Crown Cork and Seal CaseGroup -1, SECTION - 3

ABHINAV CHAURASIA (FT163002)

AKANKSHA SHUKLA (FT163009)

ARSH PRAKASH (FT163014)

ARSHIA PARVEEN (FT163015)

DEBHARSHI BHATTACHARYA (FT163018)

GARIMA SINHA (FT163023)

JAY GHOSH KHEMKA (FT163033)

What are the most significant factors affecting competition in the metal Container Industry ?

• Canning Technology Change

• Micro Economic Scenario

What Strategy does CCS have for competing in this industry ?

• Value Proposition:

• CCS did not diversify in to other industries like forest produce and plastics

• CCS did not compete with fibre foil cans for motor oil can market.

• Target Segment:

• They targeted two major segments: beverage and aerosol market.

• They expanded their distribution network in domestic market and invested heavily in underdeveloped nations.

• Manufacturing: Invested heavily in geographically new plants to reduce transportation cost .

• Marketing/Service: CCS provided high level of customer service.

What advantages does CCS have over competitors?

• Early Mover Advantage: CCS made Industry’s first aerosol container way back in 1946

• Logistics: CCS relies heavily on efficient logistics therefore enjoys a high delivery speed

• Environment: The economic scenario supports a higher growth in beverage industry where CCS enjoys a significant influence over its competitors

• Marketing: Competent sales force and technical department to resolve customer problems.

• Research: R&D department focused on enhancing the existing product line.

• In 1962 it introduced the first beverage – filling machine that could handle both bottles and cans. This coupled with favourable market growth in the beverage industry gives them a distinct advantage

Explain the comparisons in exhibit 3 of the case

• Market Players: Continental (18.4%) and American Can (16.6%) are well ahead of National Can (8.7%) and CCS (8.3%) in market share

• Revenue: Market leaders(Continental and American Can) generate up to 9 times more sales and 5 times more Net Income than the underdogs (National Can and CCS)

• Growth Rates: During 1967-76, Underdogs show sales growth of over 200% and profit growth of over 145% while the market leaders grow at 100% and 33% respectively.

• Capital Utilisation (Sales per Can Plant): Continental (764) and American (1107) are way ahead of National Can (144) and CCS (227) signifying Economies of Scale advantage

• CCS enjoys minimum Debt Ratio at 23 % and highest Return on Equity at 15.8%

What recommendations would you make to the management?

Supply Side:

CCS should open more plants to expand its base and enjoy economies of scale. They could try inorganic growth through market consolidation and acquisition of smaller can manufacturers

CCS should try aluminium cans and should see how they can reduce its cost. They could use double declining depreciation for the newly acquired two-piece can operations to enjoy tax benefits

Demand Side:

Venture into under developed nations and look at customer diversification

Thank You