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Copy of Crown, Cork and Seal

Class Presentation

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on 9 June 2013

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Transcript of Copy of Crown, Cork and Seal

Crown Cork & Seal PORTER'S FIVE FORCES Rivalry
Supplier Power
Buyer Power
Threat of Entry RIVALRY Since 1891
John Connelly
Core competency Metal Forming and Fabrication
Killed the motor oil can business
Adopted aluminum cans
Location close to customers
Customer and Technical Service Acquire Continental Cans
Expand Product Lines
Stick to the core product Compete on Prices - Lowest possible
Few Competitors
No natural industry leadership
Increasing variable cost
Commodotized products
Large minimum efficient scale
Low incentive to exit What should Avery decide? Intensify or reduce rivalry?
Protect or increase market share?
Cut prices or improve quality? SUBSTITUTES Aluminum, Glass and Plastic Aluminum
Most accepted alternative Plastics
way of the future
carbonation issues
recycling Glass
Lost competitiveness
'long neck' beer bottles Any 'effective' substitutes? Metal containers - 61%
Diversify into plastics? BUYER POWER Readily switch to other suppliers
Large buyers - Coca Cola, PepsiCo, An-Busch
'Captive' Plants - 25% of total can production How does Avery decide to compete? Engage in forward integration? SUPPLIER POWER Threat of forward integration
Reynolds Metals
Alcoa, Alcan - entry? Why is there a threat of entry from suppliers but not from new entrants? How does Avery respond to this threat? FIT ACTIVITY OR CORE COMPETENCY Easy to duplicate core competency
Losing its competitive advantage What activities would make Crown, Cork and Seal more competitively sustainable? Avery: Is it time for a change? 1989 - 2000s 1989 - CCK - $15
1989 – 1997 - $1.8B to $8.0B
1990 – Acquires Continental Cans
1992 – Acquires plastic manufacturer – Constar
1997 – CCK - $54
2000 – R&D breakthrough “SuperEnd” beverage
2001 – Avery resigns. John Conway. CCK - $2
2002 – Divests interest in Constar
2005 – Sells Plastic business
2010 - CCK - $27 By Aksh Gupta Do you agree with Connelly's Strategy? to focus on core competency of the firm What is William Avery thinking? what his options are What's this case about? Core Competency William Avery - new CEO Complements Difficult to identify Buy Metal Fabricate Cans
Packaging Material Sell Finished Product What complements add value to Crown? Provide individually
Expect cooperation or subsidization
Merge or acquire a complementor one product line
cost reduction activities
plant locations
investment in R&D
differentiating through service
Full transcript