Crown Cork & Seal in 1989

Case: Crown Cork & Seal in 1989

• Question One What are the key strategic issues that Avery needs to consider? What strategic options are open to him?

The key strategic issues that Avery ought to consider include the dynamic aspect of the industry. It is evident that the trends that existed in the 1930s era, during Connelly leadership, have changed. Therefore, it is important to ensure that the company is well positioned to adapt to the changing pace within the industry. Another issue to consider is the proximity of the foreign plants to the potential customers. Notably, the distance between manufacturing plants and the potential customers must be maintained low to reduce operation cost. Moreover, the competency of the organizations to be bought must be evaluated to assess their potential and their capacity to expand in their respective markets.

The Key strategic options available include merging with the foreign companies before acquiring them to validate their actual potential. Also, obtaining the foreign manufacturing plants of Continental Can and then establishing new manufacturing plants closer to the customers is a viable option. Venturing in the plastic and glass industry is another option that can be exploited.

• Question Two If we are going to analyse the industry that Crown competes in, what is the appropriate industry to analyse?

The analysis of the sector that Crown competes would mainly focus on the metal production industry. The production of the cans relies on the sourcing of particular metals to meet the clients’ expectations. Therefore, it is evident that the business feasibility of Crown is influenced by its ability to make the metallic cans with the customers’ specification. Moreover, raw materials constitute over 30% of the metallic can production costs. Hence, it makes the sourcing of metals the primary driver of the company to remain competitive.

• Question Three How attractive has the metal container been over the years?

The metal container industry has remain lucrative in the past 20 years as organizations have managed to stay afloat even when faced with significant hurdles including increased competition. The entry of new players remains low due to the high costs of establishing manufacturing plants. Therefore, the firms that have already established strong customer relations and viable supply chains can remain functional in the industry. Moreover, the sourcing of the raw materials is not a major hurdle, which a beneficial factor for the companies to stay competitive.