Crown Cork and Seal Company - An Industry Analysis

Industry type - Packaging industry.

In order to make any strategic decision it is important that we first analyze the external and the internal environment of any firm. This gives us a direction to the decision which we have to make.

Thus in order to come to a conclusion a path needs to be followed which includes identifying the problem in the case, strategic analysis of the company which helps you solve the identified problem and also looking for any feasible alternative solution.

1) Problems – Newly appointed CEO, threats from changing environment, Expensive Metal, unwillingness to take risk.

2) Solution for any problem -- we externally analyze the company, which refers to industry analysis. This is done using the PORTER’S FIVE FORCES which analyses any industry on five factors

Porter’s 5 forces :

1) Barriers to Entry - Things that affect are Capital Requirements, Product Differentiation, access to distribution Channel, Switching Cost, Government subsidies. No effects.

2) Substitutes - By entering plastic and glass container industry, crown is getting a step ahead to "acquire" the substitutes. As business volume and demand increased, plastic were introduced. Also metals are expensive than plastic. This lesson the threats.

3) Bargaining power of Sellers - Suppliers have many customers (in other industries).There are fewer substitutes for that input (e.g. Oil vs Glass/Plastic).It is costly to switch suppliers (product differentiation between suppliers).The input is more important for buyers. The supplier is able to forward-integrate.

4) Bargaining power of Buyers - Buyer pose a threat of backward integration. Buyers (soft drink manufacturers) were not likely to do in-house bottling than metal canning. Lessen the threat.

5) Intensity of Rivalries – High competition. Competition depends on pricing, manufacturing, distribution, geography, etc. American National Can toped this industry.

This helps us understand the external conditions of the industry.

Contributed By:

Anjali Ojha

Section A

Strategic Management

Class of 2013-15