Case Summary

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Bridgeton Industries: Automotive Component & Fabrication Plant

In the early 1900s, the Automotive Component & Fabrication Plant (ACF) was the primary production site for Bridgeton Industries. All of the ACF’s products was provided to the Big-Three domestic automobile producers. At that time, the competitors were only domestic suppliers and other Bridgeton plants. However, later on, competition became stronger due to the foreign suppliers increased. In addition, the expensive gasoline and scarce caused the ACF loss their market share. At the end of 1986, engine plant—one of the ACF plant had to shut down due to the unsustain growth in diesel-powered cars. The physical machinery, equipment and building were written down and taken off the plant books.
In 1987, Bridgeton Industries employed a strategic consulting company. On the one hand, the Strategic consulting company needed to examine Fuel Tanks, Manifolds, Front and Rear Doors, Muffler-Exhaust System and Oil Pans. On the other hand, the strategic consulting company was also asked to classify all the five kinds of products in term of “world -class” competitive position and potential. After collecting data and doing interview, the consultants put the products in the following classification:
Class 1: Fuel tanks (having costs equal to or lower than competitors’ costs)
Class 2: Manifolds, Front and rear doors (having costs 5%~15% higher than competitors’ costs)
Class 3: Muffler-exhaust systems and oil pans (having costs more than 15% higher than their competitors)
For the class 1 product, it should be contained. Products in class 2 should be observed carefully for improvement. ACF should give up or outsource the products in class 3.
At the end of 1988, class 3 products were outsourced. Furthermore, ACF watched the class 2 products closely and tried to improve the productivity and lower the…...

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