Crown Cork & Seal in 1989 Harvard Case Solution & Analysis

Threat of a New Substitute

The threat of substitute is also very high for the metal can and containers. Plastic, glass, aluminum and steel industry are the substitutes for metal can and container. Aluminum cans dominate the particular market with the highest percentage of revenues achieved from the diverse set of customers. The soft drink market allows the aluminum cans and container producer to manufacture the packaging of their products. At the beginning of the packaging industry, steel used to dominate the market until aluminum emerged to become highest producer of the packages products with its advantage of low weight and higher quality. However, glass dominated the alcohol and beer market which has a long history of preserving the wine and the alcohol in the glass manufactured product. Therefore, the particular trend is unlikely to change but the glass market is left with only customers in the alcohol, wine, and the beer market while the rest of the market has been dominated by other similar industries.

Moreover, the changing trends of the industry reveal that the plastic industry is more likely to take over the aluminum industry because of its cheap production, much lighter weight than aluminum, and its convenient handling allowed it to become the market leader of the related industries from the period of 1980 to 1989. However, due to many purposes in which one of the main reason includes carbonation and the infiltration of oxygen which allowed the industry to lower its sales. Although the particular industry is still in consideration for many companies as it promises strong future and revenues.

Bargaining Power of Supplier

As being the largest supplier to the beverage and soft drink market, the aluminum cans manufacturer relies heavily on its suppliers for the manufacture of the aluminum sheets which is then utilized in the production of cans. However, as there has been an increased shift in the changing trends of the particular industry, many companies which were the suppliers to the aluminum can producers also started to compete against their customers. This competition has allowed the number of participants to increase which has alternatively increased the excessive capacity for many companies although there has been an increased threat of a new entrant. Although, the bargaining power of the supplier remains moderate.

Bargaining Power of Buyer

The bargaining power of the buyer in the particular industry is high due to many options available to the big players of the market. Companies have options whether they shall opt for the glass, steel, or aluminum packaging. Moreover, the increase in the buyer power allows the prices for the products to decrease in the market as the number of competitors and the options available for substitute increases. Furthermore, companies that have achieved success in the particular industry have provided their customers with low cost, higher production efficiencies, and to enhance their core competencies. These customers have also located themselves near their customer so as to reduce the transportation cost.

Competitive Rivalry

Amongst the metal can industry, there are five major competitors that have competed well for their position in the industry. These major competitors include American National Can, Continental Can, Reynolds Metals, and Ball Corporation. American National Can has developed and sustained itself in the market through various acquisition and merger strategies. The company acquired the National Can for $421 million which had been the major competitor in the metal market. Moreover, American National Can is the wholly-owned subsidiary of Pechiney which is also considered as the third largest producer of Aluminum in the world. Continental Can was the market leader in the manufacturing of the metal can and container by the year 1970’s. However, the company has faced many turning points in its aim to become the market leader which was taken by American National. The company became an attractive takeover target when it achieved good sales and it was then acquired by Peter Kiewit Sons Inc. However, the particular company is still up for the bid for acquisition due to revenues in recent years.

Answer 4

Prior to the taking over of John Connelly as the President of Crown Cork and Seals in the year 1955, the company was in a state of turmoil and was about to declare bankruptcy. The management of the company appointed John Connelly as the President as he was amongst the outside Directors of the company. In the era and the reign of John Connelly, the company reached great heights of success because of the strategies and tactics applied by Connelly. Connelly remained focused on applying the basics for the company to reduce the various costs associated with the company’s production, and also to generate higher revenues to become competitive in the market. Along with the cost and revenue factor, the company aimed to respond the changing trends of the industry and anticipated correctly for the future trends and made changes in its business concept to remain competitive...............................................

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