Crown

In: Business and Management

Submitted By duciii94
Words 2057
Pages 9
* The moves by both suppliers and customers of can makers to integrate into can manufacturing themselves had profoundly redefined the metal can industry since John Connelly’s arrival. * analysts saw little growth potential for metal cans in the 1990s * Industry observers forecast plastics as the growth segment for containers. By 1983, two-piece cans dominated the beverage industry where they were the can of choice for beer and soft drink makers. Of the 120 billion cans produced in 1989, 80% were two-piece cans. While aluminum companies developed the original technology for the two-piece can, steel companies ultimately followed suit with a thin-walled steel version. * The number of aluminum cans produced increased by almost 200% during the period 1980–1989, reaching a high of 85 billion, while steel can production dropped by 22% to 35 billion for the same period * Since the can constituted about 45% of the total cost of a packaged beverage, soft drink bottlers and brewers usually maintained relationships with more than one can supplier. Poor service and uncompetitive prices could be punished by cuts in order size. * Many large brewers moved to hold can costs down by developing their own manufacturing capability.4. By the end of the 1980s, the beer industry had the capacity to supply about 55% of its beverage can needs. Captive manufacturing was not widespread in the soft drink industry, where many small bottlers and franchise operations were generally more dispersed geographically compared with the brewing industry. * soft drink industry accounted for 42% of metal cans shipped in 1989—up from 29% in 1980. The major beneficiary of this trend was the aluminum can.

Five Forces

Bargaining power of buyers

* Who are the potential buyers? Many of the buyers are large powerful companies: large breweries (Anheuser Busch, Miller Beer, etc.),…...

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