CASE STUDY

A can-do kind of company Crown Cork & Seal Company, Inc. is the world's leading manufacturer of packaging products for consumer goods. If it fits in a box, oozes from a bottle, or squirts from a pump, 50-year-old Crown Cork & Seal has it all wrapped up. The company's products include metal cans for food and beverage, plastic packaging for health and beauty products, and a dizzying array of caps, closures, pumps, and dispensing systems. Much of the company's success is due to John Connelly, the company's longtime CEO who passed away in 1990. When other can manufacturers jumped on the 2-piece aluminum can bandwagon, Connelly held on to existing 3-piece can technology. The competitors floundered and CC&S survived, debt-free, well into the 1980s.

ENVIRONMENT MEETING CUSTOMER DEMANDS TYPE OF PRODUCT COST OF EQUIPMENT ALTERNATE MATERIALS UNCONTROLLABLE MARKET FORCES

MANUFACTURING METHODS ENERGY EFFICIENT PROCEDURE

PUBLIC PERCEPTION ENVIRONMENTAL CONCERNS

OZONE LAYER LITTER AND RECYCLING TASTE AND CONTAMINATION

ADOPTED A “LONG TERM” STRATEGY R&D EXPENDITURE LIMITED TO IMPROVING EXISTING

PRODUCTS CENTRALIZE SUPPORT FUNCTIONS & ACCOUNTABILITY IMPROVED INVENTORY CONTROL FOCUS ON TRADITIONAL STRENGTH, METAL FORMING

AND FABRICATION – TRADITIONAL CORE COMPETENCIES “The biggest key to Connolly’s success strategy was

that he himself lived, breathed and supported without variation in his policies and strategy.”

SINGLE DIRECTION & FOCUS ON CORE COMPETENCIES

REDUCED RISK FROM NON DIVERSIFICATION UNWAVERING SUPPORT OF MANAGEMENT EXCELLENT REPUTATION – CUSTOMER

DRIVEN LEAN, MEAN, FIGHTING MACHINE

VARIANCE OPERATING COSTS – CROWN CORK MORE EFFICIENT IN PRODUCTION CONSEQUENCES OF PRODUCT SPREAD

INCREASED COST OF DOING BUSINESS DUE TO DIVERSIFICATION COMPANIES THAT DIVERSIFIED TOOK THE RISK

SALES AND PROFITS WERE HIGHER DUE TO THE ‘BEING SECOND’ POLICY I.E TWO PIECE CAN PRODUCTION LIMITED R&D PROVIDED GREATER RETURN ON EQUITY INTERNATIONAL EXPANSION – RESULTED IN CC&S BEING THE LARGEST PRODUCER O/S

NOT REALISING TECHNOLOGICAL ADVANCES AND MARKET TRENDS

COST OF MANUFACTURE – OVERSEAS CHEAPER US DOLLAR LIMITS EXPORT PRIMARY MARKET IN A MATURE LIFE CYCLE STAGE NOT PERSUING LARGE MARKETS OR CUSTOMERS STALLED GROWTH – WITHIN CONSTRAINED MARKET TAKE-OVER TARGET – LOW DEBT/EQUITY RATIO

BUY OUT / MERGE WITH OPPOSITION COMPANIES

DIVERSIFY – PLASTICS AND GLASS RECRUIT/DEVELOP KNOWLEDGE BASE OF

THE PLASTIC INDUSTRY – TIME FRAME PERSUE ALTERNATE CUSTOMERS RESEARCH AND DEVELOPMENT MIGRATE CURRENT PRINCIPLES &

STRATEGIES INTO GROWING MARKETS

CONNELLY - “ Crown made itself the best metal can manufacturer in the world by being an excellent supplier, a client problem solver “

WILLIAM AVERY C.E.O. 1989 223 PLANTS IN 49 COUNTRIES 1990 CONSOLIDATION – ACQUIRED CONTINENTAL CAN 1992 GOT INTO PLASTICS – ACQUIRED CONSTAR &

BECAME LEADER IN P.E.T. PRODUCTS ( PLASTIC ) 1993 – FOOD CANNING – ACQUIRED VAN DORN 1996 – PACKAGING – ACQUIRED CARNUAD METALBOX