMENT #1: Answer the following questions based on the case study for American Connector Company. Write succinct responses and include supporting references, tables, or graphs where appropriate.
1. How serious is the threat of DJC’s entry into the U.S. market to the American Connector Co. (ACC)? Competitors are a treat to American Connector Company but ACC is its own biggest threat. ACC is very inefficient in its operations – Sunnyvale has an effective utilization of 30.2% whereas Kawasaki has an effective utilization percentage of 75.4%. Complacency. Time base roll out strategy. DJC was a market aggressor.
2. Consider DJC’s relative costs in the Kawasaki plant and its potential cost structure in the United States.
a. How big are the total cost differences between DJC’s plant and ACC’s Sunnyvale plant? DJC plant is more 148% more efficient then ACC based on number of units per employee. Additionally DJC’s cost to produce a 1000 units is $4.15 vs, $7.21 for ACC. DJC has a $3.06 labor cost advantage over ACC per 1000 uints.
b. Is there a trend in costs that should concern management at either DJC or ACC? Over the last 5 years the COG’s for Kawasaki has decreased 37% (41.74% to 26.10%) and the COG’s sold ACC rose 3% (32.91% to 33.79%)
3. Three potential sources of cost difference can be examined: 1) utilization-driven cost difference, 2) differences inherent in each company’s strategy, and 3) operating effectiveness. Explain what accounts for the following three cost differences between ACC and DJC.
Utilization-driven cost differences: ACC has an advantage in lower material costs but DJC has a per employee productivity cost that is higher then ACC. Core Leadership. Mr. Osaka emphasis is on asset utilization of 100% with a yield of 99% on raw materials. The customer complaint ratio for DJC was 1 per 1 million units.
Differences inherent in each company’s strategy: Inefficiency. DJC has a standardized