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- Submitted by: dmcgaha
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- Date Submitted: 04/17/2011 07:45 AM
- Pages: 7
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QUESTION #1: How attractive is the metal container industry?
The business environment within the metal container industry in the 1980’s was a very attractive market due to the existence of significant opportunities and a relatively limited number of business threats. The maturity of this market and flatting sales created a golden opportunity for agile companies willing to invest in product refinements, service quality improvements, and process innovations to gain a greater percentage of market shares. Such was the case of Crown Cork & Seal (CC&S), a company that found itself poised to become a major force within the industry.
The primary strength of the metal container market is its vitality to the various manufacturing companies who are producing canned beverages and foods. Considering that 61% of all goods are packaged in a metal container, this industry represented an enormous opportunity. The durability of metal is an attractive feature, hence the $12.2 billion industry. In the 1980’s, a number of environmental factors changed the metal container industry forever. Notable changes include: material paradigm shifts (i.e. alternative materials), product format changes (i.e. two-piece vs. three-piece cans), rising materials and labor costs, fewer customers, and diseconomies of scale.
While the durable nature of metal was an advantage in the packing industry, the high mass of metal added significantly to the transportation costs of products thus proving to be a threat. Logistics expense is a significant portion of cost of goods sold. To reduce shipping costs, some packaging consumers searched for alternative material solutions. A number of alternative materials began to enter the market such as glass, which represented 21% of industry market share, and plastic representing an 18% industry market share in the late 1980’s. These materials represented a continued threat to the stability of metal container manufacturers such as CC&S.
Three-piece cans were...
The business environment within the metal container industry in the 1980’s was a very attractive market due to the existence of significant opportunities and a relatively limited number of business threats. The maturity of this market and flatting sales created a golden opportunity for agile companies willing to invest in product refinements, service quality improvements, and process innovations to gain a greater percentage of market shares. Such was the case of Crown Cork & Seal (CC&S), a company that found itself poised to become a major force within the industry.
The primary strength of the metal container market is its vitality to the various manufacturing companies who are producing canned beverages and foods. Considering that 61% of all goods are packaged in a metal container, this industry represented an enormous opportunity. The durability of metal is an attractive feature, hence the $12.2 billion industry. In the 1980’s, a number of environmental factors changed the metal container industry forever. Notable changes include: material paradigm shifts (i.e. alternative materials), product format changes (i.e. two-piece vs. three-piece cans), rising materials and labor costs, fewer customers, and diseconomies of scale.
While the durable nature of metal was an advantage in the packing industry, the high mass of metal added significantly to the transportation costs of products thus proving to be a threat. Logistics expense is a significant portion of cost of goods sold. To reduce shipping costs, some packaging consumers searched for alternative material solutions. A number of alternative materials began to enter the market such as glass, which represented 21% of industry market share, and plastic representing an 18% industry market share in the late 1980’s. These materials represented a continued threat to the stability of metal container manufacturers such as CC&S.
Three-piece cans were...