Strategy

CROWN CORK AND SEAL COMPANY, INC. In 1977, Crown Cork and Seal Company was the fourth largest producer of metal cans and crowns1 in the United States. Under John Connelly, chairman and CEO, Crown had raised itself up from near bankruptcy in 1957. After 20 years of consistent growth, the company had emerged as a major force in both the domestic and International metal container markets (see Exhibit 1). 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. This case looks at the metal container industry. Crown's strategy and position within that Industry, and the nature of the problems facing the company during mid-1977. The Metal Container Industry in 1977 The Metal Container Industry included 100 firms and a vast number of product lines. This section describes the product segments in which Crown competed, examines the Industry's competitive structure, and looks at three Industry wide trends: (1) Increasing self-manufacture, (2) new material Introductions, and (3) the effect of the "packaging revolution" on the competitive atmosphere. The Products The metal container Industry produced metal cans, crowns (bottle caps), and closures (screw caps, bottle lids) for over 135 Industries that use these products to hold or seal an almost endless variety of consumer and Industrial goods. Metal containers made up almost a third of all packaging products used In the U.S. in 1976. Metal containers included traditional steel and aluminum cans, foil containers, and metal drums and palls of all shapes and sizes. Of these, metal cans were the largest segment, reaching a value of $7.1 billion in 1976. Cans were being used in more than three-fourths of all metal-container shipments. The original characteristics that promoted the use of the tin can and the crown in the early 1900s still make them well suited to certain food and beverage packaging Jobs. These qualities are: (1)