CROWN CORK AND

SEAL COMPANY

BRIEF OVERVIEW
In 1977, Crown Cork and Seal Company was the fourth
largest producer of metal cans and crowns in the
United States
The company had emerged as a major force in both the
domestic and International metal container markets
This case looks at the metal container industry. Crown's
strategy and position within that Industry, and the
nature of the problems facing the company during mid1977.

FACTORS AFFECTING COMPETITION

Large number of companies in the same market.
High investment cost: Three piece lines - $750,000 %1,000,000 per line; 12-15 lines ; Total $3.5 million
investment in equipment. Two piece lines - $10-15
million per line, required optimally 5 lines.
High raw material cost
Alternate material such as aluminum, plastic and fiber
foil
Self manufacture by backward integration by other
companies

STRATEGY FOR COMPETING

Adopted long term strategy
R&D expenditure limited to improving existing products
Improved inventory control
Expansion into underdeveloped countries
Focus on traditional strength, metal forming and
fabrication
Keeping debt levels low
Bought back preferred shares
Each salesman selling entire range of products. This
consolidation was thought to provide customers with a
service unique in the industry a single contact for
crowns, cans, closures, and machinery.

ADVANTAGES OVER OTHER COMPANIES

Reduced risk due to non diversification
Single direction and focus on core competencies
Excellent Reputation
Small size and rapidly changeable
Exhibit 3
Shows very high net income to sales ratio compared to
other three. This could be attributed to less overhead
expenses
Sales and profits were higher due to being second
policy
Limited R & D provide greater return on equity
Increasing international sales

RECOMMENDATIONS
Buy Out/Merge with opposition companies
Diversify materials Plastics and fibre
Research and development
Develop knowledgebase of the plastic industry
Move to developing markets for low cost manufacturing
Diversify product lines to accommodate new market
developments (like Aerosols)

THANK YOU