Crown Cork & Seal in 1989
As many successful companies do, Crown Cork & Seal began with an idea—one that had the potential to improve the world in which we live. In 1891, a machine shop foreman conceptualized a superior method for creating bottle caps, and set about to do so. Crown Cork & Seal was born, and what followed were intermittent periods of triumphant achievements and costly missteps, soaring profits and depressing losses, eventuating in a successful company with rich tradition and history. However, the competitive business environment slows for no one, and the company finds itself constantly reevaluating its strengths, its competitive advantages, and the viability of the industry in which it has built its legacy. Industry Outlook
One of Crown Cork & Seal’s foundational questions involves their industry in general—is it an attractive industry in which to compete? Like most industries, there are things that make the metal container industry an advantageous one, and there are elements of the nature of the industry that are troublesome to its members. The low potential for new entrants does provide somewhat of a safeguard against fresh competition; however, the strong buyer power, high threat of substitutes, and intense competition from rivals makes the industry relatively unattractive on several key levels. For potential new entrants, the metal container industry does not seem to be attractive due to the high barriers to entry. Most of all, the economies of scale provide current players with economic advantages that would be extremely difficult to reach for new entrants. Additionally, the saturation of the market does not make it very attractive to new entrants, as competition for current sales is so intense. The high barriers to entry are, however, an advantage for current producers, which do not have to be scared by the arrival of new competitors. When viewing the industry through the lens of the buyers, the main consideration is the price,...
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