Crown Cork and Seal Essay

What are the most hearty factors affecting rival in the metal container labor? The U. S. Metal base effort was valued at $12. 2 billion 1989. There were quintet firms dominating this industry at that cadence constituting 61% of the entire commercialize share. Some significant factors that impacted the competition among these firms were Competitive Rivalry at heart the industry The major imposters in the metal container industry comprised of 61% of the food mart share making intensive competitive rivalry among themselves.The Pricing was in truth competitive with little room for all significant profit margins. focalization was to enhance capacity utilization and eliminate costly changeovers wherever possible. Providing al-Quran discounts was a common trend to attract more nodes. The shrinking customer base attributed to a new low in manufacturers margins. Threat of new dispatchers The threat of new entrants in this industry is fair low since the major market players already dominate the lively market share. The threat for the competing companies lies in its other rivals rather than whatever new entrant to this specialized industry.Bargaining Power of the Customers I feel the bargaining advocate in this industry for the customers was pretty senior high school at that period. The major customers of this industry were big names like Coca-Cola, Anheuser-Busch, Pepsico Inc. etc. The mergers and consolidations among the numerous bottling industry companies resulted in a shrinkage from 8000 to 800 major players in a matter of 9 years (1980 to 1989). The customers could easily punish the metal container companies by making universal switches whenever there occured unsatisfactory services or steep pricing.Bargaining military group of suppliers Steel had been replaced very quickly by aluminum ever since the conception of aluminum cans in 1958. By 1989, aluminum consisted of 99% of the beer and 94% of the balmy drink metal container business. Th e suppliers of aluminum were the largest three aluminum producers in the country. Since they were enjoying a clear market share advantage, they did not face any competition from other new players. Hence the bargaining power of the suppliers was approximatelyhow high/strong. Manufacturing Costs The overall costs of manufacturing equipments for this industry were extremely high.The various players were essay to achieve a minimum cost structure for their peripheral equipments without smart the production efficiency. Some firms were excessively shipping their old production lines to rising countries overseas where the canning technology was not well mastered at that time. aside from these, some other important factors were Technological Changes, Environmental Risks, Research and study ,Geographic location of plants. 2. What system does Crown Cork ingest for competing in this industry ? Crown Cork has been well recognized for being owner-operators.Their primary schema has been t o improve quality while ensuring spurn costs. Their strategy revolved roughly cost efficiency, quality and customer service. Connelly realized that since they were a small player in an industry dominated by American bum and Continental Can, they should emphasis on their core competencies in metal forming and dissimulation. Their main focus was to concentrate on specialized uses cans and international markets. Connellys new strategy in terms of manufacturing involved heavy investments in new and geographically dispersed plants.Their key attributes were high quality, flexibility and quick response to customers needs. They withal invested in recycling a great deal and they formed the across the nation Recyclers which was one of the top 5 aluminum can recyclers. Their strategy also involved minimum investments in R& adenylic acidampD and rather focusing on their core skills like metal fabrication and die forming. Customer service was another crucial strategical rate that Crown Cook took to compete in this industry. They had a model which ensured that any customer grievances would be routed directly to the chairman himself.These were some of the strategy that I observed in the case that Crown Cook employed to live on in this industry. 3. What advantages, if any, does a firm the size of Crown Cork have over American Can and Continental Can? How do apologise the comparison shown in exhibit 5 in the case? A firm of the size of Crown Cork has some clear advantages as compared to American Can and Continental Can. The Value chain analysis provides strategic focus. Crown Cork is not interested in investing for R&ampD. They are able to save in millions by letting go off this expense.Rather, they can rely on their mop up competitors to take the risk in terms of R&ampD and learn and capitalize on their mistakes. Also, being a relatively smaller organization, their overall organizational challenges and obstacles are much less. Their response time to custome r needs and product innovation is very quick. They have the license and leverage to specialize on their core tin products and have no need of much experimentation. Exhibit 5 represents these major observations The net gross revenue figures of Crown Cork are much less compared to American Can and The Continental Group.Even the gross profit margins for Crown Cork is lower when compared with the other two major giants. However, the operating income is much more economical (because of its size) in case of Crown Cork. This is also due to the absence of any acquisitions or mergers for them. But, the return on assets and return on average rectitude is similar to the other two companies or even better for some years.This is mostly due to their smaller overall size and also near-zero investments in R&ampD and also their economical operations expenses. 4. What recommendations would you make to the management ? Go into the plastic industry. It was high time they started expanding their h orizons and act future markets. * Should consider bidding for a part Continental Can. * centralise on enhancing efficiencies in plants may consider implementing just in time techniques.Improve marketing budgets and encourage an overall marketing approach. * Continue with their existing customer-centric model. * To survive and compete in the long run, they should start investing atleast a small percentage of revenue into R&ampD. * They aptitude consider hiring external consultants to seek industry related advice.