The company supplier power is larger in its international operations than in domestic business transactions. In the U.S. the supplier power is concentrated in three companies that have the three largest market shares. The material that changed the industry and cannibalized the soft drink can industry is aluminum.
The threat of new entrants can be categorized as medium low. The industry is controlled by five companies that have a combined 61% share in the U.S. (Bradley). The rest of the marketplace is served by over 100 independent companies. Due to the high value of the market which is worth over $12.2 billion there are always going to be entrepreneurs interested in penetrating the market. This industry is capital intensive and requires a high investment in machinery and equipment to set up an operation. Engineering knowledge is imperative for the success of a company. Since there are a few hundreds players in this industry another entrant could successfully penetrate even though the existence of high barriers of entry.
The Buyer power of Crown Cork & Seal is medium high. The company currently has a market share of 7%. In 1989 the company produced 120,795 million cans. Its buyer power is higher in the international arena than in the United States. One of the competitive advantages the company enjoys is lower direct labor costs due to cheaper labor prices overseas. The company has the capability to achieve economies of scales in the purchase of raw materials such as plastic, steel, and aluminum. Economies of scale enable companies to lower the cost of buying materials.
The threat of substitutes in the industry is medium. In regards to the sale of soft drinks can the majority of manufacturers utilize aluminum. In terms of packaging the biggest threat to metal packaging is plastic. Plastic is a petroleum derivative. The utilization of research and development allows companies to bring innovation to the industry. The company has a passive strategy in its ...
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(“Case Study Example | Topics and Well Written Essays - 750 words - 24”, n.d.)
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(Case Study Example | Topics and Well Written Essays - 750 Words - 24)
“Case Study Example | Topics and Well Written Essays - 750 Words - 24”, n.d. https://studentshare.net/miscellaneous/530603-case.
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