CASE STUDY

A can-do kind of company Crown Cork & Seal Company, Inc. is the world's leading manufacturer of packaging products for consumer goods. If it fits in a box, oozes from a bottle, or squirts from a pump, 50-year-old Crown Cork & Seal has it all wrapped up. The company's products include metal cans for food and beverage, plastic packaging for health and beauty products, and a dizzying array of caps, closures, pumps, and dispensing systems. Much of the company's success is due to John Connelly, the company's longtime CEO who passed away in 1990. When other can manufacturers jumped on the 2-piece aluminum can bandwagon, Connelly held on to existing 3-piece can technology. The competitors floundered and CC&S survived, debt-free, well into the 1980s.

THE MOST SIGNIFICANT FACTORS AFFECTING COMPETITION IN THE METAL CONTAINER INDUSTRY

ENVIRONMENT MEETING CUSTOMER DEMANDS TYPE OF PRODUCT COST OF EQUIPMENT ALTERNATE MATERIALS UNCONTROLLABLE MARKET FORCES

HAVE THESE FACTORS CHANGED OVER TIME

MANUFACTURING METHODS
ENERGY EFFICIENT PROCEDURE

PUBLIC PERCEPTION ENVIRONMENTAL CONCERNS

OZONE LAYER
LITTER AND RECYCLING TASTE AND CONTAMINATION

STRATEGY OF CROWN CORK FOR COMPETING IN THIS INDUSTRY

ADOPTED A LONG TERM STRATEGY R&D EXPENDITURE LIMITED TO IMPROVING EXISTING

PRODUCTS CENTRALIZE SUPPORT FUNCTIONS & ACCOUNTABILITY IMPROVED INVENTORY CONTROL FOCUS ON TRADITIONAL STRENGTH, METAL FORMING AND FABRICATION TRADITIONAL CORE COMPETENCIES The biggest key to Connollys success strategy was that he himself lived, breathed and supported without variation in his policies and strategy.

ADVANTAGES OVER AMERICAN CAN & CONTINENTAL CAN

SINGLE DIRECTION & FOCUS ON CORE

COMPETENCIES REDUCED RISK FROM NON DIVERSIFICATION UNWAVERING SUPPORT OF MANAGEMENT EXCELLENT REPUTATION CUSTOMER DRIVEN LEAN, MEAN, FIGHTING MACHINE

COMPARISONS SHOWN IN EXHIBIT 3 IN THE CASE

VARIANCE OPERATING COSTS CROWN CORK

MORE EFFICIENT IN PRODUCTION CONSEQUENCES OF PRODUCT SPREAD

INCREASED COST OF DOING BUSINESS DUE TO DIVERSIFICATION COMPANIES THAT DIVERSIFIED TOOK THE RISK

SALES AND PROFITS WERE HIGHER DUE TO THE

BEING SECOND POLICY I.E TWO PIECE CAN PRODUCTION LIMITED R&D PROVIDED GREATER RETURN ON EQUITY INTERNATIONAL EXPANSION RESULTED IN CC&S BEING THE LARGEST PRODUCER O/S

PROBLEMS
NOT REALISING TECHNOLOGICAL ADVANCES AND MARKET

TRENDS COST OF MANUFACTURE OVERSEAS CHEAPER US DOLLAR LIMITS EXPORT PRIMARY MARKET IN A MATURE LIFE CYCLE STAGE NOT PERSUING LARGE MARKETS OR CUSTOMERS STALLED GROWTH WITHIN CONSTRAINED MARKET TAKE-OVER TARGET LOW DEBT/EQUITY RATIO

RECOMMENDATIONS
BUY OUT / MERGE WITH OPPOSITION

COMPANIES DIVERSIFY PLASTICS AND GLASS RECRUIT/DEVELOP KNOWLEDGE BASE OF THE PLASTIC INDUSTRY TIME FRAME PERSUE ALTERNATE CUSTOMERS RESEARCH AND DEVELOPMENT MIGRATE CURRENT PRINCIPLES & STRATEGIES INTO GROWING MARKETS

WHAT HAPPENED
CONNELLY - Crown made itself the best metal can manufacturer in the world by being an excellent supplier, a client problem solver

WILLIAM AVERY C.E.O. 1989 223 PLANTS IN 49 COUNTRIES 1990 CONSOLIDATION ACQUIRED CONTINENTAL CAN 1992 GOT INTO PLASTICS ACQUIRED CONSTAR & BECAME LEADER IN P.E.T. PRODUCTS ( PLASTIC ) 1993 FOOD CANNING ACQUIRED VAN DORN 1996 PACKAGING ACQUIRED CARNUAD METALBOX