Crown & cork 5 forces model

Topics: Strategic management, Earnings before interest and taxes, Bottle Pages: 7 (1215 words) Published: October 13, 2013
PROGRAM: MMS BATCH 2012 - 14 Comment Form for Assignments
Section One: Data on the Course and Assignment

Subject : Strategy Management
Title of Assignment: Crown Cork & Seal in 1989
Date of Submission : 20/09/2013
Group No. 02 Semester: III Student Details :
Div.
Roll No.
Name

Div.
Roll No.
Name
A
2012017
Ankita Gupta

A
2012042
Bhavik Shah
A
2012023
Vishita Jain

A
2012053
Roshani Vichare

A
2012026
Heena Kansara

A

2012054
Vishal Mehta

Section Two: Evaluation

Please note below the comments on the assignment in accordance with your objectives and evaluation criteria.

Professor………………………………………………………………..……………………..

Signature ……………………………………………………………………………………… GRADE

Date returned to Examination Office: ……………………………..

Crown Cork and Seal Company, Inc.

In April 1957, when Crown Cork & Seal was on the edge of bankruptcy, John Connelly took over presidency with in order to save the company. It was rightly said that by the end of 1957, Crown had "climbed out of the coffin and was sprinting." Due to his leadership and strategic decision the company flourished after on the verge of being bankrupt for three times. After 20 years of consistent growth, the company had emerged as a major force in both the domestic and international metal container markets. On his entry, within three years the sale of the company increased up to 50% and also on the other hand reduced their operating and administration expenses. Also there was good return to equity shareholders from 0.55% in 1956 to 9.66% in 1961 which shows that it has increased the shareholder’s value (Exhibit 7 & 8). And there was consistent growth in sales and also the value of firm in the reign of Mr John Connelly. During those 20 years, Crown Cork and Seal had concentrated its manufacturing efforts on tin-plated cans for holding beer, soft drinks, and aerosol products. By 1977, however, the ozone controversy and the trend toward legislative regulation of nonreturnable containers were threatening Crown’s domestic business. In May of 1989, Connelly stepped down from his position as chairman appointing his long-time disciple William Avery as chief executive officer. Avery had plans to assess Connelly's long-followed strategy because of the industry changes that were taking place. Since Connelly got into the business in 1957, the metal can industry had been greatly redefined as both suppliers and customers of can makers moved into can-making themselves. In the case study Avery’s main concern was whether it would be a good idea for Crown to bid on all or part of Continental Can (one of their competitors), whose operations were up for sale?

Industry Analysis:
In 1989, the metal containers industry was a very robust industry, representing 61% of all packaged products in the United States.   However, many factors are emerging that are beginning to contribute to an unattractive business environment.   Margins are beginning to compress due to excess capacity and rising raw material/labour costs. Key buyers in the industry are beginning to vertically integrate downward, manufacturing their own cans in “captive” plants.   In addition, key suppliers are beginning to integrate upward as aluminium firms produce metal containers. The introduction and growth of glass and plastic as substitute products is becoming a real threat to the metal containers industry.   Glass bottles are becoming a real source of competition with the brewery end-user, outperforming metal cans on customer preference. Plastics possess the highest growth potential, especially among soft-drink bottlers. However, their potential is currently limited due to the material’s inability to hold carbonation for a long period of time and...
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