1) What are the most significant factors affecting competition in the metal container Industry? •Consumer demand/Preferences Consumers have started viewing packaging as more than functional. The container became an advertising vehicle and its features helped contribute to product sales. •Self-manufacture threat Temptation for major can users like food/beer producers to make their own cans was high. Campbell Soup Company had actually become one of the largest can producers in the US •Emergence of new materials such as aluminum, plastic for packaging Aluminum was light-weight; hence could be transported at lower costs and also recycled easily. Diversification of competitors The competitors of Crown Cork had started diversifying outside the metal container industry. American can started competing in the entire packaging area – metal containers, paper, plastics and laminated products. Some, like the Continental group, also diversified their operations and investments by expanding into foreign locations. •Research and Development Many of Crown’s competitors were spending heavily on basic research. 2) What strategy CCS have for competing in this Industry? •Restricted Research and DevelopmentOrder now
Crown’s R&D focused on enhancing existing product lines, leveraging their skill in die forming and metal fabrication and working with the sales force to address specific customer needs and requests. They viewed being second as a tremendous asset because they could do away with frills, take minimal risk in an industry in constant flux, let others make mistakes during R&D and learn from the innovators’ heartaches. •Focus on customer needs Crown believed that in an industry where there was little technical difference in product quality throughout the industry, the greatest competitive advantage was in providing a high-level of customer service. Fast answers get customers” was the belief held. Also, Crown provided customers with a single point of contact, backed by a sales force and a technical department with the ability to solve complex customer issues. •Invested in new plants Old plants (like the one in Philadelphia) with high production costs were closed down and new smaller plants (10 lines versus the old 50 lines) in geographically dispersed locations and close to the customer (rather than the material source) were built. Plants set up for multiple customers and located close to customer Plants were spread out across the country to reduce transportation costs and be nearer customers. It also didn’t concentrate on a single customer but provided products for a number of them so as to avoid a single point of failure. •International Expansion Crown and Cork concentrated on international growth, especially in developing nations. (In many cases the company received 10-year tax shelters) and hoped to get a first-mover advantage to capture 20-40% of all new geographic areas.