crown cork and seal 2
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case analysisTRANSCRIPT
Crown Cork and SealAdam Francis, Greg Cullen, Angus Walker, Terje Fiskvik 7/3/03
What are the most significant factors affecting competition in the metal container industry?
Consumer demand/Preferences
Technological Change
Infrastructure Investment
Have these factors changed over time?
Consumer demand/Preferences – The consumer is more aware of needs and ability
To manufacture to desired specification (Packaging)
Technological Change – Tin manufacturing lines have reduced in cost,
as manufactures lost clients which in turn lead to a reduced cost of approx 80%.
Environmental / Legislative Risk – Ozone hazards relating to fluorocarbons and the
Value of recycling tin was less than aluminum.
Number of Competitors – Decreased considerably due to increased manufacturing
and logistics, and the reduction of consumer demand.
Geographic location of plant and Infrastructure Investment – They increased the
number of plants by 300%, reduced the size and based them close to customer rather
than raw material.
Research and Development – Crowns R&D focused on enhancing their existing product line.
*
Adam Francis, Greg Cullen, Angus Walker, Terje Fiskvik 7/3/03
What strategy does Crown Cork have for competing in this industry?
Not much Research and Development
Focus on customers needs
Invested in new plants
Located plants close to customer
*
Adam Francis, Greg Cullen, Angus Walker, Terje Fiskvik 7/3/03
4. What advantages, if any, does a firm the size of Crown Cork have over American Can and Continental Can?
They don’t have as many organisational obstacles and are able to react quicker to product innovation
As they would have lower overheads than the 2 majors they don’t have to follow suit & diversify, they are able to specialise on tin products.
*
Adam Francis, Greg Cullen, Angus Walker, Terje Fiskvik 7/3/03
How would you explain the comparisons shown in exhibit 3 in this case?
Total Company Performance
The 2 majors both Continental Group and American Can had the highest Sales and Net Income for the period between 1967-76 but were overshadowed by Crown Cork and Seal for growth in Sales and Profit for the same period.
Both National Can and Crown Cork and Seal had the highest ROE against the 2 giants of the industry and Crown Cork and Seal the lowest Debt Ratio.
Metal Can Segments (domestic)
Whilst Crown Cork and Seal had the lowest sales for this segment it had the largest as a % of sales percentage.
*
Adam Francis, Greg Cullen, Angus Walker, Terje Fiskvik 7/3/03
Identify and discuss the major problems facing Crown, Cork and Seal.
The Ozone Controversy – Most tests supported the basic thesis that fluorocarbons were in some way damaging to the ozone layer.
Regulating Nonreturnable Containers – Legislative restrictions on the use of nonreturnable containers threatened Crown Cork. The EPA banned throwaways from federal property.
Economic Impact – Laws posed a threat as would increase beer and soft drink prices.
*
Adam Francis, Greg Cullen, Angus Walker, Terje Fiskvik 7/3/03
7. What recommendations would you make to John Connelly as of the end of the case?
Employ the assistance of external experts to identify and evaluate:
Employ political lobbyists to combat possible legislation that reduces the use for products manufactured by Crown
Environmental concerns with products
Adam Francis, Greg Cullen, Angus Walker, Terje Fiskvik 7/3/03
7. What recommendations would you make to John Connelly as of the end of the case? Cont…
Marketing approach
Plant locations
Efficiencies for raw materials
Employment efficiencies
Adam Francis, Greg Cullen, Angus Walker, Terje Fiskvik 7/3/03
7. What recommendations would you make to John Connelly as of the end of the case? Cont…
Continue with
Tight financial controls on spending
Quick response times to customers
*
© Hampson, 2000
© Hampson, 2000
EVOLUTIONARY PROCESS FRAMEWORK FOR TECHNOLOGY STRATEGY
(Burgelman & Rosenbloom, 1989 and adapted by Hampson, 2000)
TECHNOLOGY
STRATEGY
EXPERIENCE
TECHNICAL
CAPABILITIES
© Hampson, 2000
Management and PropertyManagement and Property
PROJECT MANAGEMENT PROGRAMPROJECT MANAGEMENT PROGRAM
Innovation and Technology ManagementInnovation and Technology Management
EVOLUTIONARY PROCESS FRAMEWORK FOREVOLUTIONARY PROCESS FRAMEWORK FOR
TECHNOLOGY STRATEGYTECHNOLOGY STRATEGY
TECHNOLOGY
STRATEGY
EXPERIENCE
TECHNICAL
CAPABILITIES
What are the most significant factors affecting competition in the metal container industry?
Consumer demand/Preferences
Technological Change
Infrastructure Investment
Have these factors changed over time?
Consumer demand/Preferences – The consumer is more aware of needs and ability
To manufacture to desired specification (Packaging)
Technological Change – Tin manufacturing lines have reduced in cost,
as manufactures lost clients which in turn lead to a reduced cost of approx 80%.
Environmental / Legislative Risk – Ozone hazards relating to fluorocarbons and the
Value of recycling tin was less than aluminum.
Number of Competitors – Decreased considerably due to increased manufacturing
and logistics, and the reduction of consumer demand.
Geographic location of plant and Infrastructure Investment – They increased the
number of plants by 300%, reduced the size and based them close to customer rather
than raw material.
Research and Development – Crowns R&D focused on enhancing their existing product line.
*
Adam Francis, Greg Cullen, Angus Walker, Terje Fiskvik 7/3/03
What strategy does Crown Cork have for competing in this industry?
Not much Research and Development
Focus on customers needs
Invested in new plants
Located plants close to customer
*
Adam Francis, Greg Cullen, Angus Walker, Terje Fiskvik 7/3/03
4. What advantages, if any, does a firm the size of Crown Cork have over American Can and Continental Can?
They don’t have as many organisational obstacles and are able to react quicker to product innovation
As they would have lower overheads than the 2 majors they don’t have to follow suit & diversify, they are able to specialise on tin products.
*
Adam Francis, Greg Cullen, Angus Walker, Terje Fiskvik 7/3/03
How would you explain the comparisons shown in exhibit 3 in this case?
Total Company Performance
The 2 majors both Continental Group and American Can had the highest Sales and Net Income for the period between 1967-76 but were overshadowed by Crown Cork and Seal for growth in Sales and Profit for the same period.
Both National Can and Crown Cork and Seal had the highest ROE against the 2 giants of the industry and Crown Cork and Seal the lowest Debt Ratio.
Metal Can Segments (domestic)
Whilst Crown Cork and Seal had the lowest sales for this segment it had the largest as a % of sales percentage.
*
Adam Francis, Greg Cullen, Angus Walker, Terje Fiskvik 7/3/03
Identify and discuss the major problems facing Crown, Cork and Seal.
The Ozone Controversy – Most tests supported the basic thesis that fluorocarbons were in some way damaging to the ozone layer.
Regulating Nonreturnable Containers – Legislative restrictions on the use of nonreturnable containers threatened Crown Cork. The EPA banned throwaways from federal property.
Economic Impact – Laws posed a threat as would increase beer and soft drink prices.
*
Adam Francis, Greg Cullen, Angus Walker, Terje Fiskvik 7/3/03
7. What recommendations would you make to John Connelly as of the end of the case?
Employ the assistance of external experts to identify and evaluate:
Employ political lobbyists to combat possible legislation that reduces the use for products manufactured by Crown
Environmental concerns with products
Adam Francis, Greg Cullen, Angus Walker, Terje Fiskvik 7/3/03
7. What recommendations would you make to John Connelly as of the end of the case? Cont…
Marketing approach
Plant locations
Efficiencies for raw materials
Employment efficiencies
Adam Francis, Greg Cullen, Angus Walker, Terje Fiskvik 7/3/03
7. What recommendations would you make to John Connelly as of the end of the case? Cont…
Continue with
Tight financial controls on spending
Quick response times to customers
*
© Hampson, 2000
© Hampson, 2000
EVOLUTIONARY PROCESS FRAMEWORK FOR TECHNOLOGY STRATEGY
(Burgelman & Rosenbloom, 1989 and adapted by Hampson, 2000)
TECHNOLOGY
STRATEGY
EXPERIENCE
TECHNICAL
CAPABILITIES
© Hampson, 2000
Management and PropertyManagement and Property
PROJECT MANAGEMENT PROGRAMPROJECT MANAGEMENT PROGRAM
Innovation and Technology ManagementInnovation and Technology Management
EVOLUTIONARY PROCESS FRAMEWORK FOREVOLUTIONARY PROCESS FRAMEWORK FOR
TECHNOLOGY STRATEGYTECHNOLOGY STRATEGY
TECHNOLOGY
STRATEGY
EXPERIENCE
TECHNICAL
CAPABILITIES