Crown Cork And Seal Case Summary

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1. Using the consolidated financial data for Crown, Cork and Seal, identify and post trends you think are both positive and negative for the company. Positive Trends In reviewing 1982 to 1988, Crown Cork and Seal’s net sales, net profit rose, and gross margin increased. These numbers grew while their selling, general and administrative expenses decreased from 3.3% of sales in 1982 to 2.8% of sales in 1989. The company’s return on average equity nearly increased as well; in addition, long-term debt was reduced and stock prices soared. Negative Trends 1. Competitive pricing: Following the low operating costs, operating margin in the can industry dropped by 3% between 1986 -1989 due to; • Production capacity for beverage can increased by 7% in 1989 •…show more content…
Diversification and consolidation: Due to small profit margins, too much capacity and high material and labor prices made a number of major corporate to opt to diversify and subsequent consolidation. For instance, America Can move to a totally unrelated filed insurance by slowly reducing can manufacturing. 2. If you were Avery, what strategy would you pursue to position Crown, Cork and Seal for the future and why? I would express my interest in the plastic industry and offer to buy Continental Can Company. It is most evident that plastic containers are the future trend after looking at SWOT Analysis together with the Five Forces Analysis. Accordingly, it was the perfect chance to bid for Continental Can Company ownership. Acquiring ownership of Continental Can Company would prove advantageous to Crown, Cork and Seal and make it more competitive in the target markets. Advantages of entrance to the plastic container industry; • Increase in market gap for the container industry • Lowering freight costs because of the light weight of plastics. • Plastics can be shaped and made in different patterns hence advantageous for marketing and shipping. • Plastics are made from natural resources such as

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