Tuesday, 10 December 2013

Should William J. Avery continue with the traditional strategy being followed at Crown? why? why not? - An insight into the Crown Cork and Seal Case!


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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