Master's Culminating Experience
The sales of big screen projection television (PTV) have been increasing rapidly and will continue to increase since there is no economically feasible substitute for PTV. In 2002, annual sales are forecasted to be 70 percent more than in 1997. Therefore, the demand for projection tubes (major components of PTVs) is also expected to increase as much as the sales of PTV.
Matsushita Electronics Company (MEC), the second largest projection tube producer, relocated their projection tube plant from Japan to the U.S.(AMEC) in order to increase its sales by conforming to NAFTA regulation. This plant relocation will also enable MEC to reduce its production cost significantly.
Basically, the more projection tubes produced, the lower cost will become. However, the cost does not proportionally decrease with quantity produced because the direct labor cost is a quasi-variable. In order to produce projection tubes at the lowest cost, AMEC should carefully implement its work shift schedule.
There will be competition only between Hitachi and AMEC. Other projection tube producers will not be able to compete with Hitachi and AMEC. For the next five years, AMEC will constantly increase sales. However, Hitachi, the largest projection tube producer, will continue to dominate the market by being able to sell more projection tubes at lower production costs. Hitachi’s dominance will be a problem for AMEC in the long run. To prevent the further dominance of Hitachi, AMEC should increase their sales more than projected by implementing the following strategies; 1) supply more to minor customers, 2) have excess inventories, 3) supply flexible amounts and many types of projection tubes, 4) reduce the price of projection tube 5) improve yield rates, and 6) implement the most efficient work-shift.
(1998). The Economics of Projection Tube Production in the America Matsushita Electronics Company: A Case Study. .