What Is the Strategy of Djc and American Connector?

American Connector Company

Case Solution : Group 11

Shilpa Naik – 1411056

Prem Shankar – 1411045

Abhishek Vishal – 1411069

Vinay Bale – 1411012

Pranay Siddharth - 1411023

Vivek Joshua J – 1411068

Naresh Goud - 1411034

Question 1 : What is the strategy of DJC and American Connector?

DJC strategy: The Kawasaki plant of DJC was one of the most efficient connectors plants in the world. This plant helped DJC become one of the most dominant suppliers of electrical connectors in Japan. The company maintained close links with the major computers, communications and electronics companies and distributors in Japan. This was a major entry barrier for other firms. Company’s design strategy focuses on simplicity and manufacturing ability over innovation. Innovation is more related to the process rather than the product. DJC used reverse engineering to grow their technical domain and the collective expertise very fast. Most of their products were reverse-engineered from successful American manufacturers esp, ACC. They took care to adapt the American designs to Japanese aesthetics. Once, the products achieved certain minimum level of quality, the production process became the competition and that is where DJC developed its expertise. They focussed on building a highly efficient manufacturing system – absolutely critical to their competitive strategy. They stick to their production schedule – plan everything in advance. The balance of power between Marketing/Sales and Manufacturing was tipped in favour of S&M.

ACC strategy: ACC strategy is to emphasis on both quality and customisation. Its products were recognised for superior design and performance. Quality was a point of pride for the company. ACC followed a customisation strategy as an extension of its quality emphasis. Quality at ACC meant conforming to customers’ needs. They did not care about the number of SKUs but instead focussed on developing unique solutions for their customers’ needs. Custom orders made up 15% of the company’s total production volume. Historically, ACC had been very profitable, sustaining margins as high as 52%. To maintain profitability in future and to compete in global markets, company invested several hundred million dollars in new plants and equipments. However, while sales had grown from $252 million in 1984 to $800 million in 1991, gross margins had eroded from 52% to 43% during the same period.

Question 2 : How serious is the threat of DJC to American Connector?

1. What accounts for the differences between the two plants?
2. What factors are responsible for that?

To answer this Question, we will first analyse the differences, then discuss the factors leading to these differences and then analyse the threat under these points. Please refer Annexure 1 and Annexure 2: 

If DJC does open its plant in the US, it shall have significant advantage in its production costs. It can translate this cost advantage into highly competitive pricing against ACC. It can also use this cost advantage to divest the money into more R&D and try to become a technology leader in the segment.