Crown Cork & Seal
CASE STUDY 5
FOCAL FIRM: Crown Cork & Seal
University of Arizona: Eller College of Management
Economics 571: Dynamics of Strategy
10/31/12
1. Perform an industry analysis for the industry.
Industry Competitors: Crown Cork & Seal (CCS) considered the following companies their main competition: American National Can, Continental Can, Reynolds Metal and Ball Corporation. Van Dorn Company and Heekin Can were regional threats. CCS and their main competitors comprised 61 % of the market in the metal can industry. There were approximately 100 other firms that served the rest of the market, but they were not plausible threats. Competition between the large firms was intense. Ball Corporation and Reynolds Metal were known for their technological advances. Ball Corp was also a low cost leader known for customizing its products to meet customer needs, qualities CCS prided itself on.
Power of Suppliers and Buyers: Suppliers had significant power as they provided the main material to make the metal cans. Aluminum had surpassed steel in popularity due to its quality, weight, recycling efficiency, friendlier taste and lithographic properties. There were three major aluminum suppliers: Alcan, Alcoa and Reynolds Metal. Reynolds Metal was not only a supplier but also a direct competitor of CCS. They were also the only U.S. Company to produce metal cans. This gave them tremendous power over other firms. Steel was cheaper than aluminum, so Alcoa tried not to raise their prices to keep steel from infringing on their profits.
Due to consolidation in the soft drink bottling industry there were four main buyers: Coca-Cola Company, Anheuser Busch, PepsiCo Inc., and Coca-Cola Enterprises. They established relationships with multiple can suppliers so they had significant bargaining power over them. If a supplier charged unreasonable prices or provided poor customer service, buyers would reduce their order sizes or take their business elsewhere. There was no
FOCAL FIRM: Crown Cork & Seal
University of Arizona: Eller College of Management
Economics 571: Dynamics of Strategy
10/31/12
1. Perform an industry analysis for the industry.
Industry Competitors: Crown Cork & Seal (CCS) considered the following companies their main competition: American National Can, Continental Can, Reynolds Metal and Ball Corporation. Van Dorn Company and Heekin Can were regional threats. CCS and their main competitors comprised 61 % of the market in the metal can industry. There were approximately 100 other firms that served the rest of the market, but they were not plausible threats. Competition between the large firms was intense. Ball Corporation and Reynolds Metal were known for their technological advances. Ball Corp was also a low cost leader known for customizing its products to meet customer needs, qualities CCS prided itself on.
Power of Suppliers and Buyers: Suppliers had significant power as they provided the main material to make the metal cans. Aluminum had surpassed steel in popularity due to its quality, weight, recycling efficiency, friendlier taste and lithographic properties. There were three major aluminum suppliers: Alcan, Alcoa and Reynolds Metal. Reynolds Metal was not only a supplier but also a direct competitor of CCS. They were also the only U.S. Company to produce metal cans. This gave them tremendous power over other firms. Steel was cheaper than aluminum, so Alcoa tried not to raise their prices to keep steel from infringing on their profits.
Due to consolidation in the soft drink bottling industry there were four main buyers: Coca-Cola Company, Anheuser Busch, PepsiCo Inc., and Coca-Cola Enterprises. They established relationships with multiple can suppliers so they had significant bargaining power over them. If a supplier charged unreasonable prices or provided poor customer service, buyers would reduce their order sizes or take their business elsewhere. There was no