Avery, the new CEO of
Crown Cork & Seal had been the president of the
company since 1981. While he was the President, he had spent his duration of
his career in Connelly’s shadow. It was Connelly who structured the company to
be successful by framing effective strategies like cost efficiency, quality and
customer service.
The Crown’s traditional
strategy focused on tin cans and crowns.
They also decided to be the second player in the market as research and
development was not their strength and preferred to learn from other firm’s
mistakes. Now, Avery has to decide whether to continue their traditional
strategy of manufacturing metal cans or expand Crown’s product line to plastics
since it is seen as a growth segment for containers since Crown’s rivals are merging
or expanding their product lines. If Crown continues to manufacture metal cans,
the growth of the company will diminish since there is little growth potential
for metal cans. Moreover, low profit margins, rising material and labor cost makes
diversification and consolidation crucial. Also the metal can industry is
highly commoditized and leaves no scope for innovation in order to have a sustained
growth in the industry.
Avery should continue
with the traditional strategy in order to maintain their existing client base. Moreover,
there is no surety of success in the new product line since there is tough competition
in the market. If he decides to continue with the traditional strategy ignoring
the opportunities of diversification and merger then Crown will continue to
grow at a declining rate which will lead to the company’s extinction.
So, Avery can continue
with the traditional strategy of manufacturing metal cans along with diversifying
its product line to plastics or glass or merging with Continental Can or
integrate itself with Pepsi or Coca Cola Company for its continuous existence
in the market.
Contributed By:Anjana Vishwanathan
Strategic Management
Class of 2013-15
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