1. 1 Crown Cork and Seal Adam Francis, Greg Cullen, Angus Walker, Terje Fiskvik 7/3/03 1.What are the most significant factors affecting competition in the metal container industry? Consumer demand/Preferences Technological Change Environmental / Legislative Risk Number of Competitors Geographic location of plant and customer Infrastructure Investment Research and Development

2. 2 Crown Cork and Seal Adam Francis, Greg Cullen, Angus Walker, Terje Fiskvik 7/3/03 2.Have these factors changed over time? Consumer demand/Preferences – The consumer is more aware of needs and ability To manufacture to desired specification (Packaging) Technological Change – Tin manufacturing lines have reduced in cost, as manufactures lost clients which in turn lead to a reduced cost of approx 80%. Environmental / Legislative Risk – Ozone hazards relating to fluorocarbons and the Value of recycling tin was less than aluminum. Number of Competitors – Decreased considerably due to increased manufacturing and logistics, and the reduction of consumer demand. Geographic location of plant and Infrastructure Investment – They increased the number of plants by 300%, reduced the size and based them close to customer rather than raw material. Research and Development – Crowns R&D focused on enhancing their existing product line. Their preference was to perfect their technology that they were using, and let others take the risks.

3. 3 Crown Cork and Seal Adam Francis, Greg Cullen, Angus Walker, Terje Fiskvik 7/3/03 3.What strategy does Crown Cork have for competing in this industry? Not much Research and Development Focus on customers needs Invested in new plants Plants set up for multiple customers Located plants close to customer International Expansion – Crown and Cork concentrated on international growth, especially in developing nations. (In many cases the company received 10-year tax shelters)

4. 4 Crown Cork and Seal Adam Francis, Greg Cullen, Angus Walker, Terje Fiskvik 7/3/03 4. What advantages, if any, does a firm the size of Crown Cork have over American Can and Continental Can? They don’t have as many organisational obstacles and are able to react quicker to product innovation As they would have lower overheads than the 2 majors they don’t have to follow suit & diversify, they are able to specialise on tin products. Do not have a high Research and Development budget as they are not interested. They are able to let others take the risks and make mistakes during R&D and learn from the innovators heartaches.

5. 5 Crown Cork and Seal Adam Francis, Greg Cullen, Angus Walker, Terje Fiskvik 7/3/03 5.How would you explain the comparisons shown in exhibit 3 in this case? Total Company Performance The 2 majors both Continental Group and American Can had the highest Sales and Net Income for the period between 1967-76 but were overshadowed by Crown Cork and Seal for growth in Sales and Profit for the same period. Both National Can and Crown Cork and Seal had the highest ROE against the 2 giants of the industry and Crown Cork and Seal the lowest Debt Ratio. Metal Can Segments (domestic) Whilst Crown Cork and Seal had the lowest sales for this segment it had the largest as a % of sales percentage. Also interesting was the fact that Crown Cork and Seal had the lowest amount of can plants. The number of Crown Corks plants was approx 269% less then than largest Continental Groups. (ie Reduced Assets therefore lower overheads) Whereas Crown Corks Net Income was only 161% less than Continental Groups.

6. 6 Crown Cork and Seal Adam Francis, Greg Cullen, Angus Walker, Terje Fiskvik 7/3/03 6.Identify and discuss the major problems facing Crown, Cork and Seal. The Ozone Controversy – Most tests supported the basic thesis that fluorocarbons were in some way damaging to the ozone layer. Regulating Nonreturnable Containers – Legislative restrictions on the use of nonreturnable containers threatened Crown Cork. The EPA banned throwaways from federal property. Economic Impact – Laws posed a threat as would increase beer and soft drink prices. Deposits and Recycling – This new system favored aluminum cans because of the higher value reclaimed for aluminum and the recycling network already existed.

7. 7 Crown Cork and Seal Adam Francis, Greg Cullen, Angus Walker, Terje Fiskvik 7/3/03 7. What recommendations would you make to John Connelly as of the end of the case? Employ the assistance of external experts to identify and evaluate: Employ political lobbyists to combat possible legislation that reduces the use for products manufactured by Crown Environmental concerns with products Industry specific advice Review current technology Market penetration

8. 8 Crown Cork and Seal Adam Francis, Greg Cullen, Angus Walker, Terje Fiskvik 7/3/03 7.What recommendations would you make to John Connelly as of the end of the case? Cont… Marketing approach Additional and or synergistic markets Plant locations Efficiencies at plants (Just-in-Time manufacture?) Efficiencies for raw materials New types of raw material Employment efficiencies

9. 9 Crown Cork and Seal Adam Francis, Greg Cullen, Angus Walker, Terje Fiskvik 7/3/03 7.What recommendations would you make to John Connelly as of the end of the case? Cont… Continue with Customer service approach Re-evaluating fabrication processes looking for efficiencies Tight financial controls on spending Quick response times to customers

10. 10 Crown Cork and Seal Adam Francis, Greg Cullen, Angus Walker, Terje Fiskvik 7/3/03 © Hampson, 2000

11. 11 Crown Cork and Seal Adam Francis, Greg Cullen, Angus Walker, Terje Fiskvik 7/3/03