Management Case Analysis

1. What are the key issues that Avery needs to consider? What are his options?

The key issue that Avery needs to consider is whether the company Crown Cork & Seal should bid for part or all of Continental Can. He also has to evaluate whether Crown should break its tradition and broaden its product line beyond the metal can manufacture and closures (Bradley 1).

Avery had the option of diversifying beyond the manufacture of the containers. There are great opportunities in the containers, plastic closures, and glass containers (Bradley 13). Since the growth of business in metal containers was slowing down, plastic containers were the only container segment with much promise for development (Bradley 13). Avery’s second option was to get involved in the bidding for Continental Can. If the Crown Company acquired Continental Can Canada (CCC) with approximately $400 million in sales, Canada Crown would emerge as the most outstanding single presence out of the US (Bradley 13). Avery’s last option was to take two companies that had emerged from different cultures and merge them.

• How attractive has the metal container industry been over the years?

The evaluation of the attractiveness of the metal container industry will use the Five Forces Model. It will entail the assessment of the bargaining powers of the buyers, the bargaining power of suppliers, the threat of new entrants, the threat of substitute products or services, and rivalry among the competitors (HBS 1). The metal industry has competition from substitute products which are glass and plastics. The metal container industry occupied 61% of the market, 21% by the glass, and 18% by the plastic industry (Bradley 1). Before 1989, the metal container industry was booming due to many buyers, including Coca-Cola Company, Pepsico Inc., Anheuser-Busch Companies Inc., and Coca-Cola Eterprise Inc (Bradley 2). However, the consolidation within the soft drink segment reduced the number of buyers from 8,000 in 1980 to 800 in 1989, thus reducing the number of purchases and making the metal container industry decline in profits and growth (Bradley 2). In the year 1988, the metal container industry experienced a fallback. The aluminum suppliers increased the price to 15% while the steel prices advanced from 5% to 7% (Bradley 4). The in-house manufacturers were the entrants in the industry that threatened the success of the metal industry. The companies that produced the cans for their use accounted for about 25% of the total can output, which was significant competition for the traditional metal container industry (Bradley 4). The sector had major competitors such as American National can, Continental can, Reynolds metal, Ball corporation, Van Dorn Company, and Heekin Can (Bradley 7). An evaluation of the metal container industry using the Five Forces Model shows that the metal container company is becoming less attractive over the years. The company has competitors, rivalry, increased bargaining power of the suppliers, decreased buyers, new entrants’ presence, and substitute products’ presence.

• What were the keys to CCS’s success under John Connelly?

The Key elements to John Connelly’s success in CCS were the presence of tangible and intangible assets and the heterogeneous skill set. According to the resource-based view model (RBV), tangible assets are physical things that contribute to the company’s success (Jurevicius 1). From 1976 to 1989, Connelly spent approximately $82 million on new facilities and the company’s relocation (Bradley 10). The facilities that Connely spent the company’s money on were targeted to enhance the performance of the company in the market and the production of high-quality metal containers. According to Jurevicius, physical resources give a company little competition over its rivals since they can acquire the resources by purchasing them (Jurevicis 1). The intangible assets that Connelly used in the company for its success include the launch of a technology strategy that focused on enhancing the existing product line, the marketing strategy that entailed the production of quality products, and international growth. Connelly’s heterogeneous aspect that differed from the other companies was developing a product line structured on Crown’s traditional strengths in metal fabrication and forming (Bradley 9). Focusing on the company’s tangible, intangible and heterogeneous aspects enabled Connelly to run CCS successfully.

• What should Avery do?

Avery should diversify beyond the manufacture of plastics and containers. The strengths Avery would have by diversifying would be an increased market for consumers who prefer glass and plastic to metal cans. Diversification from the traditional metal can production is bound to cushion the CCS company from the losses that are bound to emerge from the decline of the metal can. The weakness of the diversification venture is the need for more capital for CCS to start production. The CCS lacks initial facilities and machinery to produce glass and plastic. Therefore, the company is bound to incur a lot of money in purchasing the necessary materials. Opportunities that the diversification venture is bound to provide for Avery is the room for more market. The potential threats are the stiff competition from the companies that produce glass and plastic products. The companies initially providing the plastics and glass already have an established market; therefore, Avery will struggle to acquire a new need for CCS. Regardless of the threats and weaknesses, it is a viable business idea for CCS to diversify its production.

Work Cited

Bradley, Stephen. Crown Cork & Seal in 1989. 2005.

HBS. “The Five Forces.” Havard Business School. https://www.isc.hbs.edu/strategy/business-strategy/Pages/the-five-forces.aspx

Jurevicis, Ovidijus. “Resource-Based View.” Strategic Management Insight, Nov. 2021. https://strategicmanagementinsight.com/tools/resource-based-view/