CROWN NATURAL AND SEAL COMPANY, INCORPORATION. In 1977, Crown Natural and Seal Company was the fourth greatest producer of metal cans and crowns1 in the United States. Underneath John Connelly, chairman and CEO, Crown had brought up itself up from near bankruptcy in 1957. Following 20 years of consistent growth, the company got emerged as a major force in both domestic and International steel container markets (see Demonstrate 1). During those two decades, Crown Natural and Seal off had targeted its manufacturing efforts upon tin-plated containers for possessing beer, soft drinks, and pulverizador products. This case looks at the metal container industry. Crown's strategy and position within just that Market, and the mother nature of the challenges facing the company during mid-1977. The Steel Container Market in 1977 The Metal Container Sector included 100 firms and a vast number of product lines. It describes the item segments in which Crown taken part, examines the Industry's competitive structure, and looks at 3 Industry large trends: (1) Increasing self-manufacture, (2) new material Introductions, and (3) the effect of the " packaging revolution" for the competitive ambiance. The Products The metal container Industry produced metal containers, crowns (bottle caps), and closures (screw caps, bottle of wine lids) over 135 Industrial sectors that use the products to hold or seal a nearly endless selection of consumer and Industrial items. Metal pots made up almost a third of all packaging items used In the U. T. in 1976. Metal pots included classic steel and aluminum containers, foil storage units, and metal drums and palls of most shapes and sizes. Of these, metal can lids were the greatest segment, getting to a value of $7. one particular billion in 1976. Containers were being used in more than 3/4 of all metal-container shipments. The original characteristics that promoted the use of the tin can easily and the crown in the early on 1900s nonetheless make them suitable to particular food and beverage packaging Careers. These qualities are: (1) Immunity to handling maltreatment; (2) capability to resist superb heat and pressure, permitting pasteurization inside the package; (3) preservation of any sterile condition for very long periods; (4) lightness compared with the contents; (5) amenability to fabrication in to differing sizes; and (6) low cost, permitting destruction after use. Further more advances in packaging technology, however , have got challenged the competitive strength of these features. Cans were composed of two basic unprocessed trash: aluminum and tin-plated metallic. Originally. these were formed by rolling a sheet of metal, soldering It, performing to the proper size, and attaching two ends, method Introduced by the aluminum sector made possible a two-piece may, The new may was formed by pushing a flat blank of metal Right into a deep glass, which eradicated the need for a different bottom. The item makers followed the term " drawn and ironedвЂќ through the molding treatment. The aluminum companies that developed the task, Alcoa and Reynolds, had done so with all the intention of turning the
process over to can manufacturers end therefore increasing uncooked material sales. 1Crowns happen to be flanged bottle caps, at first made with an insert of natural cork вЂ“ hence the name Crown Natural and Seal off
Yet , when the companies were hesitant to fees the large costs Involved in range changeovers, both aluminum corporations began building their own two-piece lines and competing straight in the end industry. The new can had positive aspects in weight, labor, and materials costs and was recommended by the Food and Drug Administration, that has been worried about business lead from soldered three-piece containers migrating in to the cans' articles. Tin-plated can easily producers quickly acknowledged the brand new process as the wave of the future. They quickly started to explore the options for drawing end ironing stool sets. By 1972 the strategy was perfected, and Investment dollars acquired begun to pour into line changeovers and fresh equipment acquisitions. Exhibit a couple of Illustrates...