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SUSQUEHANNA UNIVERSITY
Consumer Metal, Glass, and Plastic Packaging Industry
Crown Holdings Inc. V.S. Rexam PLC
Todge C. Aumiller
3/1/2012
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Table of Contents Page #
Executive Summary 3
Consumer Packaging Industry Overview 4
Industry Boundaries and Structure 4
Industry Size 5
Strategic Group Analysis 7
Scale and Scope 10
Market share of top competitors 12
Broad Industry Environment 14
Political/Social/Legal Factors 14
Macroeconomic Factors 14
Demographic Factors 15
Corporate Social Responsibility/Environmental Impact 16
Porter’s Five Forces 17
Supplier Power 18
Threat of Entrants 20
Industry Rivalry 20
Threat of Substitutes 21
Buyer Power 22
Change Factors 22
Technology/Productivity 22
Globalization 24
Mergers and Acquisitions 24
Buyer behavior 25
Company Comparison: Crown Holdings Inc. & Rexam PLC. 26
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Missions, Philosophy, and Levels of Strategy 26
Mission an Philosophy of Crown Holdings Inc. 26
Mission an Philosophy of Rexam PLC 28
Mission and Philosophy Comparisons Between Crown Holdings and Rexam 30
Brief Statement of Current Strategies 31
Level of Enterprise 31
Level of Corporation 34
Level of Primary Business 37
Social Responsibility and Environmental Impact Strategies for Sustainability 40
Strategic Use of Information Technology 46
S.W.O.T. Analysis 48
Strengths 48
Weaknesses 51
Opportunities 53
Threats 54
Datamonitor Review of SWOT and Commentary 57
Financial Analysis 58
Common Sized Spread Sheets & Commentary: Crown Holdings Inc. 58
Common Sized Spread Sheets & Commentary: Rexam PLC. 62
Analysis of Key Ratios: Crown Holdings & Rexam PLC. 64
Growth Rates and Trends 67
Asset Quality 70
Current and Alternative Strategies 71
Strategic Choices 74
Annotative Bibliography 79
Appendix A 85
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EXECUTIVE SUMMARY
Consumer Metal, Glass & Plastic Packaging Industry
The consumer packaging industry encompasses a small number of large companies, who
through subsidiaries, operate in numerous regions around the globe. Extensive, product-specific
manufacturing subsidiaries compete innovatively within their regions for a slice of the market
share in metal, glass, and plastic consumer packaging. In this industry, key players, such as
Crown Holdings Inc. and Rexam PLC, have established regional subsidiaries and diversified
their product portfolio while primarily focusing on certain strategic sectors. Spreading out
through various geographical markets lowered product-specific risk substantially, and brought in
multiple revenue streams, becoming key strategic moves to minimize competition. The small and
large subsidiaries, as well as the individual regionally based companies compete in each
geographical and product specific segment. Low product differentiation, close substitutes, and
high exit costs in consumer packaging spawn fierce competition. Crucial components for success
are efficiency, innovation, and creativity. Innovation creates the highest competitive advantage
for buyer’s preference, when considering future movement towards green initiatives and a
decreased amount of packaging.
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Industry Boundaries and Structure
Metal, plastic, and glass consumer packaging is an industry immaculate in size, covering
the entire globe, while having hundreds of billions of dollars in revenue each year. Robert M.
Grant suggests that an industry is “a group of firms that supplies a market”. (2010). the industry
is supplied by a vast number of firms comprising of a small number of large firms with
subsidiaries around the globe, who have billions of dollars’ of revenue each year. The largest
company itself only captures about 3% of the total market share, indicating a mature industry
established centuries ago, changing in scope and scale dramatically (Datamonitor360, 2011:6).
The remaining companies in the industry are smaller globally based firms with tinier
subsidiaries. And small individual companies located around the globe, which are either
nationally or regionally based. With so many different product segments in consumer packaging
many companies specialize within a certain product and/or material, for example Crown
Holdings, has claimed that one out of every five metal cans globally is produced by them (Smart
Media Limited,2011). Rexam PLC, also flying into the metal can packaging segment on the
wings of Red bull, but the energy drink can niche is fading and the energy shot is taking over
(Euromonitor International, 2011). As consumers look for a fast way to get the same value as an
energy drink, the energy shots have begun to take popularity. Five hour energy has become a
huge rage and as Red bull enters the shooter market for a small effective plastic substitute,
growth in cans has decreased considerably recently (Euromonitor International, 2011).
Strategic fit is described by Grant as, how a firm’s resources match its competitive
environments (Grant R. 2010). Understanding the necessary structure in the industry is vital in
strategic fit. Market boundaries and structure are a key element of this strategic fit in defining the
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exterior environment of an industry. Factors such as the industry size, strategic group analysis,
scope and scale, and market share of top competitors, help explain the precincts and organization
of the consumer packaging industry within the realms of global demand segments of glass,
metal, and plastic (Grant R. 2010).
Industry Size
Market size entails both the three main material packaging segments and the regions
which the industry competes in. Market share is calculated by taking the company's sales over
the period and dividing it by the total sales of the industry over the same period (Grant R. 2010).
To understand the industry graphically and analytically, charts and statistics will overview the
market boundaries and structure. Total revenues for the global glass, metal, and plastic industry
totaled $304.6 billion in 2010 (Datamonitor360, 2011:7). The compound annual growth rate
(CAGR) of the market in the years 2006 to 2010 was 3.3% (Datamonitor360, 2011:7). In Figure
1. the segments are broken down by percentage.
Figure. 1
15.00%
26.20% 58.80%
Global Consumer Packaging Market Segmentation by Material
($304.6 Billion) for 2010
Glass ($48.7 Billion)
Metal ($79.8 billion )
Plas=c($176.1 billion)
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Plastic sales had the leading size in the global metal, glass and plastic packaging market
in 2010, with total sales of $176.1 billion, equivalent to 57.8% of the market's overall volume. In
comparison, sales of metal had a volume of $79.8 billion in 2010, equating to 26.2% of the total
market. (Datamonitor360, 7). In comparison, sales of metal had a volume of $79.8 billion in
2010, equating to 26.2% of the total market. (Datamonitor360, 2011). Lastly, glass had a volume
of $45.69 billion in 2010, linking to 15 % total (Datamonitor360, 7).
Going even further and breaking down these material segments into product type
demand globally for packaging. Food and beverages were the two largest in 2009 accounting for
nearly 69% of sales, or $210.17 billion (Rexam, 2012). Healthcare and cosmetics packaging, two
other key areas, made up 11%, or $33.506 billion (Rexam, 2012). the remainder of packaging for
other was 20% of the market share, or $60.92 billion.
Comprehending market share globally is essential to competitive strategies and leading
an industry. Large firms in the industry globally network, the three largest segments of this
industry lie within the Americas, Europe and the Asia-Pacific markets. (Datamonitor360, 2011)
Below in Figure 2, is a chart showing graphically the market share of the regions globally. The
meaning of this chart is to understand the industry structure and know that the highest proportion
of revenue will come from the America’s and Europe. For example, a company like Crown
Holdings would want to know this to match its factory base and ensure it is capturing adequate
market share. Firms looking to capture the market will look to establish strategies around the
largest segments (Para International, 2011). Below in Figure 2., visually it is shown that the
Americas have 35% of the market, representing $106.61 billion of the whole industry.
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Figure 2.
Referenced by: Todge Aumiller Data from Rexam.com
Second, Europe has 28.6 percent of the global market, representing $87.116 billion of the
$304.6 billion total. Third, Asia- Pacific holds 28.10 percent of the industry, signifying $ 85.593
billion. The remainder of the globe encompasses only a mere 8.2 %, having only $24.977 billion
of the industry total. Notable growth would be to Europe of 2.1% and Asian Pacific of 4.3%
respectively, over the same period, to reach respective values of $87.3 billion and $85.6 billion
in 2010 (Datamonitor360, 7).
Strategic Group Analysis
In global consumer packaging the two strategies most important to the industry are
product diversity and global location or scope (Pira International, 2011). These two factors play a
key role in what strategies the companies must take in order to compete within their competitive
landscape. For instance, global scope could be defined as the location or locations globally where
the corporation operates (Grant R. 2010). And product diversity is the extent of which this
producer is spread out among plastic, glass and metal packaging. The characteristics that define
35.04%
28.63%
28.13%
8.21%
2010 Global Glass, Metal, and Plastic Packaging Market Share by Area ($304.6 Billion in Revenue)
Americas
Europe
Asia-‐Pacific
Rest of the World
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horizontal and vertical axis are low, medium, or high. There are three strategic groups within this
market who operate within this market share. Figure 3. below shows this on a strategic map, the
diverse groups and their location, enabling a view of what future path is best.
Figure 3.
Referenced and Created by: Todge Aumiller
Three groups who operate in different sectors of the landscape are Large Global
Packaging Companies, Small Global Packaging Companies, and Specific Region Packaging
Companies; these could be considered nationally or locally specific. There are a few large firms
with a substantial amount of market share for example: Crown Holdings, Rexam PLC, Ball
Corporation, and Owens Illinois. Are three of the largest companies globally and only making up
about 9.6% combined market share globally (Top Packaging Firms 2010). Thus all other firms
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make up about 90.4% of the market share, combined with a substantial number of small global
firms and region specific firms (Top Packaging Firms 2010).
Last, the horizontal axis explains the strategic group’s product diversity. This is another
key component to understanding the competitive landscape because as product diversity grows
larger, firms begin to reduce risk through a diversified product portfolio. Although this is
common sense, it plays a key role in the strategic moves of the firms because a differentiated
product portfolio brings in multiple revenue streams from diverse. (Crown Holdings, Inc. 2010)
Product diversity, is the extent of products to which a producer creates and maintains in its
selling portfolio. Considering this industry many large firms will be diverse but a main portion of
their products for different corporations will lie in a specific region (WorldPackaging.org, 2011).
For example, packaging firms such as Crown Holdings create a variety of personal care products,
can types, and personalized packaging (Crown Holdings Inc. 2010).
Each specific sector has its range of products, where usually on the region specific end
there will be low product diversity because these firms do not have the resources and capabilities
to go beyond the scope of one or two products. Second, with the small global firms, they are able
to have a medium range of product diversity due to their base in multiple countries and product
sectors. Lastly, large global firms tend to have the highest product diversity because they have
hundreds of factories and sub-businesses whom can each take on a different packaging area (
Crown Holdings, Inc. 2010). And with substantial funds to invest in R&D and corporate take
overs, these firms can lead product innovation with new diverse packaging, as well as buy firms
who have created names within that industry.(World's Largest Containers and Packaging
Companies Overall, 2010)
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Region Specific firms tend to focus on creating a more diverse product range while
gradually gaining market share. Also, small global firms focus equally on creating more market
share and increasing their products diversity for the buyers. Finally, large global companies are
trying to capture more market share, while keeping their leading edge in product diversity and
innovation of consumer packaging in order to gain more corporate customers. In conclusion it
could be said that the landscape of this industry is a constant struggle to lead product diversity
and to grab a larger share of the market, globally, which is about $304.6 million dollars and
growing (Top Packaging Firms, 2010).
Scale and Scope
Breaking down packaging into scale and scope is similar to looking at an object through a
microscope because as you focus in the microscope you see the scale and as you zoom out you
can view the scope. For scale, the firms can all be seen in one view and there specific regions in
the lens are clear, as well as their size. As the lens is focused at each firm individually, it is
evident certain firms comprise of more components, products, than others. For instance, a larger
firm may be comprised of healthcare plastics, metal food and beverage cans, and personal care
packaging. Each of those categories could be broken down farther into specifics like personal
care would be deodorant, lipstick, eye shadow, and other holders of personal products ( Crown
Holdings, Inc. 2010). Knowing what the scale and scope of the industry comprises of will play a
vital advantage to firm’s future goals (Grant R. 2010).
Viewing the scale of the consumer packaging industry for metal, glass, and plastic
through a microscope with put the entire globe into the lens. The industry covers The Americas,
Europe, Middle East and Africa (MEA), and Asia-Pacific, as well as Australia
(WorldPackaging.org, 2011). The Americas consist of Canada, Mexico, and the United States,
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Argentina, Brazil, Chile, Colombia, and Venezuela. Europe comprises Belgium, Denmark,
France, Germany, Greece, Italy, the Netherlands, Norway, Spain, Sweden, Switzerland, Turkey,
and the United Kingdom, Czech Republic, Hungary, Poland, Romania, Russia, and Ukraine. The
Asia-Pacific contains Australia, China, India, Indonesia, Japan, New Zealand, Singapore, South
Korea, Taiwan, and Thailand. Middle East-Africa (MEA) includes Egypt, Israel, Nigeria, Saudi
Arabia, South Africa, and United Arab Emirates, and Kenya (WorldPackaging.org, 2011).
Looking at this overview of the industry illustrates just how large and vastly spread consumer
packaging is. Understanding the horizontal integration into the industry is a core competency to
developing global branches for firms. It is a core competency because creating a factory in a
centralized emerging market for example, will lead to higher producer demand. This is opposed
to building a factory in a developing company right next to your already established competitor
(Crown Holdings, Inc. 2010).
Product diversity is the scope of the consumer packaging industry, focusing individually
on each firm and region. The metal, glass and plastic packaging industry include glass
packaging, metal food and beverage packaging, rigid/semi-rigid plastic containers and flexible
plastic packaging. Wide varieties of products, such as, cosmetic packaging, beverage packaging
and pharmaceutical packaging, to name a few, are incorporated packaging materials (Crown
Holdings, Inc, 2012). To understand further the depth of products, imagine the beverage
industry alone has glass bottles, metal cans, plastic bottles, metal bottles, all having different
colors and product specific design. Now imagine that with every product, we use to either
consume food, drinks, medicine or buy care products in. Horizontally establishing product
diversity reduces risk in the market substantially. For example, the beverage can industry
celebrated 75 years as a package in 2010, but since its creation the amount of material has been
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reduced by 80%. Great advances have come in the last 20 years and the work to reduce material
usage continues (Rexam, 2012).
Below in Figure 4., Pira predictions for specific segments of the scope in the industry up
to 2014. Average growth of 2.74 % total is overall predicted for the metal, glass, and plastic
industry (Rexam, 2012). Looking at the chart below and breaking each individually down, the
higher percentages are more favorable markets for companies to expand in to.
Figure 4.
Major Industry Competitors
The Figure 5. below, graphically shows the market share of a few of the leading firms
within the global consumer metal, glass, and plastic packaging industry.
Figure 5.
4.00%
3.80%
2.40%
1.90%
1.60%
2.74%
0.00% 1.00% 2.00% 3.00% 4.00% 5.00%
Rigid Plas=cs
Flexable Plas=cs
Glass
Other Metal
Beverage Cans
Average CAGR
Consumer Packaging Sales Growth 2009-‐2014 (CAGR)
Source: Pira InternaGonal
Rigid Plas=cs
Flexable Plas=cs
Glass
Other Metal
Beverage Cans
Average CAGR
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Data from Hoovers Referenced by: Todge Aumiller
Crown Holdings, Rexam PLC, Ball Corporation, Owens Illinois are the four leading
companies in this industry. Crown Holdings, Ball Corp., and Owens Illinois are all within based
within the United States (Top Packaging Firms 2010). Rexam is based in the United Kingdom
(Rexam, 2012). The market median for net profit margin was 3.29%.(Hoovers, 2012) Crown
Holdings had a revenue last year of $7.94 Billion, and a net profit margin of 4.08%, above the
market median.(Hoovers, 2012) Rexam had a total revenue of $7.14 billion, and a net profit
margin of 2.68%, below market median (Hoovers, 2012). Ball Corp. had a profit of $8.63 billion
and a net profit margin of 7.64%, well above the industry average (Hoovers, 2012). This industry
could be scudded although because Ball Corp is involved in other profitable segments in a
different industry. To figure their actual industry revenue here, times the market share Ball Corp
holds (2.3%) by the industry total amount of $304.6 billion to get $7.0058 billion in revenue
actual. (Datamonitor360). Owens-Illinois had $7.36 Billion in revenue last year and a net profit
and a net profit margin of -6.93%, substantially below the market median. As said previously the
2.60% 2.50% 2.30% 2.20%
90.40%
Metal, Glass, and Plastic Consumer Packaging Industry Market Share
Crown Holdings Inc.
Rexam PLC
Ball Corpora=on
Owens Illinois
Other
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Americans hold $106.1 Billion of this industry in revenue. The three firms who are established in
the U.S. held $22.3058 billion of all revenue.
Broad Industry Environment
Political/Social/Legal Factors
Understanding how the industry deals with the ever changing social, political and legal
factors are vital to knowing its external environment and how to menover itself accordingly to
lead. The next two years will be a crunch for sustainable packaging as government pressure
grows (Crown Holdings Inc., 2012). Congress banned polychlorinated biphenyls (PCBs) in the
1970s, manufacturers began employing an alternate flame retardant: polybrominated diphenyl
ether, until years later when scientists learned this close chemical cousin of PCB was just as
harmful, if not more (Peeples, L. 2012). Meanwhile, Europe continues to move forward with
toxic chemical legislation. France recently proposed a ban on BPA in food packaging, which the
USDA predicts could hurt U.S. exports in the future (Peeples, L. 2012). As policy and social
apprehensions grow over packaging’s health implications and consumer environmental
concerns. The transition for companies in this industry to consider and capitalize in product
improvement will bring to light their future outlook.
Macroeconomic Factors
The macro external environment is critical to the consumer packaging industry because
economic downturn in any or a group of countries could deterioate sales substantially. In order
to counteract unpredicable markets, understanding the current position or outlook of global
economies can allow for a strategy to be formulated. For example, current global packaging
firms should prepare for possible collapse in Europe, where they have a substantial amount of
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operations. Within the consumer packaging industry, there is normal good packaging, where
peoples’ wealth rises, demand increases, adversly as wealth decreases, consumer’s demand
decreases. Necessity packaging alternatively is affected little by wealth or economic outlook
because the demand is needed either way. Many companies within this industry took
considerable hits financially during the downturn do to having a porfolio full of normal
packaging (Crown Holdings Inc. 2012). The global economy, specifically the United States and
Europe fell in 2007, imposing a problem for consumer packaging, considering the largest portion
of market share is in food, beverage, and cosmetic packaging (Rexam 2012). Rexam PLC was
positioned to feel less of a shock with a portion of its sales being in pharmacutical packaging, a
necessity packaging that is needed no matter the economic outlook (Rexam 2012).
Countries in emerging markets with potential of rapid growth are beacon of light for
global packaging companies looking to expand. The European region may falter in the next years
due to the weakening Euro and other political unrest in the region (NationMaster.com 2012). The
Asian Pacific showed substantial growth higher than the industry average in 2010 and should
continue to in the future, with China and Japan still in the growth phase of the economic
development (NationMaster.com 2012). Brazil, impacted by the crisis in 2007, is showing signs
of rapid growth and improvement as well (NationMaster.com, 2012). Creating a competitive
advantage and cornering packing in emerging markets will be a key factor of who leads the
future.
Demographic Factors
Packaging of metal, plastic and glass has powerful influences on consumers’ lives across
many different industries, social classes and age groups. Consumer packaging affects all human
beings and pets globally who consume food, beverages, pharmaceuticals, and other items that are
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packaged. Food, water and shelter are the three most important necessities.(Rexam 2012)
Although sometimes not packaged, food and water in today’s world tend to be. It is not class
specific, a poorer person may consume alcohol out of plastic rather than glass but both are still
packaging forms. Trend cycles with packaging are emerging rapidly as a result of economic
volatility, technological innovation and a growing openness to new ideas (Rexam 2012).
Corporate Social Responsibility/Environmental Impact
Future outlook of a depreciating packaging demand and greener packaging aiming to
reduce their packaging need to evaluate the impact this would have on their shelf presence
(Crown Holdings, Inc. 2012). To be successful is the extent to which a firm is able to efficiently
and effectively use its resources and capabilities to carry out its mission and meet its goals (Grant
R. 2010). The key to leading the global consumer packaging industry is evolving strategic fit
around impeding changes
Growing health concerns have become a social responsibility to firms and will increase to
do so in the future. As studies continue and knowledge grows certain packaging will become
obsolete. For example, lead packaging long ago was a common practice in certain cases until the
studies and health problems established the negative impact this had on the consumer. Plastic
packaging recently came under fire as well, in 2010, when the environmental health news
reported that evidence has shown that the plastics and wrappers used for packaging can
inadvertently leach unwanted chemicals into food. Several studies found high levels of biphenyl
A, an environmental chemical that can disrupt hormonal processes in canned foods and in
packaged foods for people and pets (Environmental Health Sciences 2011). Considering plastic
contributes for the largest sector of this industry dealing with these issues will be detrimental to a
firm’s longevity.
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Another key consideration these firms must take into account is following the trend of
recycling. Aluminum cans are highly recyclable and can be recycled repeatedly without loss of
performance. The more people recycle, the more sustainable the can becomes as a package. In
the case of aluminum cans, the energy used to make cans from recycled aluminum is only 5% of
that used to make a can from virgin raw material so recycling makes real environmental sense
(Rexam 2012).
In its sustainability report by Crown Holdings stated that developing countries, waste as
much as 40 percent of available food due to spoiling before they reach hungry mouths.(Crown
Holdings, Inc. 2012). Also developed countries, such as Europe show that about 30 percent of
purchased food is wasted due to packaging. This evidence brings another key point to the table
with social responsibility and environmental consideration with food protection and preservation.
So in reality, packaging can and will promote sustainability by preventing waste of food in
countries (Crown Holdings, Inc. 2012). In conclusion these companies should want to promote
green recycling of plastics, metals, and glass due to the price savings the firm incurs as well as
increase focus on food preservation packaging to globally improve food prices and hunger
concerns.
Porter’s Five Forces
Porter’s Five Forces provides a method that analyzes industries and determines the
development of business strategy for individual industries, while analyzing competitiveness in an
industry (Grant R. 2010). The five forces are composed of supplier power, threats of entrants,
industry rivalry, threats of substitutes, and buyer power, determine the intensity of the
competition of an industry, the attractiveness of the market, and consequently, the profitability of
companies within the industry (Grant R. 2010).
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Metal, Glass, and Plastic consumer packaging, has local and global companies, leading to
high fragmentation of the industry. Fragmentation creates strong competition for entering the
market. The key suppliers are raw material sellers and the main buyers are any firm that needs
packaging for its product. Figure 6. below shows a diagram of Porter’s Five Forces and their
appropriate strength or weakness for the dairy industry.
Figure 6. Sourced by: Todge Aumiller
Supplier Power
First of the five forces used to analyze the consumer glass, metal, and plastic industry is
supplier power. The power of a supplier is determined by how easily a producer can switch from
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different input suppliers and the bargaining power of each party (Grant R. 2010). Supplier power
in the industry is comprised of raw material suppliers of glass, metal and plastic. The suppliers
have low product differentiation, meaning there is not much difference between the aluminum
provided from one supplier to the other. Low product differentiation diminishes supplier power.
Lower power is created for the supplier with high competition because of a vast market
for raw materials. Although, the large market of suppliers is belittled by alternatively
encompassing high demand form a huge producer base in various other markets. For example,
building industry demand for raw materials could have a competitive advantage due to
government funding paying a high price relative to packaging. Next, quality of the product
relative to its cost is of medium importance in the industry because a supplier has the power to
change cost, with higher quality. A producer is willing to give a higher price quality because in
consumer packaging, a purified form of aluminum, would be preferred in certain circumstances
say over a lower grade (Datamonitor360 2011).
Relatively low-switching costs form one supplier to the other decreases the supplier’s
power. For example, if one supplier decides to increase prices higher than market average, then a
producer will not have much of a cost lost to go to another who as at or below market average.
The ease of switching is due to a high number and concentration of suppliers of raw materials
throughout the globe (Datamonitor360, 2011). In consideration of packaging’s simplicity from
raw materials straight to a product, supplier power could decrease if the raw material supplier
would choose to cut the middle man. Occurring in one of two ways the packaging producers
could be cut out. First would be raw material suppliers buying equipment and producing the
packaging themselves. Second would be the raw material suppliers sell directly to the final
manufacturer, so for instance, Coke could produce their own cans with the aluminum supplied or
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recycling aluminum suppliers. Companies such as Crown Holdings have perfected this art and
customize to the manufacturers preference, so the high asset costs of entering are not worth the
hassle of the supplier or the buyer (Crown Holdings, Inc. 2012). Please see Appendix A. for
Datamonitor360 breakdown.
Threat of Entrants
Threat of entrants coming into the industry is low. Opposition entering the industry can
take market share and valuable customers. In consumer packaging industry, there are large
capital requirements to enter the market making it difficult to enter. (Datamonitor360, 2011). A
manufacturing industry needs a large scale of fixed assets for startup such as, plants, land, labor
and equipment. Alternatively, there is low product differentiation in packaging, making it easier
to become a player within the industry. For example one can relative to another can like Pepsi
and Coke is the same size and shape and material so producers generally make similar products.
I disagree with datamonitor although on this point because the complexity and complex designs
on cans today have allowed for large players to hold the market (Datamonitor360, 2011).
Intellectual property can make it difficult for competition to enter for a short period of time but
due to undemanding regulations in packaging, making entering emerging growth markets not
unreasonable difficult (Datamonitor360, 2011). Please see Appendix A. for Datamonitor360
breakdown.
Industry Rivalry
Rivalry among competitors in the industry in a core competency to have because if you
can expose the weaknesses of your competitors, you can beat them. Henry Ford once said,
“Competition is the keen cutting edge of business, always shaving away at costs”
(thinkexist.com 2012) All three sectors of glass, metal, and plastic combine to create a diverse
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competitive landscape where firms are competing intensely for market share and product
diversity in order to maintain and gain a competitive advantage . Intense rivalry is created with
the industry being easier to enter than to exit with high exit-costs has created a strong economy
of scale environment.(Grant R. 2010) Rivalry is a core industry mover of the firms because
competition is a constant battle to capture the best geographic position and lowest cost. The
market is composed of a fairly small number of large companies, but they tend to operate in
several regions and have some diversification in their product portfolio, thereby minimizing
competition relatively (Datamonitor360, 2011). Countless companies create similar products,
increasing competition in the industry. As discussed before, high barriers to exit increase
company rivalry because they will fight to maintain in the market (Datamonitor360, 2011).
Please see Appendix A. for Datamonitor360 breakdown.
Threats of Substitutes
Substitutes threaten the livelihood of an industry through replacement and innovation.
Substitutes play an important role specifically in this industry because glass, metal, plastic, and
paper board are all packaging products and are all substitutes for one another. Specialization in
one of these areas could take away from another, while new R&D could develop a can made of
paperboard for example, cheaper, lighter and more efficient than an aluminum can
(Datamonitor360, 2011). If a company chooses to diversify in these substitutes, it must maintain
absolute advantage in one or many to allow for market dominance. Diversifying properly in
order to not lose a competitive advantage in a segment exemplifies a firm’s strategic fit into the
industry. (Grant R. 2010) Green packaging and future research will set the president for what
will substitute packaging. Please see Appendix A. for Datamonitor360 breakdown.
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Buying Power
Buying power is the power over the producer a consumer has relative to prices and other
determining factors. In consumer packaging, buying power belongs specifically to the
manufacturers of consumer goods. There is low product differentiation, as well as strong product
dispensability, meaning buyers have the power to hop from company to company with little
change in product bought ( Datamonitor360, 2011). Although, switching from larger
manufacturer to larger manufacturer will most likely show little differ enation, but going from a
large to a small company could decrease the quantity and quality of a good consumable
(Aumiller). A barrier to this behavior would be the contracts and specific product design
provided by a manufacturer that is attractive the buyer. Buyer power is limited by the large
number and variety of buyers as well. Lastly there is a fairly even amount of buyers relative to
sellers (Datamonitor360, 2011). Please see Appendix A. for Datamonitor360 breakdown.
Change Factors
Technology/ Productivity
Innovation leads to success in this industry. Technology leads to increased productivity.
Innovation inspires technology, thus making technology lead to success in the industry.
Technology promotes economies of scale while improving productivity and cutting costs.
Intellectual property within this industry is essential because it differentiates the firm from its
competitors. Intellectual property encompasses patents, trademarks, copyrights, trade dress and
trade secrets. An example of this would be Rexam’s newly designed Safe’n’sound, which is a
revolutionary safe needle injection packaging created for healthcare plastics (Rexam 2012).
Within the industry according to Thomas Reuters’ analysis there are a few key issues to be
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considered with new intellectual property in the packaging industry. First is that consumers are
split equally between convenience and conscience. Second there is no direct definition of
“green” packaging. Third is making sure companies in this consumer packaging industry who do
not directly deal with the consumer to understand the customer demands. Lastly, interactive
technology is a changing factor in the industry to track a food from its source to destination
(Roderick, J. 2011). Innovative technology improving these areas will be a strategic factor for
companies to consider, as well as other improving technological aspects.
Larger companies in the packaging industry need to consider a different type of
technology as well, many subsidiaries and are globally branched entailing a spider web network
of connection. Organization is essential to business continuity.(Grant R. 2010) Establishing
interconnected people, knowledge, IT, tools, and processes that enable a company to execute
better than its competitors is a crucial organizational move. The captivating capabilities system,
usually comprising of a select handful of capabilities using IT networking, creates coherence
because it links tightly with the company’s strategic position (Neely, M. 2011). In an ever
changing global environment where products become obsolete and patents expire, coherence or
unity as one entity enables a company to endure and prosper. Alan Bennett, the former CEO of
H&R Block mentioned that, future strategies are no longer 5 years. Three years is the new five,
with such rapid economic and technological growth. Integration allows a company to react
quickly to the ever changing packaging environment. For example a new packaging material is
being developed for soda and drinks that is edible by a Harvard research team and a field
prototype is already on its way for wine, soda, and tomato juice (Edwards D. 2012) Keeping up
with possibly brand altering trends in packaging will be key for these companies.
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Globalization
Globalization in the consumer packaging industry has a positive outlook and to key
competitors in the industry it is a must. Emerging markets and mature markets alike show a
slowly growing demand for packaging (Rexam, 2012). Understanding markets who present the
greatest possibility for growth will be key to strategic planning by top firms. Globally the
industry is expected to grow an average annual rate of 3% over 5 years to reach $440 billion by
2014. Establishing a presence emerging markets will be vital to gaining brand recognition. India,
China, and Brazil all show signs of becoming top packaging areas for these firms to establish
themselves in for suppliers of consumer goods, while at the same time maintaining consumer
expectations in mature markets where, green products and new design are essential (Rexam,
2012).
Mergers and Acquisitions
Mergers and Acquisitions in this industry could play an important role in gaining market
share. With the high costs of creating a new plant and establishing a factory in a new region, it is
more cost effective to merge or acquire the smaller company. Many of the top competitors in this
industry look to merge or buy out either subsidiaries or entire firms to gain more leverage in an
aspect of the consumer packaging region. For example, Rexam acquired a company in Europe
who was a can manufacturer in order to gather more market share in the industry they felt
profitable. Key success with emerging competitors and established competitors will lie with their
abilities to acquire and merge with firms whose industry or region poses a favorable outlook.
Many other quantitative and qualitative data will come in to play as well, but generally to
increase a firm’s leverage and gain help improve a niche industry, competitive acquisitions are a
must.(Grant R. 2010) Merging with technological companies is another alternative, where
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innovation and technological advancement is of the utmost importance in product research and
development (WorldPackaging.org,2011).
Buyer behavior
Understanding global consumer behavior and how the demand for packaging will be
affected is key to knowing how to innovate and please the manufacturer packaging buyers. Asia
and Latin America made great strides as luxury brand markets, due to emerging markets. There
was substantial growth in demand among the aspirational, brand focused middle income classes.
Retail formats for the price conscious consumer, such as hypermarkets and discounters,
outperformed department stores, supermarkets and small grocers, who were unable to offer
competitive prices. According to Euromonitor, these outlets will continue to see the biggest
gains in retail value in the short term as consumers worldwide seek out better value for money
(Rexam, 2012). Looking at the long term growth and behavior of the industry consumers will
continue to demand cheaper products, efficient innovation, and leading design.
The global downturn has led to a strengthening of what is described as ‘nesting’, a term
used to describe the phenomenon of people spending more time at home with friends and family
and less time socializing outside the home. Taking advantage of this trend, by making products
that replicate the restaurant or bar experience at home, opens up opportunities for innovative
packaging solutions (Rexam, 2012).
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Part II Company Comparison: Crown Holdings Inc. & Rexam PLC
Missions, Philosophy and Levels of Strategy for Crown Holdings Inc. & Rexam PLC
Mission and Philosophy of Crown Holdings Inc.
Crown Holdings products, placement, innovations and people help companies build
brands worldwide. Crown Holdings have a commitment to helping launch successful new
brands, invigorate existing brands, and drive business regionally, as well as globally (About
Crown, 2012). Crown’s brand is an industry leader in global metal packaging and other specialty
packaging. “Crown Holdings has a Commitment to Quality Statement rather than a Mission
Statement: Customer satisfaction is Crown’s highest priority. We achieve this goal by
continuously improving the cost effectiveness and performance of all our products and
processes, as well as focusing on innovation.”(About Crown, 2012).
In an industry where quality is everything, Crown Holdings have a worldwide
performance improvement initiative, a commitment to quality, called World-Class Performance.
This initiative is to deliver continuous improvement, by creating an integrated, global approach
that recognizes the interaction of every function and every activity (About Crown 2012). By
integrating systems which increase the effectiveness of Crown Holding’s people, ideas,
processes and suppliers, the company strives to keep defects, complaints, and impact on the
environment to an absolute minimum (About Crown, 2012).
Crown Holdings world class performance model is derived around seven dimensions that
fuel and drive every step of its operations. The structure is represented on page 28, in Figure. 7
off of the company’s web site to visually explain its commitment to quality. The first three
dimensions primarily focus on the external environment. The first dimension consists of quality
first, where the company focuses on customer satisfaction through process and product quality,
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having a zero non- conformance standard to ensure the highest quality with all their products.
The second dimension is serving its customers, where understanding customers' business needs
and purchasing requirements facilitates the firm to build long-term, successful business
partnerships for profitable growth (About Crown, 2012). Third, focuses on business social
responsibility, where the environment, health and safety are essential to all its operations. Crown
Holdings is committed to protecting the environment, conserving natural resources, and ensuring
the health and safety of all its employees. The firm’s values resonate in its sound and responsible
business practices and in compliance with all applicable regulations. (About Crown 2012)
The last four dimensions that Crown Holdings embodies for its world-class performance,
deal more directly with the internal environment of the company. The fourth of the seven
dimensions encompasses the team force, meaning Crown Holdings values individuals and
recognizes the power of individual teams. The foundation of this dimension is in the idea that the
company believes that every individual can be trained, encouraged and empowered to contribute
to the process of continuous improvement. The fifth internal dimension is managing innovation,
which revolves around the belief that project management, benchmarking and best practice
transfer are meticulously applied in all parts of business. Again this is founded in the individual,
where a contribution to a product, process and/or systems innovation is encouraged and rewarded
within Crown Holdings. Internally the manufacturing processes are another essential dimension
focus of Crown Holdings. The manufacturing processes deliver the gears to eliminate
inconsistency in the production process. In packaging the company knows it is essential to use
process standards as a measure of performance and to continuously strive to raise these standards
(About Crown 2012). The last dimension, both internal and external is supply chain
management, where connecting efficiently with suppliers is vital. Ensuring quality standards are
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met by all suppliers to maximize their contributions (About Crown 2012). These beliefs will later
tie into the current strategies of the company.
Figure 7. World-Class Performance
Created by: Crown Holdings (crowncork.com)
Mission and Philosophy of Rexam PLC
Rexam PLC is a global consumer packaging company who is a leader in metal cans
packaging, making packaging for many of the world’s favorite brands. The company shapes the
experience for all kinds of products that consumers choose, use and depend on every day.
Rexam’s vision and mission are one in the same, in the annual report it is stated as:
“Our vision is to be the best global consumer packaging company. This means balancing
profitable revenue growth, cash generation and the appropriate risk profile for the Group
to deliver a strong return on capital employed and a steady increase in profits year on
year.”- Rexam PLC. 2012
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By being the best, Rexam means its manufacturing capabilities, the quality of its products, the
level of service it offers. Rexam believes its ability to be best innovatively in every aspect of its
business as well as the best in efficiency of its value chain will lead to be number one (About Us:
Rexam 2012). Focusing on being the best will drive motivation and encouragement for the
company because when your company believes it can be the best, then you believe it can be.
Management trickles down through the echelons of the business and shooting for the stars is how
companies like Apple and Microsoft accomplished dominance within their markets.
The framework below is how Rexam strives to accomplish its mission. This is essential
push strategy, align and mobilize the organizations operations and accelerate its time to
implementation (Rexam 10k). Creating an efficient model that drives operational excellence is a
key in the mission for this company. Figure. 8 shows just that establishing a winning
organization then adding the essential parts will help create this leading mission statement, this is
a visual representation of its mission.
The company has established a motto, called the Rexam Way which is claimed to be their
competitive advantage to attaining their mission of being number one. The mission and vision of
Rexam go hand in hand with The Rexam Way. The Rexam way is constructed on four
philosophies: Trust, Teamwork, Continuous Improvement and Recognition ( About Us: Rexam
2012). This ideal is about practical measures and attitudes that are making a real difference in
every area of Rexam’s business, whether it is investment in IT, successful assimilation of
acquisitions or how long-standing relationships with customers and suppliers are managed (
About Us: Rexam 2012). Later it will be seen how the mission statement and philosophies of this
company shape the current strategies being implemented.
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Figure. 8 Vision Framework
Created by: Rexam PLC on the 2011 Annual Report
Mission and Philosophy Comparisons Between Crown Holdings and Rexam
Both companies present many similarities in their missions and philosophies based on
structure and the reality of the industry both inhabit. Crown Holdings and Rexam both focus on
balance. Crown Holdings wants to balance cost and performance and innovation. Rexam is
focused on balance between profitability, performance, and risk. Although both mission
statements are more dissimilar than alike, the true similarities fall in the values each company
holds. Both hold values in their company or a group of key focuses from teamwork in Rexam’s
words, to Team Force in the wording of Crown Holdings(About Crown 2012). No matter how
you word it, these companies are focusing on injecting efficiency, sustainably, and teamwork
into every aspect of their operations. Crown Holdings and Rexam both feel engaging in every
aspect of the business is vital to a winning plan.
Both company’s missions and philosophies are different in unique and effective ways.
For example, in the mission statements, Rexam states it wants to be the best global consumer
packaging company (About Us: Rexam 2012). Crown Holding takes an alternative route to the
mission and states that customer satisfaction is their highest priority (About Crown 2012).
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Rexam’s policy is creating a statement to its entire company encompassing its employees, staff,
and executives. Its statement builds confidence because to be the best is a goal which drives a
company’s interior, which resonates to its exterior as in buyers and sellers. Crown Holdings
statement creates attraction the customer and means they are a servant to the company they
manufacture for and will go to all ends to satisfy this stakeholder. Both are unique approaches to
the industry but pose negatives as well as positives to the people the statements impact.
Crown Holdings and Rexam have different philosophies as well, Rexam has “The Rexam
Way” and Crown Holdings have the seven dimensions of their commitment to quality. Rexam’s
values appear to be a broader generalized statement from Crown Holdings. Crown Holdings
believes in the seven specific values that will impact every segment of their business, where
Rexam only has four values it embodies. As was said before these philosophies and mission
statements will resonate to the current strategies created by both Rexam and Crown Holdings,
where some will be similar and some will be different.
Brief Statement of Current Strategies
Level of Enterprise
The broadest level of strategy for both Crown Holdings and Rexam PLC is the
level of enterprise. Level of enterprise for both companies is influenced by regulations and
sustainability laws globally. Crown Holdings is influenced by regulations and sustainability laws
within countries the corporations operates and has factories who are subject to these laws and
regulations. For example sustainability laws and regulations have become a huge factor in the
industry and for Crown Holdings where in its risks in the annual report it states, “
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“Laws and regulations relating to environmental protection and health and safety may
increase the company’s costs of operating and reduce its profitability. The Company’s
operations are subject to numerous U.S. federal and state and non-U.S. laws and
regulations governing the protection of the environment, including those relating to
treatment, storage and disposal of waste, the use of chemicals in the Company’s products
and manufacturing process, discharges into water, emissions into the atmosphere,
remediation of soil and groundwater contamination and protection of employee health
and safety.”- Crown Holdings 2011 Annual Report
Understanding the regulations of each country on products, operations, and trade are a
giant concern for the global business due to large costs being incurred due to failure to meet
required laws, as well as negative media. The annual report also states that, “Future regulations
may impose stricter environmental or employee safety requirements affecting the Company’s
operations or may impose additional requirements regarding consumer health and safety”
(Crown Holdings, Inc. 2012 AR). This shows how the company must proactively operate to
ensure that regulations are met within all countries of operation to ensure sustainability. These
factors are referenced in its Sustainability report (Crown Holdings, Inc. 2012). For example,
potential restrictions on the use of biphenyl-A by the FDA, a starting material used to produce
internal and external coatings for some food, beverage, and aerosol containers and metal
closures, could pose a threat on operations and costs (Crown Holdings, Inc. 2012 AR). Further
investment in R&D should be utilized to proactively avoid this possible regulation. The below
chart taken from Crown’s Report, shows its efforts to increase labor workplace safety, and as
discussed in recommendations the increasing the negative workplace safety must be addressed to
maximize labor efficiency.
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Created by: Crown Holdings Sustainability Report Referenced by: Todge Aumiller
Rexam is subject to the regulations and laws of countries where it operates as well. It is
also concerned with further regulatory standards and laws within countries of operations because
of their negative impact on Rexam’s bottom line. Rexam feels there is an external risk in
packaging legislation and regulatory environment change within the countries it operates, where
legislation could impact its markets (Rexam PLC. 2012). Rexam also states that, “Packaging will
continue to be a focus for government legislators working within the sustainability agenda”
(Rexam PLC. 2012). Rexam must ensure it proactively decreases the risk of policy change.
Global changes in packaging legislation and regulation affecting producer accountability for
recycling, recycled content, carbon footprint and landfill taxation represent an increasing trend
risk to the company’s future (Rexam PLC. 2012). Rexam continually monitors changes or
proposed changes in laws or regulations that may adversely affect its business if implemented
arbitrarily (Rexam PLC. 2012). Using established and effective membership of relevant trade
associations, by direct collaboration with organizations and through efforts of a new legislative
risk monitoring tool that was introduced in 2011, the company has begun to proactively diminish
this risk (Rexam PLC. 2012). Both companies are considering this risk and proactively preparing
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for change, although through the information found Rexam is establishing better connections to
alleviate this risk.
Level of Corporation
The level of corporation between these two businesses is the selection of businesses the
company should compete, or the coordination of portfolio of businesses. Crown Holdings being
a holding company owns multi-businesses, under its structure. It owns, food and beverage can
manufacturing, personal care manufacturing, and personalized manufacturing (Crown Holdings,
Inc. 2012 AR). “The Company’s principal Research, Development & Engineering (RD&E)
Centers are located in Alsip, Illinois and Wantage, England. The Company utilizes its centralized
RD&E capabilities to advance and deliver technologies for the company’s worldwide packaging
activities” (Crown Holdings, Inc. 2012 AR). From the statement above, we can see structure of
the corporation is broken down into a centralized R&D unit that is located in the United States
and England. And region based headquarters that operate under the head corporation based in
Philadelphia, PA in the United States. The other two segments are regionally based in Europe
and Singapore, South East Asia (Crown Holdings, Inc. 2012 AR. ). Decentralizing the entire
corporation to handle the vast scale of 139 factories in 41 countries is a core success to the
corporation, and centralizing R&D allows for talent to collaborate together and not be separated.
Also, in terms of marketing, in each of the companies regions it markets and sells products to
customers through its own sales and marketing staff. (Crown Holdings, Inc. 2012 AR ).
The first region, the Americas, Crown Holdings operates in, had 67% of its division’s
2011 net sales within the United States. In the Americas Division the Company has determined
that there are two reportable segments: Americas Beverage and North America Food (Crown
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Holdings, Inc. 2012 AR). The second region is the European Division, this operates operations in
Eastern and Western Europe, the Middle East and North Africa (Crown Holdings, Inc. 2012
AR). Within the European Division the company has three reportable segments: European
Beverage, European Food and European Specialty Packaging (Crown Holdings, Inc. 2012 AR).
The Asian Pacific exists these are not reportable segments for the company. Analyzing the
company structure from its board down to its individual factories and employees, the company
has a global scale and network that is unmatched. The company should begin to shift more of its
Americas division to Brazil and similarly in Europe should begin to use this segment of
packaging and cans to shift towards growing demand in Russia. The chart below created by
Crown shows the percentage of where the company lies (Crown Holdings, Inc. 2012).
Created By: Crown Holdings Inc. Referenced By: Todge Aumiller
The level of corporation within Rexam is similar to that of Crown Holdings. Although
the structure of the company is less decentralized due to the substantially fewer number of
factories held. Rexam . Rexam doesn’t follow the normal segmentation as Crown Holdings
does, the business first separates beverage packaging and plastic packaging (Rexam PLC. 2012).
The segments of Rexam in beverages include Beverage Can Europe & Asia, Beverage Can
North America, Beverage Can South America (Rexam PLC. 2012). Plastic Packaging is mainly
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congested in Europe with its personal care, healthcare, and food packaging factories (Rexam
PLC. 2012 Corporate Profile). Rexam PLC has two main places of control the main overseas
service center in London and the USA Rexam Inc operational headquarters in Charlotte, NC in
the U.S (About Us: Rexam 2012). Rexam’s beverage and plastic packaging headquarters are in
these counties accept for its main facility in Brazil. Both companies have created a network for
operations where both have R&D in England and the U.S. as well as global bases for each of
their factory groupings (About Us: Rexam 2012). Below we can see that Rexam is branched out
globally, the map is important to understand Rexam’s strategy of strategically positioning
themselves so they can capture the markets will the highest demand by producers. Both
companies have created efficient networks and portfolios of products and factories to gain
leverage in these areas that effect consumer demand substantially. The creation of these
corporate groupings align with both companies organization structure in order to efficiently
operate within various aspects of the globe and enter emerging markets, to create products for
producers who want to lead a region.
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Rexam by Location Globally (Created by: Rexam PLC Referenced by: Todge Aumiller)
Level of Primary Business
Both Crown Holdings and Rexam have a primary business of a number of consumer
packaging products in order to create efficient packaging and packaging solutions for clients.
Crown Holdings primary sales come from beverage and food cans with about 82% of total sales.
The products of arousals, closures, specialty and miscellaneous items only make up about 18
percent of its total sales (Crown Holdings, Inc. 2012). Below is a chart showing the sales of
Crown Holdings by Product.
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Created by: Crown Holdings Referenced by: Todge Aumiller
Crown Holdings primary focus is on the beverage can industry, which takes up a total of
51 percent of its sales. The beverage market is dynamic and highly competitive. Crown
understands that it much work with each packaging manufacturer and its customers to please
consumers’ ever-changing needs (Crown Holdings, Inc. 2012 AR). To compete in this industry
the firm must focus on offering customers broad market awareness, resources at all levels of its
worldwide organization, and extensive R&D capabilities that have enabled innovative products
to be provided to customers (Crown Holdings, Inc. 2012 AR). The company focuses on metal
cans as well considering the large product sales it generates. Crown Holdings supplies total
packaging solutions, including metal and composite closures, capping systems and services
(Crown Holdings, Inc. 2012 AR). Crown creates an environment for its customers that follow its
motto of brand building packaging.
Rexam has operations in similar and different segments as well. Rexam’s primary
business lies in its beverage can manufacturing, creating a direct competition for producer
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demand between Rexam and Crown. To justify this Rexam stated, “Our principal business
operations are Beverage Cans and Plastic Packaging. In all, we have over 70 manufacturing
facilities in 25 countries in Europe, North and South America and the Asia Pacific rim. And 80%
of our sales come from Beverage Can Packaging” (Rexam PLC. 2012). This statement shows
that the organization is involved primarily in cans, although its plastic healthcare segment shows
promising growth and revenues. It has decided to sell its personal care packaging business due to
a lack of knowledge and focus on that product (About Us: Rexam 2012). To compete in the
industry, Rexam is following the same paths as Crown through working with consumers to
create the best possible product (About Us: Rexam 2012). The firm has created revolutionary can
inks and printing that has allowed it to gain an attractive look form producer, such as Pepsi who
is also a buyer from Crown Holding (About Us: Rexam 2012). The result of this technology can
be seen below, with the Pepsi Istanbul for Turkey (About Us: Rexam 2012). As can be seen, this
new ink printing is creating marketing wonders in a can, proving innovation, even as simple as
colored printing, creates a competitive advantage.
Created By: Pepsi Co. and Rexam Referenced by: Todge Aumiller
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Social Responsibility and Environmental Impact Strategies for Sustainability
Crown Holdings and Rexam are both actively integrating social responsibility and
environmental sustainability into their businesses. Both companies released a sustainability
report last year, Crown Holdings released a document that is an entirely separate entity from its
Annual Report. Crown Holdings first year of releasing the report was with the intentions to
acknowledge the important role sustainability has within its organization, not only from the
operations and product perspectives, but through its commitment to the employees and
communities (About Crown 2012)
Crown Holdings does not set sustainability goals for the future, it does balance general
industry figures with specific data from the reporting period in key areas such as heat recovery,
volatile organic chemical management, energy reduction, improved transportation logistics and
waste reduction (Crown Holdings, Inc. 2012). These themes were chosen based on the identified
areas of interest by several stakeholder groups, including customers and suppliers (Crown
Holdings, Inc. 2012). The CEO of Crown Holdings, James Conway, stated that,
“While formal sustainability reporting is new for Crown, the concept of sustainability is
not. From the day our company was founded more than 120 years ago, we have lived by
the principles of sustainability thanks to a relentless focus on safety, innovation and
efficiency.” (Crown Holdings, Inc. 2012 AR).
Those three values are reflected in the World-Class Performance (WCP) program, which has
served as the cornerstone for sustainability efforts for Crown Holdings for nearly two decades.
(About Crown 2012)
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Environmental sustainability and metal cans coincide. Crown Holdings primary business
is metal cans. Many of the company’s costs are from the raw material of metal or aluminum from
cans. Metal has many intrinsic properties, which translate to high scores in all three dimensions
of sustainability: environmental, economic and social (About Crown 2012). The reason cans are
economical is that they are the most recycled food and beverage packages in the world. Socially
and environmentally cans help conserve precious resources, while preventing spoilage and
waste. Cans are cost effective and economical throughout the supply chain when compared with
other packages (About Crown 2012).For example, there is a 64.3% recycling rate of steel cans in
the United States and a 64% recycling rate of aluminum in Europe (About Crown 2012).
Great strides have been made by Crown Holdings in their social responsibility and
sustainability efforts of heat recovery, managing volatile organic chemicals, energy savings,
transportation logistics, and waste reduction. These movements in sustainability are driven by the
three values of Crown’s WCP through innovation, efficiency, and safety (Crown Holdings, Inc.
2012 AR). Each of these strides has affected vital aspects of the company positively. Touching
on a few of these five improvements will give a sense of where Crown Holdings stands in
environmental sustainability and social responsibility.
Heat recovery is vital in this industry for efficiency and conservation. Running
machinery, generating compressed air and curing coatings are all processes that generate heat
within Crown’s operations (Crown Holdings Inc. 2012). Rather than letting this heat go to waste,
Crown is actively implementing innovative ways to leverage this important resource to fuel other
manufacturing operations worldwide (Crown Holdings, Inc. 2012 AR). The result is a reduction
of waste and energy savings, creating efficiency, innovation, and sustainability at the same time.
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This is where Crown’s WCP policies overlap into creating sustainable solutions for their global
manufacturing chain. To illustrate what Crown is doing globally for heat conservation in Beijing,
China, a beverage can plant is recovering the hot air that is generated by the ovens used in
manufacturing and transferring the heat to heating for the factory. Implementing this innovative
thinking has reduced the amount of gas used for space heating by 75%. (Crown Holdings Inc.
2012).
Figure 8. Energy Consumption Chart
Created by: Crown Holdings Inc. Referenced by: Todge Aumiller
Above in Figure 8. the efficiency of the Crown Holdings can be seen as its reduction and
reliance on energy consumption has been decreased over the past for years. For instance, from
2007 to 2010, it decreased propane (LPG) usage by 14%, natural gas by 8% and electricity by
2% even as unit sales continued to increase each year (Crown Holdings Inc. 2012).
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All of Crown Holdings stakeholders are engaged and considered on both a global and
local level. Customers are engaged through innovation meetings and customer technical service.
Suppliers are considered through logistics planning created by Crown Holdings and innovation
meetings. Employees are taken under consideration through the intranet, community projects,
and employee engagement surveys (Crown Holdings Inc. 2012). Local communities are focused
on through community engagement programs and volunteering. Investors, Shareholders and
Analysts are considered through the annual report creation, quarterly earnings calls, and
shareholder meetings (Crown Holdings Inc. 2012).
Also, Government and Regulatory Authorities are interactively engaged through meetings and
plant tours. Another stakeholder in social responsibility that Crown Holdings considers is the
educational institutions, where apprenticeship programs are set up, equipment donation for
training purposes, and guest lecturing on packaging and engineering related topics(Crown
Holdings Inc. 2012). Lastly, the stakeholder the firm considers is the trade associations, where it
sets up meetings to ensure rules are followed and also submit reports to state their actions at hand
to ensure the company is within legal limits (Crown Holdings Inc. 2012).
Rexam actively integrates its sustainability initiative into its company to ensure
efficiency and environmental and social responsibility. Rexam created a section within its annual
report to cover its sustainability progress and initiatives (Rexam PLC. 2012). In an industry
where efficiency saves money and sustains the environment, every innovation helps drive profits
and operations. In Rexam’s annual report of 2011 it states on sustainability that, “We believe that
running our business sustainably is essential to near term success and long term prosperity. Our
Group vision is to be the best global consumer packaging company and this includes our actions
in and around sustainability, encompassing products, operations and people” (Rexam PLC.
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2012). Following its earlier established mission statement is vital for this organization or any
organization for that matter because having one set goal for the company to revolve and
encompass its policies around is essential for success. The three vital things Rexam focuses on in
its report is products: to enhance value, operations: to the efficiently use resources, and people:
to engage employees (Rexam PLC. 2012). Rexam also states, “Our customers look for partners
who take their corporate responsibilities seriously. Our approach has been to identify realistic
goals that our customers can depend upon as they seek to reduce the environmental impacts of
the products they commercialize and to assure an ethical supply chains.” The statement is
important to sustainability because it focuses on maintaining consumer satisfaction and
proactively creating products and ensuring quality is met, for a healthy environment.
Rexam has taken initiatives in each of the three areas it feels are necessary. The first
being products that will enhance value (Rexam PLC. 2012). Efficiently enhancing a product not
only reduces the amount of raw materials used but also can create a more efficient product for
the consumer. For instance, NoveliaTM is the unique preservative free multi-dose eye drop
system designed by Rexam. Compared with traditional unit dose solutions, it also significantly
reduces the amount of plastic required, reduces drug wastage by over 90% and also reduces
volume by nearly 90% due to its space efficient design (Rexam PLC. 2012). This design is a
win/win for both Rexam and the stakeholders.
Second, through operations, Rexam wants to efficiently use resources to ensure
environmental stewardship as well as efficiency. In operations, Rexam strives to resourcefully
manage energy consumption by its products for example in Figure 9. below it can be seen how
the company is reducing energy use in some areas, while faltering in others. For Beverage Cans,
Rexam measures the reduction in energy used per ton of production. In 2011, it attained a 3%
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reduction as opposed to 2010 (Rexam PLC. 2012). The target is to achieve a total reduction of
10% in the period between 2010 and 2013. In Plastic Packaging, the amount of energy used per
ton of production by Rexam increased by 2% in 2011, this was driven by lower overall
production volumes (Rexam PLC. 2012). The company’s failure to lower efficiency is a negative
outcome for Rexam and could reduce consumer satisfaction and sales. Also, with an overall
target to achieve a total reduction of 8% in the period between 2010 and 2013, Rexam must
deliver to the stakeholders or loss of trust and confidence could follow (Rexam PLC. 2012).
Figure 8. Energy Consumption Per Ton
Created by: Rexam PLC Referenced by: Todge Aumiller
Rexam’s last objective for sustainability is to ensure environmental and social
responsibility is to focus on people through engaged employees. Understanding that employees
are the foundation of the organization, Rexam believes in ensuring safety and a healthy work
environment. Similar to Crown Holdings Rexam states that, “Rexam is dedicated to
implementing world-class environmental, health and safety processes and culture across the
Company” (Rexam PLC. 2012). Similar to Crown’s strategy, Rexam wants to focus on world-
class sustainability processes. Both have almost exact statements in this sense although, Rexam’s
is to narrow, seeming only to focus on the company itself and not the external environment as a
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whole. An example of how Rexam has implemented social responsibility through its employees
is with its huge amount of commitment to engage and shape safe behavior, its South American
beverage can operation reached an unprecedented milestone during 2011. Rexam accomplished
one year without a lost time accident, this safety was attained through the introduction of
numerous innovative safety programs and with the support of various communication channels
(Rexam PLC. 2012).
Both Rexam and Crown Holdings have similar policies although Crowns Policies seem to
be broader and more developed apposed showing the maturity and leading edge of the company.
Rexam’s initiatives to ensure social responsibility seem narrower while possibly missing
important stakeholders. Both seem to be proactive in terms of environmental sustainability and
social responsibility, although, it should be noticed that Crown Holdings philosophies and
structure seem to correlate better with these initiatives from the stated sustainability reports. In
the next section, information technology will support sustainability and efficiency of employees
and resources, establishing a dynamic role in the future of both corporations (Aumiller).
Strategic Use of Information Technology by Crown Holdings and Rexam
Strategically using information technology in this industry has become a vital component
for manufacturing and company excellence. In the global economy today, firms like Crown
Holdings and Rexam who have products as simple as packaging must employee technology
throughout every level of their corporations to ensure growth. The wide variety of areas that
effect a company’s information technology include computer software, information systems,
computer hardware, programming languages but are not limited to things such as processes, and
data constructs. Both companies have begun and are currently implementing information
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technology into their company to ensure customer, seller, and internal satisfaction. Both
companies engage in various information technologies in order to help efficiently control
operations, connect workers, improve quality of employees and products, connect global chains
and executives effectively, and to create an overall network of efficiency for instantaneous
reaction to issues or opportunities. (Crown Holdings, Inc. 2012 AR).
Rexam has constantly been using information technology (IT) to improve operations,
products and its people to ensure efficiency, satisfaction, and connection. Recently, Rexam
people have been a large focus of Rexam’s IT initiatives. Rexam reported in its sustainability
section of the annual report for 2011, that the firm has been conducting surveys using
information technology such as online databases and software to evaluate employee satisfaction
in order to maximize its labor force (Rexam PLC. 2012).The survey is a new integrated system
within Rexam, that will be taken yearly to ensure employee and executive engagement and
values are in line with the companies (Rexam PLC. 2012). Another way Rexam used IT for
employee efficiency was in its South American beverage can business, where the business
explored new methods of communication and invited employees to share comments, praise or
suggestions through an online ‘Open Channel’(Rexam PLC. 2012).
Crown Holdings like Rexam has implemented information technology in order to connect
its people, operations, and products. In order to ensure its 7 dimensions of world-class
performance are met the corporation must have an interconnecting network to ensure all of its
subsidiaries are connect (Crown Holdings, Inc. 2012 AR). In consideration of a firm that is so
globally dispersed it is vital for these systems to be implemented to ensure factory efficiency and
all for executives to visually see the entire picture of the company and its components, in order to
make decisions in the company’s best interests. In Crown Holding’s annual report under risks the
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firm discusses how information technology being compromised could be detrimental to the
company’s future. (Crown Holdings, Inc. 2012 AR). The reported stated, “The Company’s
business increasingly relies on the successful and uninterrupted functioning of its information
technology systems to process, transmit, and store electronic information. A significant portion
of the communication between the Company’s personnel around the world, customers, and
suppliers depends on information technology”(Crown Holdings, Inc. 2012 AR). Understanding
that the foundation of this company lies within technology is essential to understand its ability to
operate efficiently globally, having a headquarters in Philadelphia, Pennsylvania and being able
to communicate and efficiently assess a corporation located in Brazil is a core competency for
future outlook of this corporation.
SWOT Analysis
A. Strengths
Crown Holdings Inc. Rexam PLC
• Product range across varied customers adding to brand strength
• Global presence helping to broaden up the market width / Size and scale advantages providing benefits of market position
• High Asset Turnover Relative to Industry
• Capacity adjustments should effect near term
• Healthy market position establishes a strong platform/established globally
• Strong quality control focus delivers customer satisfaction
• Diversified industry focus stabilizes earnings and enhances customer base
• Innovation strengthens customer ties. • Good progress on asset utilization.
Source: Created by Todge Aumiller’s Interpretations of Datamonitor and 2011 Annual Statements
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Both companies have strengths that allow for an understanding of how both have
captured a leading role in the global consumer packaging industry. Crown Holdings has a
number of strengths that have allowed it to control the take a leading role in the metal, glass, and
plastic packaging. It has created a metal can niche that enables it to compete competitively in the
industry. Although it has created this niche in cans, Crown has strength of a product range that
extends across a wide variety of clients. Having this strength essentially adds brand power to the
corporation. Customers range from products like drinks and food to health and beauty. Strong
networking power has enabled the company to have this broad range of cliental where no single
customer accounts for more than 10% of net sales ( Crown Holdings, Inc Datamonitor 2011).
The strength decreases the risk of a one company dropping the corporation and deteriorating
profits. Next Crown’s global presence has helped to broaden the market width of the company,
giving the firm the power over many other companies in the industry while operating in 41
countries, and having 135 manufacturing facilities which is unmatched in its packaging industry
(Crown Holdings, Inc. 2012 AR). 72% of its income in 2010 came from outside the United
States (Crown Holdings, Inc Datamonitor 2011). Also, the size and scale of Crown have given it
the advantage of market position, creating economies of scale in procurement and production. I
feel Datamonitor should have combined these two points as I have because both are similar due
to global scope of the company and the value created for customers who want to expand
globally.
The company has another advantage within its industry financially, with a high asset
turnover relative to industry average (Crown Holdings, Inc. 2012 AR). The strength means that
Crown Holdings can efficiently use its assets better to generate sales, because asset turnover is
the amount of sales generated for every dollar's worth of assets (Investopedia, 2012). Also
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Crown has had enough cash to enhance capacity in the past, which should generate higher
operational efficiency, and profit margins in the near future (Crown Holdings (CCK) 2012).
Rexam, another industry leader in global consumer packaging has created many advantages
to ensure their leading position in the market. Rexam’s healthy market position and global scale
establishes a strong platform for its market presence. In Brazil the company holds 60% of the
market in can manufacturing, which is a giant strength considering the growth booming within
this country (Rexam PLC. 2011). Rexam’s global presence and strong customer ties similar to
Crown Holdings, have allowed for its global can niche. Another, strength of Rexam is its strong
quality control focus, which delivers customer satisfaction (Rexam PLC. 2011). The company’s
value-chain leading efficiencies with six sigma and kaizen theory have created a value to
customers who value quality, time and expense. Similar to Crown Holdings, Rexam’s diversified
industry focus stabilizes its earnings and enhances its customer base. Offering products form
beverage, personal care, healthcare, and food markets has created a diversified portfolio to
mitigate risk in the company. Also, as mentioned before with its strong global presence of 90
plus manufacturing plants and establishment in more than 20 countries across the globe the
company has created an entity that now has 30% sales in emerging markets.( Rexam PLC. 2011).
I had deleted global presence in the Datamonitor SWOT analysis due to it intertying with the
first bullet point. Innovation for Rexam has become a huge part of their competitive advantage to
strengthen customer ties (Rexam PLC. 2012). During the year Rexam saw the successful launch
of a number of new products in packaging. For example, in Russia, an emerging market, Rexam
introduced Europe’s first 75cl beverage can to fill a gap in that market, innovatively creating
demand for a product ( Rexam PLC. 2012). On the other side of the globe, in Brazil, Rexam’s
use of innovative technologies such as high definition printing, UV and fluorescent inks has
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helped customers strengthen their brands, increase sales and win awards (Rexam PLC. 2012).
Lastly the company has had good progress on asset utilization, with a return on assets(ROA)
above the industry average. (Rexam PLC. 2012). This above industry average ROA shows that
management is efficiently using its assets to generate earnings higher than the industry average.
When considering strengths, weaknesses must be considered as well, because to be an overall
leading firm you must minimize your weaknesses to ensure broad risk reduction.
B. Weaknesses
Crown Holdings Inc. Rexam PLC
• Unionized labor could lead to higher workforce engagement costs
• High debt burden could bring the operations under financial distress
• High goodwill previously, limits amount of goodwill possible without decreasing net worth.
• Unfunded employee post-retirement benefits
• Reliance on few customers • Unfunded employee post-retirement
benefits • Low efficiency energy consumption
in plastic products.
Source: Created by Todge Aumiller’s Interpretations of Datamonitor and 2011 Annual Statements
Weaknesses show possible future problems for a company and areas that must be
addressed to ensure a firm’s longevity. Crown Holdings has various weaknesses that limit the
company financially and could stunt future growth. The first of these is Crown has a unionized
labor force, which could lead to higher workforce appointment costs (Crown Holdings, Inc
Datamonitor 2011). In a manufacturing company, established in emerging markets, where
inflation could raise the cost of living, Crown must minimize worker dissatisfaction and control
the labor union in order to competitively compete in a cost-jumping environment. Also, Crown
has incurred a high debt burden, which could bring the operations of the company under
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financial stress. In 2010, Crown had $241 million is the short term debt, and $2,807 million is
the long term borrowings (Crown Holdings, Inc Datamonitor 2011). If the company does not try
to eliminate these debts through liquidation, serious financial problems could incur. The
business also has high goodwill from the past, causing instability in its balance sheets. If the
company has to overpay for a business to expand per say and goodwill is increased dramatically
again the net worth and profits of the company will be in trouble (Crown Holdings, Inc. 2012
AR). Lastly a substantial weakness that imposes future financial issues is unfunded post-
retirement employees benefits (Crown Holdings, Inc. 2012 AR). General Motors defaulted
previously for this various reason and this is a concerning problem for Crown. As the firm pays
of its debts and ensures its stays above water, it may have to ignore some pension payments in
current because it can pay them later.
Rexam has some weaknesses that could pose a threat in its future. Unlike Crown
Holdings, who has a diversified portfolio of clients, Rexam is limited to a smaller amount of
customers with larger orders. This increases the risk of the company losing massive profits if one
company would chose to not continue business with Rexam. For instance, Rexam's revenues are
highly concentrated the top 10 customers alone accounted for 61% of sales in 2010 , which is up
from 58% in 2008 (Rexam PLC. 2011). Generating new clients will be a key to the success of
Rexam’s future. Similar to Crown Holdings, Rexam is financially burdened by post retirement
funds that must be paid in the future, decreasing available cash to spend on innovation and
growth. In 2010 the company had unfunded pension obligations of £253 million ($391 million)
(Rexam PLC. 2011). Lastly, another difference I had noticed, other than Datamonitors reports
which both present substantial weaknesses, was the low efficiency energy consumption in plastic
products (Rexam PLC. 2011). In Rexam’s plastic division as mentioned earlier in sustainability
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the company failed to meet their reduction goal and actually increased from the previous year by
a few percent. This increased variable cost into the products will cut into the profits of the
company.
C. Opportunities
Crown Holdings Inc. Rexam PLC
• Near future sporting events in Brazil providing expansion possibilities
• Stronger expansion in emerging markets increases customer base
• Favorable outlook for global beverage industry for further opportunities
• Acquisitions/ Partnerships
• Strategic divestments to focus on core areas
• Growing containers and packaging industry
• Partnerships • Increased R&D
Source: Created by Todge Aumiller’s Interpretations of Datamonitor and 2011 Annual Statements
Opportunities are presented in this industry for both these companies that seem favorable
to the long term growth of the company as well as the immediate growth. The opportunities
should be used as strategies for the company to remain an industry leader. Crown Holding Inc.
has an opportunity to invest and advertise with future sporting events in Brazil. Brazil is hosting
the Olympics for the 2016 Summer Games and this presents a great opportunity for corporate
advertising. Also, considering the growth of the BRIC companies or emerging markets Crown
must have stronger expansion and presence in these markets due to increasing demand over the
next years. (Crown Holdings, Inc Datamonitor 2011). Globally packaging demand has increased
dramatically as discussed earlier in the industry section of the paper, presenting a promising
prospect for Crown Holdings. Also, Datamonitor states that, “the global beverages industry grew
by 15% in 2010 to reach a value of $ 1,749.3 billion” (Crown Holdings, Inc Datamonitor 2011).
Further acquisitions and partnerships for the company could prove to be key moves in the future.
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I added this to the SWOT because possible company expansion will further broaden its network
and also partnerships could be useful technologically and corporately to reduce costs.
Rexam has similar and different opportunities presented to it within the global industry based
on its current position. Strategic divestments in areas of the company could present an
opportunity to increase cash on hand and focus on the core aspects of the business. The company
has already announced that it wants to sell its specialty packing division of its company in order
to gain cash (About Us: Rexam). Another opportunity presented to Rexam is the growing
containers and packaging industry. As discussed with Crown Holdings the emerging markets and
global growth of the industry will be a key driver in long term outlook (Rexam PLC. 2011).
Industry growth will prove to be profit pullers for this firm as costs are decreased and sales are
increased. Similar to Crown, partnerships could prove to be a smart strategic choice for the
future of the company. Partnering with FIFA for example who is hosting the 2012 World Cup in
Brazil could be money making move for the company. Research and Development also poses
further growth for Rexam, investing in innovation could prove to reduce costs and increase the
already present strength of the company’s operations.
D. Threats
Crown Holdings Inc. Rexam PLC
• Stringent laws and regulations affect the company's operations
• Dependence on seasonal nature of end-user industry(weather, etc.)
• Intensifying competition could curb growth aspirations
• Sluggish growth of carbonated beverages
• Possible raw material shortages and price escalations
• Economic Downturn • Aluminum and Other input cost
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• Loss of major customer • Information technology interruption • Loss of Intellectual Property rights • Economic Downturn • Aluminum and Other input cost
increases • Political and economic stability
nationally • Nutrition tastes and consumer
preference changes. • Other internal/external financial
complications
increases • Political and economic stability
nationally • Changes in packaging legislation • Nutrition tastes and consumer
preference changes. • Other internal/external financial
complications • Intensifying competition could curb
growth aspirations • Loss of Intellectual Property rights
Source: Created by Todge Aumiller’s Interpretations of Datamonitor and 2011 Annual Statement
Many risks are presented to these company’s due to external and internal issues. The
threats that are posed to Crown Holdings or Rexam could cause a crippling or finishing blow to
either one. Crown has various external threats such as stringent laws and regulations in the areas
it operates, which adversely create a negative impact on the financial position of the company.
(Crown Holdings, Inc Datamonitor 2011). Externally political and economic stability in these
countries play a vital role in how the company can operate. An economic downturn in Europe or
any other country of operation or sales could impact the company negatively (Crown Holdings,
Inc. 2012 AR). The threat of aluminum prices and input energy prices rising could pose a
problem for costs of Crown Holdings, establishing good selling relationships will be essential.
Crown could be hurt if a customer decides to not buy from the corporation. Seasonal nature of
the industry and bad weather to can food could prove negative to the company’s profits as well
(Crown Holdings, Inc. 2012 AR). Customer taste controls the demand for the products of the
companies who buy Crown’s products so consumer taste change could pose as a threat if shift
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goes away from their products (Crown Holdings, Inc. 2012 AR). Competition in an easily
enterable market could become a problem for the Crown’s future growth and sales.
Internally many threats are presented to Crown Holdings as well. Internal financial
implications as conversed earlier are a colossal threat to the company. (Crown Holdings, Inc.
2012 AR). As discussed earlier, information technology is a huge component of the company’s
networks and interruption through hacking or other unforeseen problems could hurt the
business’s well-being. Lastly, if a loss of intellectual property occurs within the company, which
would cause competition to increase and profit to be decreased (Crown Holdings, Inc. 2012 AR).
Rexam has many external and internal threats as well man are similar. Rexam has various
external threats such as stringent laws and regulations in the areas it operates. (Rexam PLC.
2011). Similarly economic outlook in countries as well as political outlook could have a negative
effect on Rexam. (Rexam PLC. 2012). The threat of aluminum prices and input energy prices
rising could cause a conundrum for costs. Rexam could be hurt if a customer decides to not buy
from the corporation because of their low customer base relative to the industry (Rexam PLC.
2012).Customer taste controls the demand for the products of the company so a sudden demand
shift could deteriorate profits (Rexam PLC. 2012). Rexam although similar externally with
threat risk is lowered internally relative to Crown Holdings. Information technology breaches in
the company’s networks through hacking or other unforeseen problems could hurt the business’s
well-being. Losing intellectual property within the company is also a possible issue that could
arise (Rexam PLC. 2012). Financial problems could arise from impeding pensions, but this threat
is not substantial to the company (Rexam PLC. 2012).
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Datamonitor Review of SWOT and Commentary for Crown Holdings and Rexam
Analyzing the both Crown Holdings and Rexam’s SWOT there are a few disagreements
and changes I feel are necessary for each company. First in the strengths of both companies
seemed to be repetitive because datamonitor tends to not combine strengths that are related. Also
for Rexam I disagreed with a tight production line partially because analyzing the report, I found
that they have increased in Cost of Goods Sold in the past 5 years. Also I combined two points
of global presence and scope and size because I feel datamonitor separated two points that were
the same idea. Next in weaknesses, I feel for Crown Holdings were well touched on by
datamonitor. The only thing I would add is the high deprecated assets. Rexam also had good
weaknesses from Datamonitor. I did add a few in the chart above that I felt were necessary
although. Next in opportunities I felt both were good suggestions although they are current
strategies for both companies. I felt emerging markets was a key missed area for Rexam in the
opportunities because this will prove to be the winning place for packaging companies. Lastly in
consideration of threats, Datamonitor I felt gave both companies a poor list of threats. I felt this
because when I looked at each company’s annual report in the Risk section, I found multiple
other threats for each. In conclusion Datamonitor is a good foundation for SWOT but missed
some vital areas in the industry (Aumiller).
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Financial Analysis
Common Sized Spread Sheets & Commentary: Crown Holdings
The table shown above is the common sized income statement for Crown Holdings. The
data taken goes 5 years from 2007 up to 2011, from left to right. Horizontally the columns of
percentage, show year to year total percentage that the item is comprised of revenue this is done
by dividing the given value for the item for that year divided by the sales or revenue for that
year. Vertically in the highlighted rows, the five year trends are shown to indicate a change in the
4 areas of significance. The net profit margin at the bottom has decreased 3.57% since 2007 this
is curious due to the cost of goods sold margin decreasing by 2.14% over the past 5 years, since
it is the largest expense of the company. The problem has accrued through evaluation of income
tax has risen as well as unusual expense for the recent years due to tax breaks from almost going
bankrupt in 2007. Compared to Rexam, Crown has a high cost of goods sold almost a 10%
difference, this a huge negative for Crown Holdings because in consumer packaging buyers
Fiscal year. All values USD Millions 2007 2008 2009 2010 2011Sales/Revenue 7,727.00$ 100.00% 8,305.00$ 100.00% 7,938.00$ 100.00% 7,931.00$ 100.00% 8,650.00$ 100.00%Cost of Goods Sold (COGS) incl. D&A 6,700.00$ 86.71% 7,083.00$ 85.29% 6,830.00$ 86.04% 6,692.00$ 84.38% 7,315.00$ 84.57%CoGS incl. D&A Trend(2007-2011) 86.71% 85.29% 86.04% 84.38% 84.57%Depreciation & Amortization Expense 229.00$ 2.96% 216.00$ 2.60% 194.00$ 2.44% 172.00$ 2.17% 176.00$ 2.03%Gross Income 1,027.00$ 13.29% 1,222.00$ 14.71% 1,108.00$ 13.96% 1,239.00$ 15.62% 1,335.00$ 15.43%Gross Income Trend(2007-2011) 13.29% 14.71% 13.96% 15.62% 15.43%SG&A Expense 385.00$ 4.98% 396.00$ 4.77% 381.00$ 4.80% 360.00$ 4.54% 395.00$ 4.57%Research & Development 48.00$ 0.62% 47.00$ 0.57% 42.00$ 0.53% 42.00$ 0.53% 43.00$ 0.50%R& D Trend(2007-2011) 0.62% 0.57% 0.53% 0.53% 0.50%Other SG&A 337.00$ 4.36% 349.00$ 4.20% 339.00$ 4.27% 318.00$ 4.01% 352.00$ 4.07%Other Operating Expense 29.00$ 0.38% 25.00$ 0.30% 55.00$ 0.69% 46.00$ 0.58% 28.00$ 0.32%Unusual Expense 123.00$ 1.59% 29.00$ 0.35% (16.00)$ -0.20% 34.00$ 0.43% 102.00$ 1.18%Non Operating Income/Expense 15.00$ 0.19% (39.00)$ -0.47% 5.00$ 0.06% 10.00$ 0.13% (2.00)$ -0.02%Interest Expense 318.00$ 4.12% 302.00$ 3.64% 240.00$ 3.02% 203.00$ 2.56% 232.00$ 2.68%Gross Interest Expense 318.00$ 4.12% 302.00$ 3.64% 240.00$ 3.02% 203.00$ 2.56% 232.00$ 2.68%Pretax Income 201.00$ 2.60% 442.00$ 5.32% 459.00$ 5.78% 614.00$ 7.74% 587.00$ 6.79%Income Tax (400.00)$ -5.18% 112.00$ 1.35% 7.00$ 0.09% 165.00$ 2.08% 194.00$ 2.24%Equity in Affiliates -$ 0.00% -$ 0.00% (2.00)$ -0.03% 3.00$ 0.04% 3.00$ 0.03%Consolidated Net Income 601.00$ 7.78% 330.00$ 3.97% 450.00$ 5.67% 452.00$ 5.70% 396.00$ 4.58%Minority Interest Expense 73.00$ 0.94% 104.00$ 1.25% 116.00$ 1.46% 128.00$ 1.61% 114.00$ 1.32%Net Income 528.00$ 6.83% 226.00$ 2.72% 334.00$ 4.21% 324.00$ 4.09% 282.00$ 3.26%Net Income Trend(2007-‐2011) 6.83% 2.72% 4.21% 4.09% 3.26%
Crown Holdings Inc.Common Size Income Statement (2007-2011)(Data from: WSJ.com and Marketwatch.com) Created by Todge Aumiller
P a g e | 59
prefer cost over most other factors. Crown has decreased its total percentage of the marginal
R&D as well, which I feel is a negative move to future growth. I feel the cause of the decreased
R&D is due to debt payments, which the company must consider first (Aumiller).
The table above is the common sized balance sheet for Crown Holdings. The data taken
goes 5 years from 2007 up to 2011, from left to right. Horizontally the columns of percentage
show year to year the percentage that each asset holds of total assets and the percentage that each
liability or stockholders equity holds of total liabilities and share-holders equity. First looking at
assets, we can see that the cash and short term investments has gone down, this is due to the
Fiscal year All values USD Millions 2007 2008 2009 2010 2011AssetsCash & Short Term Investments 457.00$ 6.55% 596.00$ 8.80% 459.00$ 7.03% 463.00$ 6.71% 342.00$ 4.98%Total Accounts Receivable 673.00$ 9.64% 734.00$ 10.84% 728.00$ 11.15% 936.00$ 13.57% 948.00$ 13.80%Accounts Receivables, Net 497.00$ 7.12% 591.00$ 8.72% 558.00$ 8.54% 789.00$ 11.44% 797.00$ 11.60%Inventories 1,030.00$ 14.76% 979.00$ 14.45% 960.00$ 14.70% 1,060.00$ 15.36% 1,148.00$ 16.72%Total Current Assets 2,234.00$ 32.01% 2,457.00$ 36.27% 2,242.00$ 34.32% 2,649.00$ 38.40% 2,603.00$ 37.90%Net Property, Plant & Equipment 1,604.00$ 22.98% 1,473.00$ 21.74% 1,509.00$ 23.10% 1,610.00$ 23.34% 1,751.00$ 25.50%Machinery & Equipment 4,075.00$ 58.39% 3,861.00$ 57.00% 4,063.00$ 62.20% 4,062.00$ 58.88% 4,195.00$ 61.08%Accumulated Depreciation 3,494.00$ 50.06% 3,387.00$ 50.00% 3,601.00$ 55.13% 3,575.00$ 51.82% 3,597.00$ 52.37%Net Goodwill 2,199.00$ 31.51% 1,956.00$ 28.88% 2,050.00$ 31.38% 1,984.00$ 28.76% 1,952.00$ 28.42%Other Assets 486.00$ 6.96% 316.00$ 4.66% 89.00$ 1.36% 87.00$ 1.26% 85.00$ 1.24%Tangible Other Assets 45.00$ 0.64% 52.00$ 0.77% 38.00$ 0.58% 39.00$ 0.57% 36.00$ 0.52%Total Assets 6,979.00$ 100.00% 6,774.00$ 100.00% 6,532.00$ 100.00% 6,899.00$ 100.00% 6,868.00$ 100.00%
Liabilities & Shareholders' EquityShort Term Debt 45.00$ 1% 59.00$ 1% 30.00$ 0% 241.00$ 3% 128.00$ 2%Accounts Payable 1,328.00$ 19% 1,266.00$ 19% 1,163.00$ 18% 1,300.00$ 19% 1,393.00$ 20%Income Tax Payable 56.00$ 1% 28.00$ 0% 39.00$ 1% 50.00$ 1% 23.00$ 0%Other Current Liabilities 616.00$ 9% 688.00$ 10% 664.00$ 10% 628.00$ 9% 674.00$ 10%Total Current Liabilities 2,083.00$ 30% 2,072.00$ 31% 1,925.00$ 29% 2,377.00$ 34% 2,285.00$ 33%Long-Term Debt 3,354.00$ 48% 3,247.00$ 48% 2,739.00$ 42% 2,649.00$ 38% 3,337.00$ 49%Other Liabilities 387.00$ 6% 344.00$ 5% 331.00$ 5% 376.00$ 5% 386.00$ 6%Total Liabilities 6,641.00$ 95% 6,738.00$ 99% 6,149.00$ 94% 6,670.00$ 97% 7,107.00$ 103%Common Stock Par/Carry Value 929.00$ 13% 929.00$ 14% 929.00$ 14% 929.00$ 13% 929.00$ 14%Retained Earnings (654.00)$ -9% (428.00)$ -6% (94.00)$ -1% 230.00$ 3% 512.00$ 7%Other Appropriated Reserves (1,239.00)$ -18% (1,340.00)$ -20% (1,625.00)$ -25% (1,699.00)$ -25% (1,819.00)$ -26%Treasury Stock (130.00)$ -2% (133.00)$ -2% (122.00)$ -2% (153.00)$ -2% (187.00)$ -3%Total Shareholders' Equity 15.00$ 0% (317.00)$ -5% (6.00)$ 0% (96.00)$ -1% (473.00)$ -7%Total Equity 338.00$ 5% 36.00$ 1% 383.00$ 6% 229.00$ 3% (239.00)$ -3%Liabilities & Shareholders' Equity 6,979.00$ 100% 6,774.00$ 100% 6,532.00$ 100% 6,899.00$ 100% 6,868.00$ 100%
Crown Holdings Inc.Common Size Balance Sheet (Data from: WSJ.com and Marketwatch.com) Created by Todge Aumiller
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company’s attempt to repay debt and leverage its cash on hand. Relative to Rexam the company
the company is holding less than them in cash although this is good because they are utilizing
their revenue the possibility that Rexam has begun to save money in recent years gives the
company leverage to utilize it in the upcoming years. Another interesting aspect of the common
sized is it shows the company is increasing its plant and equipment slightly holding 61% of its
total assets although depreciation has halted the company as it takes up 52% of the company.
Meaning as the equipment depreciates, depreciation expense is recorded. Accumulated
depreciation is simply the running balance of depreciation that has accumulated against the value
of the equipment. Thus meaning only about 9% of Crown’s machinery and equipment is worth
anything. This is a problem that must be addressed. Good will is another item that takes up a lot
of the company’s assets, this is also a bad indicator of financial strength because as discussed
earlier in threats the company has stacked up this to a staggering 28% of its assets. Although they
have slowly began to decrease the margin of this asset over the past 5 years, this still presents
problems to the company (Aumiller).
Now jumping to the liabilities and stockholder’s equity and looking at long term debt, we
can see the company has built up a large number of long-term debts relative to total liabilities.
Taking on debt in order to pay off current debt is not a good strategy for the company and it is
forced to practice this to stay afloat. In 2011, the Company sold $700 principal amount of 6.25%
senior notes due 2021. The Company used a portion of the proceeds to retire all of its $600
outstanding 7.75% senior notes due 2015 (Crown Holdings, Inc. 2012 AR). The last thing to note
in liabilities is the stock holders equity total has become negative this will later effect the Return
on Equity and other equity equations because ROE is equal to net income divided by return on
equity. And dividing by a negative equity gives you a negative ROE when you have a positive
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profit. The reason the equity has gone negative can be seen below, with purchase of non-
controlling interests, pensions, and common stock repurchase the company has created negative
equity (Crown Holdings, Inc. 2012 AR). The negative total equity shows, the accounting
methods used to deal with accumulated losses from prior years but this should wave a red flag of
possible company financial problems (Aumiller).
Created by: Crown Holdings Inc. Referenced by: Todge Aumiller
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Common Sixed Spread Sheets and Commentary: Rexam PLC
The table shown above is the common sized income statement for Rexam. The data taken
goes 5 years from 2007 up to 2011, from left to right. Horizontally the columns of percentage
show year to year the total percentage that the item is comprised of revenue this is done by
dividing the given value for the item for that year divided by the sales or revenue for that year.
Vertically in the highlighted rows, the five year trends are shown to indicate a change in the 4
areas of significance. The net profit margin at the bottom has increased 1.58% since 2007, this is
higher than Crowns 5 year trend show that Rexam is heading in the right direction. The
companies low cost of goods sold has allowed for this to occur as discussed earlier it is nearly
10% lower than Rexam, and this is due to the company having better efficiency in their
operations. In 2011 the cost has risen again due to rising input costs such as aluminum and fuel
(Aumiller).
Fiscal year. All values GBP Millions. 2007 2008 2009 2010 2011Sales/Revenue 3,611.00£ 100.00% 4,618.00£ 100.00% 4,866.00£ 100.00% 4,619.00£ 100.00% 4,734.00£ 100.00%Cost of Goods Sold (COGS) incl. D&A 2,621.00£ 72.58% 3,442.00£ 74.53% 2,922.00£ 60.05% 2,643.00£ 57.22% 3,520.00£ 74.36%CoGS incl. D&A Trend(2007-2011) 72.58% 74.53% 60.05% 57.22% 74.36%Depreciation & Amortization Expense 158.00£ 4.38% 222.00£ 4.81% 272.00£ 5.59% 229.00£ 4.96% 217.00£ 4.58%Depreciation 126.00£ 3.49% 166.00£ 3.59% 208.00£ 4.27% 183.00£ 3.96% 179.00£ 3.78%Amortization of Intangibles 32.00£ 0.89% 56.00£ 1.21% 64.00£ 1.32% 46.00£ 1.00% 38.00£ 0.80%Gross Income 990.00£ 27.42% 1,176.00£ 25.47% 1,944.00£ 39.95% 1,976.00£ 42.78% 1,220.00£ 25.77%Gross Income Trend(2007-2011) 27.42% 25.47% 39.95% 42.78% 25.77%Research & Development 14.00£ 0.39% 19.00£ 0.41% 20.00£ 0.41% 19.00£ 0.41% £ 17.00 0.36%R&D Trend(2007-2011) 0.39% 0.41% 0.41% 0.41% 0.36%Other Operating Expense 641.00£ 17.75% 791.00£ 17.13% 1,565.00£ 32.16% 1,509.00£ 32.67% 730.00£ 15.42%Unusual Expense 35.00-£ -0.97% 42.00£ 0.91% 275.00£ 5.65% 23.00£ 0.50% 5.00-£ -0.11%Non Operating Income/Expense 32.00-£ -0.89% 49.00£ 1.06% 15.00-£ -0.31% 25.00£ 0.54% 42.00£ 0.89%Non-Operating Interest Income 14.00£ 0.39% 12.00£ 0.26% 3.00£ 0.06% 4.00£ 0.09% 7.00£ 0.15%Interest Expense 106.00£ 2.94% 165.00£ 3.57% 152.00£ 3.12% 140.00£ 3.03% 99.00£ 2.09%Gross Interest Expense 106.00£ 2.94% 165.00£ 3.57% 152.00£ 3.12% 140.00£ 3.03% 99.00£ 2.09%Pretax Income 260.00£ 7.20% 239.00£ 5.18% 60.00-£ -1.23% 333.00£ 7.21% 422.00£ 8.91%Income Tax 86.00£ 2.38% 69.00£ 1.49% 30.00-£ -0.62% 102.00£ 2.21% 128.00£ 2.70%Equity in Affiliates -£ 0.00% 1.00£ 0.02% 1.00£ 0.02% 5.00£ 0.11% 9.00£ 0.19%Consolidated Net Income 174.00£ 4.82% 171.00£ 3.70% 29.00-£ -0.60% 236.00£ 5.11% 303.00£ 6.40%Net Income 174.00£ 4.82% 172.00£ 3.72% 29.00-£ -0.60% 236.00£ 5.11% 303.00£ 6.40%Net Income Trend (2007-2011) 4.82% 3.72% -‐0.60% 5.11% 6.40%
Rexam PLCCommon Size Income Statement(2007-2011) (Data from: WSJ.com and Marketwatch.com) Created by Todge Aumiller
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The table above is the common sized balance sheet for Rexam. The data taken goes 5
years from 2007 up to 2011, from left to right. Horizontally the columns of percentage show year
to year the percentage that each asset holds of total assets and the percentage that each liability or
stockholders equity holds of total liabilities and share-holders equity. Comparable to Crown
Holdings, the company only has accumulated depreciation of 25% , giving a longer life to assets
of the company. The company’s long term debt is only 29% of its liabilities and equity as well
creating a better balanced balance sheet. This theory of having a balanced balance sheet is in
Rexam’s Annual report and is a key goal of the firm (Rexam PLC. 2012). Again the company
has balanced its liabilities and equities because unlike Crown Holdings the company has 38% of
Fiscal year. All values GBP Millions.(₤) 2007 2008 2009 2010 2011AssetsCash & Short Term Investments 134.00£ 2.60% 130.00£ 1.81% 180.00£ 2.96% 185.00£ 3.05% 451.00£ 7.36%Cash Only 113.00£ 2.19% 75.00£ 1.04% 113.00£ 1.86% 114.00£ 1.88% 83.00£ 1.36%Total Accounts Receivable 540.00£ 10.47% 787.00£ 10.93% 588.00£ 9.67% 593.00£ 9.77% 590.00£ 9.63%Inventories 391.00£ 7.58% 614.00£ 8.53% 432.00£ 7.10% 415.00£ 6.84% 517.00£ 8.44%Total Current Assets 1,118.00£ 21.67% 1,616.00£ 22.45% 1,246.00£ 20.49% 1,530.00£ 25.22% 1,598.00£ 26.09%Net Property, Plant & Equipment 1,310.00£ 25.39% 1,982.00£ 27.54% 1,723.00£ 28.33% 1,571.00£ 25.89% 1,590.00£ 25.96%Machinery & Equipment 1,574.00£ 30.50% 2,375.00£ 33.00% 2,389.00£ 39.29% 2,289.00£ 37.73% -£ 0.00%Accumulated Depreciation 853.00£ 16.53% 1,278.00£ 17.75% 1,381.00£ 22.71% 1,424.00£ 23.47% 1,560.00£ 25.47%Net Goodwill 1,692.00£ 32.79% 2,246.00£ 31.20% 1,886.00£ 31.01% 1,848.00£ 30.46% 1,830.00£ 29.88%Other Assets 68.00£ 1.32% 16.00£ 0.22% -£ 0.00% 19.00£ 0.31% 465.00£ 7.59%Total Assets 5,160.00£ 100.00% 7,198.00£ 100.00% 6,081.00£ 100.00% 6,067.00£ 100.00% 6,124.00£ 100.00%
Liabilities & Shareholders' EquityShort Term Debt 77.00£ 1.49% 100.00£ 1.39% 51.00£ 0.84% 15.00£ 0.25% 53.00£ 0.87%Accounts Payable 579.00£ 11.22% 679.00£ 9.43% 417.00£ 6.86% 438.00£ 7.22% 510.00£ 8.33%Other Current Liabilities 328.00£ 6.36% 675.00£ 9.38% 410.00£ 6.74% 429.00£ 7.07% 973.00£ 15.89%Total Current Liabilities 1,084.00£ 21.01% 1,945.00£ 27.02% 982.00£ 16.15% 968.00£ 15.96% 1,026.00£ 16.75%Long-Term Debt 1,679.00£ 32.54% 2,272.00£ 31.56% 1,955.00£ 32.15% 1,800.00£ 29.67% 1,785.00£ 29.15%Other Liabilities 115.00£ 2.23% 353.00£ 4.90% 275.00£ 4.52% 352.00£ 5.80% 931.00£ 15.20%Total Liabilities 3,327.00£ 64.48% 5,022.00£ 69.77% 3,759.00£ 61.82% 3,742.00£ 61.68% 3,805.00£ 62.13%Common Equity (Total) 1,831.00£ 35.48% 2,174.00£ 30.20% 2,320.00£ 38.15% 2,322.00£ 38.27% 2,319.00£ 37.87%Retained Earnings 60.00£ 1.16% 77.00£ 1.07% 55.00£ 0.90% 32.00£ 0.53% 211.00£ 3.45%Other Appropriated Reserves 351.00£ 6.80% 351.00£ 4.88% 347.00£ 5.71% 348.00£ 5.74% -£ 0.00%Total Shareholders' Equity 1,831.00£ 35.48% 2,174.00£ 30.20% 2,320.00£ 38.15% 2,322.00£ 38.27% 2,319.00£ 37.87%Total Equity 1,833.00£ 35.52% 2,176.00£ 30.23% 2,322.00£ 38.18% 2,325.00£ 38.32% 2,319.00£ 37.87%Liabilities & Shareholders' Equity 5,160.00£ 100.00% 7,198.00£ 100.00% 6,081.00£ 100.00% 6,067.00£ 100.00% 6,124.00£ 100.00%
Rexam PLCCommon Sized Balance Sheet (Data from: WSJ.com and Marketwatch.com) Created by Todge Aumiller
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its total equity and liabilities in equity, giving leverage to its debt to equity ratio. Financially
Rexam seems to be in a much better position than Crown Holdings (Aumiller).
Analysis of Key Ratios: Crown Holdings Inc. & Rexam PLC
Profitability
The bottom line of a business is how profitable it is, relative to assets, to equity and
relative to overall revenue. Comparing these companies with a few key ratios will shed some
light on which firm can make money. The first ratio the above chart compares the two companies
with is Gross and Net profit margin. The definition of gross profit margin states that this is a
financial metric used to assess a firm's financial health by revealing the proportion of money left
over from revenues after accounting for the cost of goods sold(Investopedia, 2012). Gross profit
margin serves as the source for paying additional expenses and future savings and as discussed
before Rexam has a Gross Profit that is 10% higher due to their 10% less expense on cost of
goods sold relative to Crown Holdings. The net profit margin is another ratio of profitability
calculated as net income divided by revenues (Investopedia, 2012). It measures how much
out of every dollar of sales a company actually keeps in earnings, meaning a higher profit margin
indicates a more profitable business that has better control over its costs relative to its
competitors (Investopedia, 2012). Rexam has a net profit margin almost double that of Crown
Holdings, indicating its ability to control costs and generate high sales.
Crown Holdings RexamGross Profit Margin 15.43% 25.77%Net Profit Margin 3.26% 6.40%Return on Equity N/A 13.06%Return on Assets 4.10% 4.97%Return on Investment Capital 10.41% 7.37%
Profitability Key Ratios (Source: WSJ.com/Macroaxis.com)2011 Annual Report Calculations: Created By Todge Aumiller
N/A* = negative shareholder's equity
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Return on Equity(ROE), Return on Assets(ROA), and Return on Investment
Capital(ROIC) are all good indicators of a firm’s profitability. ROE is found by dividing net
income by shareholder’s equity. ROE measures an organization's profitability by revealing how
much profit a business generates with the money shareholders have invested (Investopedia,
2012). As discussed previously, Crown Holdings has a negative equity due to the negative
shareholder’s equity it has accumulated, due to pensions and other costs Crown incurred (Crown
Holdings, Inc. 2012 AR). On the other side of the spectrum, Rexam has created a high
stockholder’s equity, generating positive outlook for shareholders. ROA is calculated through
dividing net income by total assets. ROA is an indicator of how profitable a firm is relative to its
total assets, giving an idea as to how efficient management is at using its assets to generate
earnings for the business (Investopedia, 2012). Both firms are around the industry average in
ROA with both Crown and Rexam being above 4%. Last, is return on investment capital, which
is calculated by net income less dividends divided by total capital (Investopedia, 2012). ROIC
assess how efficient and profitable a company is at allocating the capital under its control into
investments (Investopedia, 2012). Both companies have a high ROIC showing their abilities to
generative profit from capital, although Rexam falls short about 3% of Crown Holdings. Rexam
is addressing this issue through their efficiency improvements and capacity changes in factories
(Aumiller).
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Financial Strength
Financial strength in the industry is a key indicator of the health of a company and its
ability to take on loss if say another recession occurred. The first ratio used to consider the
financial strength of these firms is the current ratio, which is calculated by current assets over
current liabilities (Investopedia, 2012). This ratio measures a firm’s ability to pay short term
obligations, and gives a sense of the efficiency of its ability to turn its product into cash
(Investopedia, 2012). Rexam as seen above in the table has a higher ability to turn its product
into cash and cover short term obligations. Another ratio of financial strength and liquidity is the
current ratio, which is calculated by current assets minus inventories divided by current liabilities
(Investopedia, 2012). Current ratio considers a company’s most liquid assets to meet its short-
term obligations, when inventory is taken out (Investopedia, 2012). Crown Holdings is below 1
showing a weak ability for the company to pay off short-term liabilities, where Rexam is at 1
showing an acceptable ratio for the industry.
The next ratio used to compare financial strength is debt to equity which is calculated by
total liabilities divided by shareholder’s equity, which shows a company's financial leverage
(Investopedia, 2012). Crown Holdings doesn’t have a debt to equity ratio due to its negative
equity showing the company has no financial leverage in terms of equity relative to liabilities.
Rexam has a high debt to equity of 79.26, which is relatively high but this industry tends to be
Crown Holdings RexamCurrent Ratio 1.30 1.56Quick Ratio 0.64 1.00Total Debt/Equity N/A 79.26Z-Score 1.599 1.20
N/A* = negative shareholder's equity
Financial Strength Key Ratios (Source: WSJ.com/Macroaxis.com)2011 Annual Report Calculations: Created By Todge Aumiller
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high due to high fixed assets expenses so a lot of long-term debt must be taken on. Lastly is the
z-score, which is the output from a credit-strength test that gauges the likelihood of bankruptcy
(Investopedia, 2012). Companies with Z-Scores above 3.1 are generally considered to be stable
and healthy with low probability of bankruptcy, scores that fall between 1 and 3.1 lie in a so-
called 'grey area' with scores of less than 1 indicating the high probability of distress. I calculated
this by using the formula (for manufacturing firms) of: Z-Score = 1.2A + 1.4B + 3.3C + 0.6D +
1.0E Where: A = Working Capital/Total Assets, B = Retained Earnings/Total Assets, C =
Earnings Before Interest & Tax/Total Assets, D = Market Value of Equity/Total Liabilities and E
= Sales/Total Assets (Investopedia, 2012). As seen in the tables above both companies are in the
lower end of the Grey area for bankruptcy in the future. Crown Holdings is due to its long term
debt and bad equity. Rexam’s is due to its high pension costs. But both are still well above a
bankruptcy threat for the near future (Aumiller).
Growth Rates and Trends: Crown Holdings Inc. & Rexam PLC
Now to understand trends of each company and where it has come from the past five
years we can look at the 1 year and 5 years growth trends above in the table. The categories
include the percentage in sales change, the net income percentage change, the cost of goods sold
with D&A, and lastly the R&D change in percent. For Crown Holdings the sales has increased
Years of Trend Average 1 Year 5 Years 1 Year 5 yearsSales % 9.00% 12.00% -3.00% 24.00%Net Income % -0.83% -3.57% 1.55% 3.84%CoGS incl. D&A% -0.03% -0.12% 20.04% 1.77%R&D % 0.19% -2.14% -0.03% 0.39%
2011 Annual Report Calculations: Created By Todge AumillerGrowth Rates (Source: WSJ.com/Macroaxis.com)
RexamCrown Holdings
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by a staggering 9% over the last year relative to a – 3% decrease in Rexam’s sales although they
have has a net income growth of 1.5% last year and Crown Holdings had a negative .83% loss.
The ratios show that even with lost sales, Rexam is more efficient with costs, and also Rexam is
taxed less relative to Crown Holdings. Also the 5 year trend for both show similar results where
Crown has lost a total 3.57% as shown above, where Rexam has increase 3.84%. . Cost of goods
sold has decreased for Crown Holdings proving its manufacturing efficiency relative to Rexam
who both in the 5 year and 1 year trend has gained in costs 20% and 1.77% which is due to fuel
increases and manufacturing startups (Rexam PLC. 2012). R&D is another statistic that should
be considered in the industry where Green technology is becoming a must and efficient solutions
to packaging will lead to its profitable future. Both companies must consider increasing R&D in
the future to gain intellectual property and revolutionize the industry further. Below are charts of
the revenue trends of both the companies, showing the five year growth of each, Rexam has
generated higher revenue growth in the past five years significantly creating cash and growth for
the company, establishing itself as a major competitor in the industry. Crown Holdings has
lagged in the past five years, as seen from the graph below, due to the financial crisis in the
United States. This graph shows the significance of future restructuring and debt payments must
that must ensue, in order to not be surpassed by a growing Rexam.
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Data from Crown Holdings, Inc. 2012 AR Created by Todge Aumiller
Data from Crown Holdings, Inc. 2012 AR Created by Todge Aumiller
£-‐ £1,000.00 £2,000.00 £3,000.00 £4,000.00 £5,000.00
2007 2008 2009 2010 2011
Revenu
e
Years 2007 2008 2009 2010 2011
Series1 £3,611.00 £4,618.00 £4,866.00 £4,866.00 £4,734.00
Rexam Revenue Growth
Series1
$-‐ $1,000.00 $2,000.00 $3,000.00 $4,000.00 $5,000.00 $6,000.00 $7,000.00 $8,000.00 $9,000.00
2007 2008 2009 2010 2011 Series1 $7,727. $8,305. $7,938. $7,931. $8,650.
Revenu
e
Years
Crown Holdings Revenue Growth
Series1
24%
12%
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Asset Quality: Crown Holdings Inc. & Rexam PLC
Another financial analysis to review the efficiency of the company is through asset
quality. The above table shows the comparison in 2011 between key efficiency ratios of Crown
Holdings and Rexam, these ratios include total asset turnover, revenue per employee, net income
per employee, days of sales outstanding and inventory turnover. The first efficiency ratio is total
asset turnover; this measures a firm's efficiency at using its assets in generating sales or revenue
(Investopedia, 2012). Crown Holdings has a solid asset turnover relative its competitor, as seen
in the above table, where Rexam falters. Discussed later, we will see how this is a current
strategy of Rexam for capacity utilization. The next two numbers I calculated where the revenue
generated per employee and the Income per employee. The revenue per employee is the total
revenue of the company divided by its total number of employees. This shows the labor
efficiency of the firm. Crown Holdings has higher labor efficiency relative to Rexam in revenue
per employee. Also in income per employee where net income is divided by the number of
employees we see that Crown Holdings almost triples in efficiency relative to employees and net
income. This should be a considered area of evaluation for Rexam.
The next two ratios look at inventory, and how efficiency the company generates cash
from sales and moves its inventory out. Days of Sales Outstanding is determined by dividing
accounts receivable by total credit sales times the number of day, showing the average number of
Crown Holdings RexamTotal Asset Turnover 1.26 0.78Revenue/Employee $420,000.00 $394,678.00Income Per Employee $100,000.00 $31,347.00Days Sales Outstanding 36.59 38.94Inventory Turnover 6.61 5.5
2011 Annual Report Calculations: Created By Todge AumillerEfficiency Key Ratios (Source: WSJ.com/Macroaxis.com)
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days that a company takes to collect revenue after a sale has been made (Investopedia, 2012).
Both companies take around 37 days to collect revenue meaning they are basing sales on credit
of companies. Being a contract company, the time it takes for the money to be received is under
stable due to the volume of orders. Lastly, I calculated inventory turnover above by sales divided
by inventory, showing how many times a business’s inventory is sold and replaced over a period
(Investopedia, 2012). Crown Holdings inventory turnover is higher showing higher throughput
in sales relative to Rexam. In conclusion Rexam has faltered in efficiency relative to Crown
Holdings from the ratios given.
Current and Alternative Strategies Comparison of Current Strategies of Crown Holdings Inc. & Rexam PLC.
Crown Holdings Inc. Rexam PLC New Innovative Packaging Design Strategic divestment initiatives to create
cash generation for the company Increased investment in emerging markets Closing and merging of factories in order
to maximize efficiency Increased capacity in plants to create more efficient operations in Brazil, China, Eastern Europe and Southeast Asia
Employee survey implementation for quality improvement
Increase emerging market sales/presence. Partnership with HeatGenie Innovation of products (Safe'n'Sound©) Debt reduction to in the next 5 years Investing in a new two line can making
plant in Finland for £68m, opens in 2013. Sustainability report launch Blue Chips
Data from Annual Reports, Valueline, and Company Websites Created By: Todge Aumiller
In the table above both Crown Holdings and Rexam’s current strategies are compared.
Similar strategies between the two companies right now are the innovations, implementing
capacity, and entering emerging markets. Both companies discuss extensively, constantly
innovating the consumer packaging industry in efficiency, designs, and accessibility. Innovation
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drives competition in this industry because producers will switch to the newest most efficient
product so creating current strategies around this is essential for both companies (Aumiller).
Currently Crown Holdings in 2011 developed a number of successful new product launchings
such as Orbit, Crown holdings revolutionary easy-to-open metal vacuum jar, received the “Best
in Metal Award”, a coveted award, selected by the Metal Packaging Manufacturer’s Associations
(Crown Holdings, Inc. 2012 AR). Another example of innovation for Crown is its SuperEnd®
beverage that was improved in 2011, cutting aluminum usage and greenhouse gas usage with an
efficient consumer efficient design (Crown Holdings, Inc. 2012 AR). Rexam has seen innovation
as well, through product and value chain improvements to broaden its range for customers.
Recent upgrades have been in a new two line can making plant in Finland, where it is planned to
open at the start of 2013 in order to cover contracts for customers in Finland and the Baltic
countries in 2015 (Rexam PLC. 2012). Also the new creation of their safe’n’sound device has
created a demand from consumers looking for innovation in healthcare packaging (Rexam PLC.
2012).
Also, these companies are focusing on capacity increases to improve operations. Rexam
has begun trying to fully utilize its plants in this effort (Rexam PLC. 2012). Crown Holdings has
also invested in capacity in foreign plants in order to fully utilize capabilities and prepare for
immerging markets growth (Crown Holdings (CCK) 2012). Both businesses have begun to
invest heavily in emerging markets, Rexam is already established heavily in Brazil and had 30%
of its sales from last year where emerging market sales grew by 8% alone (Rexam PLC. 2012).
Crown Holdings has also begun to expand into these emerging markets by increasing the
capacity of some plants in the regions and building new ones in areas of favorable growth
(Crown Holdings, Inc. 2012 AR). Both companies are investing heavily in these three strategies
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because it drives future growth and competition, because if you are the lowest cost, best
positioned plant, you will receive contracts from consumers.
Separately both have created some different current strategies in order to differentiate
themselves and gain a competitive advantage in packaging. Crown Holdings has partnered with
HeatGenie, a Texas based company in order to create a self-heating packaging for the military
and possibly future consumers (Heatgenie 2012The partnership could prove to be vital for the
corporation’s revenues in the future. The company has also set the goal of having considerable
debt reduction to in the next 5 years, this partly a goal of Rexam as well but Crown Holdings has
gathered considerable debt that, I feel this is a notable current strategy (Crown Holdings, Inc.
2012). Lastly the company has recently released the new sustainability report in 2011, the current
strategy is a vital marketing move for the company to attract new packaging producers and show
the firms commitment to its mission statement (Crown Holdings, Inc. 2012).
Rexam has different strategies to compete in the industry and gain competitive
advantage. The first current strategy of the company is a strategic divestment initiative to create
cash generation for the company. Rexam sold off portions of its business and consolidated
factories in less favorable growth regions in order to gain higher cash on hand. The cash gained
from this is used to cover debt liabilities in pensions and fund further investment in emerging
markets (Rexam PLC. 2012). The next two current strategies have been implemented to improve
labor relations and increase productivity (Rexam PLC. 2012). In order to improve labor efforts,
in 2011 it recently implemented is its Blue Chips (Rexam PLC. 2012). The program entails an
employee receiving a “Blue Chip” that has a cash value equivalent to 50 Rexam ordinary shares,
recognizing individuals who visibly demonstrate the values and leadership practices the
company embodies (Rexam PLC. 2012). The second strategy the enterprise implemented to
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increase labor relations and quality improvement within management was an employee survey
(Rexam PLC. 2012).
Comparison and Discussion of Alternative Strategies of Crown Holdings & Rexam
Data from Annual Reports, Valueline, and Company Websites Created By: Todge Aumiller
After evaluating both Crown Holdings and Rexam’s financial, market and current
position in the consumer packaging industry, a few alternative strategies for future growth and
competitive advantage can be drawn for each firm. The first option for Crown Holdings is to
begin strategic disinvestments, considering the business’s cash position; I feel this is a feasible
solution to covering some impeding long-term debt. Another option is to integrate employee
surveys and employee “Gold Crown” awards to ensure employees values are aligned with the
companies and to reward those who exemplify top notch packaging employees. The third
alternative Crown could commit to is increasing recycling investments and possibly creating a
natural gas facility in emerging markets or in areas where future can growth will call for
Crown Holdings Inc. Rexam PLC Strategic disinvestments to help fund debts
Create Recycling Plants in emerging markets, support sustainability and decrease waste.
Employee survey integration and “Gold Crown” program
Increase presence in Russia to gain control of growing economy and beginning to invest in supplier relations (Russia is home to two of the world's top five aluminum producers)
Increase recycling investments in the US and emerging markets to ensure materials for the future, possibly build recycling plants in emerging markets.
Invest in natural gas use for more factories and other operations to reduce costs and reduce dependence on oil through increased R&D
Purchase Rexam’s Personal Care factories, to increase segment and reduce risk.
Start community programs and support areas such as Brazil and China where growth in sales a profited Rexam greatly in order to maintain good relations.
P a g e | 75
recycling facilities. The fourth and final recommendation I have for Crown is to consider
purchasing the personal care factories in order to diversify its portfolio considering high leverage
in cans and to increase its personal care segment of business (Aumiller).
In the above table I have created four possible alternative strategies for implementation
by Rexam. The first of these strategies is to create recycling plants in emerging markets in order
to support sustainability and decrease waste for the company and environment. The second
alternative came from viewing Rexam’s company placement that is branched around Russia but
not very present in the country. The strategy of beginning to invest in supplier relations and
create factories or a supply chain facility for raw material in Russia due to it being the home to
two of the world's top five aluminum producers (Banks, Jim. 2006). The third strategy is since
the cost of natural gas is so low and recent suppliers have begun investing heavily the company
should begin to diminish reliance on oil and shift to these alternatives through research and
development, wind and solar power are some other Green options, in the future (Aumiller). The
forth idea for Rexam came from Crown Holdings who invests in community programs to
establish better relations with communities in which it operates (Crown Holdings, Inc. 2012).
An effective plan for the future of the company’s social image and corporate image to investors
would be to start community programs and support areas such as Brazil and China where growth
in sales has profited Rexam greatly in order to maintain good relations to reduce risk of
regulations (Aumiller).
Strategic Choices for Crown Holdings and Rexam
Crown Holdings Inc. Rexam PLC Strategic disinvestments to help fund debts
Create Recycling Plants in emerging markets, support sustainability and decrease waste.
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In the table above the green shows the accepted two strategies for each company and the
red shows the rejected strategies for each. The first rejected strategy for Crown Holdings was to
increase investments in the U.S. and emerging markets to ensure materials for future. Crown is
already invested in recycling and buying facilities at this time is not feasible for the company,
who is carrying a lot of debt. The second rejected strategy for Crown was to purchase Rexam’s
personal care division to improve its segment. Although growing is always good I feel there are
two big reasons this investment will falter, first the company again has too much debt to finance
this acquisition, because a decrease in Goodwill from the purchase of this could send the
company bankrupt. Second, Rexam is selling the division of the company for a specific reason,
which could be due to oil costs increasing the price of producing plastic and a diluted, decreasing
market. The two strategies I rejected for Rexam where to start community programs in these
countries because this strategy is not feasible and is not an immediate threat to the company for
not taking action, considering the main customer of the business, producer, only cares about the
bottom cost and location. And I also rejected to increase presence in Russia because the firm is
already in the country partly and circles it, so I assume Rexam has set itself up to take market
Employee survey integration and “Gold Crown” program
Increase presence in Russia to gain control of growing economy and beginning to invest in supplier relations (Russia is home to two of the world's top five aluminum producers)
Increase recycling investments in the US and emerging markets to ensure materials for the future, possibly build recycling plants in emerging markets.
Invest in natural gas use for more factories and other operations to reduce costs and reduce dependence on oil through increased R&D
Purchase Rexam’s Personal Care factories, to increase segment and reduce risk.
Start community programs and support areas such as Brazil and China where growth in sales a profited Rexam greatly in order to maintain good relations.
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share and enter the country proportionally when need be. Also, Russia is growing but not as fast
as Brazil, China, or India (Aumiller).
For each company in the green above, I selected two strategies I felt will help the
company’s gain an advantage in efficiency and growth. The first selected strategy for
implementation I chose for Crown Holdings was to strategically disinvest in factories in
plateaued or decreasing sales areas. These areas include the U.S. and parts of Europe, where
mature markets and decreasing consumer demand for soda cans has stunted growth. Crown
should efficiently combine firms to create a tighter value chain because this strategy has proven
effective for leading competitors, such as Rexam. Disinvestments will create cash generation for
the company in order to pay off current debts and a shorter than 5 year plan of reducing debt. In
order to compete effectively and grow, the firm cannot have debt constricting its growth.
Establishing a sale of a plant and compressing it with another branch will allow for efficient
labor decreases, processes, and capital use. The second strategic choice I chose for Crown
Holdings was Employee survey integration and “Gold Crown” program. Both of these are
current in Rexam’s current strategy and seem to be working (Rexam PLC. 2012). Increasing
labor relations is a vital consideration for Crown because of its unionized labor force (Aumiller).
The survey would entail electronically or through paper using a scorecard to rate labor
satisfaction and labor competency relative to company objectives. The “Gold Crown” instead
will be a plaque that an employee receives for its outstanding commitment to the company and
its overall commitment to excellence. The employee could also receive a bonus of $100 dollars
or maybe 100 shares of Crown stock. This creates a driver to increase motivation in the company
and generate well thought ideas for improvement by employees (Aumiller).
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Rexam had two strategic strategies I felt will create value for the firm in areas of poor
performance and increase future efficiency. The first strategic choice for Rexam would be to
create recycling plants in emerging markets. This would not only create a self-generated
company by cutting out the supplier, but it would also increase firm image relative to the
company and the country of operation with the plant. In the long run the value of the recycling
plant on the firm’s costs will be essential due to increasing costs of raw materials. Rexam will
create a competitive advantage relative to Crown because they will be able to offer a lower price
due to cost cutting (Aumiller). Second, I chose the strategic choice of investing in natural gas use
for more factories and other operations to reduce costs and reduce dependence on oil through
increased R&D. Input costs are rising and Rexam has done little in the past five year trend to
reduce its costs of goods sold so in order to do this I feel it needs to begin to look at other viable
fuel alternatives for factories with increased R&D. Low R&D could be holding the company
back from new plant innovations. Wind and solar are becoming cost effective thus presenting a
possible cost saving option for the company. The trend of the industry is moving towards green
so by showing that in your operations even you will attract producers who can say our products
are all made by a green manufacturer (Aumiller).
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Annotative Bibliography
About Crown: Brand-Building Packaging. (Crown Holdings, Inc., 2012) http://www.crowncork.com/about/about_crown.php. Accessed April 10,2012.
This website focuses on Crown Holdings and its mission, history, and beliefs. It was vital to my research because it explained the mission of the company and how its seven dimensions are what drive the company.
About Us: Rexam. (Rexam, 2012) http://www.rexam.com/index.asp?pageid=2. Accessed April 12,2012.
This website focuses on Rexam’s mission, history, beliefs, and overall company. It was vital to my research because it explained the mission of Rexam and the strategies and theories the company embodies to create a successful global enterprise.
Aumiller, Todge. (2012). 29 South Water Street, Selinsgrove, PA. 17870. [email protected].
I used my opinion to create ideas for this paper and analyses data in order to create the best possible decisions for the company’s future strategies.
Competitive Quotes. (thinkexist.com 2012). http://thinkexist.com/quotations/competition/. Accessed February 25, 2012.
This site focuses on quotes established by famous individuals. The information was appropriate to my research because it exemplified the truth about competition and rivalry with Henry Ford. It specified no information directly to this subject although.
Crown Case Study. (Smart Media Limited, 2011). http://www.smartmedia.com/rte.asp?id=5 Accessed February, 28 2012.
This article focuses on the case of the canning industry, specifically on crown holdings and how they corner the market. The information was relevant to my research because it defined how the company holds its market share and to what extent it holds the can market globally.
Crown Holdings, Inc. (Datamonitor360, 2011). Database. http://360.datamonitor.com/. Accessed April 1, 2012.
This data report focuses on overall industry overview, such as Porter’s Five Forces and company overviews of top competitors as well as key statistics. This information was prudent to my research because it gave me insight directly into the industry and laid a foundation for me to branch out and collect data questioning and agreeing with these figures.
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Crown Holdings, Inc. 2010. Annual Report. http:// http://investors.crowncork.com/phoenix.zhtml?c=85121&p=irol-IRHome. Accessed February 19, 2012.
This report focuses on the entire packaging industry’s outlook and exterior as well as interior issues, explaining structure and products. The information was vital to my research because explained the economic outlook of the packaging industry and sector structure globally.
Crown Holdings, Inc. 2012 AR. Annual Report. http:// http://investors.crowncork.com/phoenix.zhtml?c=85121&p=irol-IRHome. Accessed February 19, 2012.
This report focuses on the entire packaging industry’s outlook and exterior as well as interior issues, explaining structure and products of Crown Holdings for the 2011 fiscal year. The information was vital to my research because explained the financial position of the company and its strategies of current and future.
Crown Holdings, Inc.. (Hoovers,2011). www.hoovers.com. Accessed April 18,2012. Crown Holdings, Inc. 2012. Sustainability Report. http://www.crowncork.com/sustainability. Accessed February 28, 2012.
This report focuses on the economic sustainability of the company and of the packaging industry as a whole. Giving insight to how the industry is changing and is. The material was pertinent to my research because its established the changes occurring in the industry as well as political issues.
Crown Holdings (CCK) 2012. Valueline Report. http://www3.valueline.com/secure/vlispdf/stk1700/vlispdf/f2461.pdf. Accessed April 17, 2012.
This report focuses on Crown Holdings financials and current strategies in order to give an overview of the direction of the company. The material was pertinent to my research because it gave insight to the company’s strategies and financial outlook.
Banks, Jim. 2006. Metals country focus: Russia. London Metal Exchange. http://www.lme.com/mar06-article5.asp. Accessed April 23, 2012.
This article focuses on the two of the five top aluminum producers being in Russia. The information was needed for my research because it allowed me to demonstrate why entering Russia and helping its economy is a key strategic move for Rexam’s future.
Business and Company Resource Center. Top Packaging Firms Worldwide, 2010. Market Share Reporter 2012. http://galenet.galegroup.com/servlet/BCRC. Accessed February 15, 2012.
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This article focused on providing knowledgeable information on industry packaging leaders and how market share and product variation came in to play. The data was essential to my research because it allowed for me to critically analyze key players in the industry as well as their strategic groups.
Business and Company Resource Center .World's Largest Containers and Packaging Companies Overall, 2010. Forbes,2012, http://galenet.galegroup.com/servlet/BCDCsRC, Accessed on January 31, 2012.
This editorial focused on providing conversant information on industry packaging leaders and the various companies involves in 2010. The facts were essential to my research because it allowed for me to critically analyze key players in the industry.
Economy Statistics. (NationMaster.com, 2012) http://www.nationmaster.com/graph/eco_eco_ove-economy-overview Accessed February 24,2012
This piece focuses on the economic conditions and outlook for countries around the globe. The information was key to my research because it defined general economic conditions of the countries involved in my industry but however it specified no information directly related to packaging.
Edwards D. 2012. WikiCells: Bottles That We Eat. Harvard Research Online. http://wyss.harvard.edu/viewevent/183/. Accessed February 29, 2012.
This article focuses on the new innovative packaging designed at Harvard for bottles that will be edible. The information was needed for my research because it allowed me to exemplify what technology changes could occur in the future and how firms need to react strategically.
Global Metal Glass and Plastic Packaging. (Datamonitor360, 2011). Database. http://360.datamonitor.com/. Accessed February 28, 2012.
This data report focuses on overall industry overview, such as Porter’s Five Forces and company overviews of top competitors as well as key statistics. This information was prudent to my research because it gave me insight directly into the industry and laid a foundation for me to branch out and collect data questioning and agreeing with these figures.
The Global Consumer Packaging Market. (Rexam, 2012) http://www.rexam.com/files/reports/2009ar/index.asp?pageid=29. Accessed February 20, 2012
This article focused on the global consumer packaging market and its outlook for the future. The facts were pertinent to my research because it defined the industry segments and their growth, as well as consumer behavior and overall future stance of the industry.
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Grant, R. 2010. Contemporary strategy analysis. West Sussex, UK: John Wiley and Sons Ltd.
This book focuses on the basis and fundamental principles of strategy analysis and gave in site into how to critically analyze an industry. The text was essential to my research because it gave me knowledge and definitions of key analytical tools of the trade of corporate analysis and strategy.
Global packaging industry expected to reach $820 billion by 2016, according to Pira International. (Pira International, 2011). Industry Report. http://www.packagingeurope.com /Packaging-Europe-News/45252/Global-packaging-industry-expected-to-reach-820-billion-by-2016-according-to-Pira-International.html. Accessed February 28, 2012.
This report focuses on forecasting the packaging industry for the future and relative current data expounding on how companies must critically position themselves for changes. The information given helped me understand and predict future outlook of the company and compare figures statistically with Datamonitor360.
Heatgenie 2012. HeatGenie Forges Strategic Alliance with Crown Holdings, Inc. HeatGenie.com. http://heatgenie.com/2011/04/heatgenietm-forges-strategic-alliance-with-crown-holdings-inc. Accessed April 20, 2012.
This article by HeatGenie focuses on the current partnership in packaging with heatgenie’s technology with Crown Holdings and the creation of products for the military. This information was needed for my research because it helped explained strategic partnerships by the Crown Holdings company to generate revenue.
Investopedia, 2012. Financial Dictionary. http://www.investopedia.com/#axzz1tATXHtWm. Accessed April 19, 2012.
This website gives investment definitions in terms of ratios and the significance of the ratio. The material was applicable to my research because it helped me figure key financial ratios and understand the meaning and how the ratios compared to each companies health.
Neely, M. 2011. 2012 Consumer Packaged Goods Industry Perspective. http://www.booz.com/global/home/what_we_think/featured_content/perspectives_12/consumer_packaged-goods_2012. Accessed February 15, 2012.
This article focused on the economic outlook of the industry while provided insightful tools and innovation that will be needed to lead the industry. The information was relevant to my research because it established insight to the future and gave helpful technological advances that will play a key role in the industry.
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Newly identified chemicals leach into food packages, pose regulatory challenge. (Environmental Health Sciences, 2011) http://www.environmentalhealthnews.org/ehs/newscience/ed-chemicals-leach-into-food-pose-regulatory-challenge/. Accessed February 23, 2012.
This article focuses on political policy change and macroeconomic issues with plastic that could be the downfall of the industry. The material was appropriate to my research because it identified future political issues as well as gave another view of plastics outlook.
Market Statistics and Future Trends in Global Packaging.(WorldPackaging.org,2011). www.worldpackaging.org. Accessed February 17, 2012.
This web page focuses on an overview of the packaging industry while comparing both Rexam PLC and Crown Holdings Inc, as well giving packaging breakdown and news. The material was vital to my research because it gave me insight to strategic grouping and the scope and scale of the industry.
Packaging Industry Overview. Database . (Hoovers,2011). www.hoovers.com.
This database focuses on the competitive landscape and statistics of top competitors in an industry, while giving industry rates comparison and company buyers. The information was pertinent to my research because it gave key statistics of competitors to use and compare in graphs.
Packaging Industry in the United Kingdom. (Euromonitor International, 2011) http://www.euromonitor.com/packaging-industry-in-the-united-kingdom/report. Accessed February 24,2012
This summary focuses on the economic conditions of the packaging industry in the UK an gave insight to economic conditions that could be global as well. It was vital to my research because it explained how red bull help establish Rexam in canning and also later it helped explain the industry strategy changes.
Peeples, L.,2012 Toxic Chemical BPA Under Attack, But Alternatives May Not Be Safer.Experts Say. http://www.huffingtonpost.com/2012/02/23/toxic-chemical-bpa-alternatives_n_1297222.html?ref=green. Accessed February 24, 2012.
This article also focuses on political policy change and macroeconomic issues with plastic that could be the downfall of the industry. The material was appropriate to my research because it identified future political issues as well as gave another view of plastics outlook.
Porter, M. 1985. Competitive strategy: Techniques for analyzing industries and competitors. New York, NY: Free Press.
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Rexam PLC. (Datamonitor360, 2011). Database. http://360.datamonitor.com/. Accessed April 15, 2012.
This data report focuses on overall industry overview, such as Porter’s Five Forces and company overviews of top competitors as well as key statistics. This information was prudent to my research because it gave me insight directly into the industry and laid a foundation for me to branch out and collect data questioning and agreeing with these figures.
Rexam PLC. 2012. Annual Report 2011. http://www.rexam.com/files/reports/2011ar/files/2011_annual_report.pdf. Accessed April 1, 2012.
This report focuses on the entire company of Rexam from interior to exterior and explaining structure and products of the firm for the 2011 fiscal year. The information was vital to my research because explained the financial position of the company and its strategies of current and future.
Rexam PLC. 2012. Corporate Profile. http://www.rexam.com/files/pdf/corporate_profile.pdf. Accessed April 20, 2012.
This report focuses on the corporate structure and breakdown of the company. Giving insight to how the firm operates and is segmented through chain of power. The material was pertinent to my research because it allowed me to better understand Rexam.
Rexam PLC. Database . (Hoovers,2011). www.hoovers.com. Accessed April 18, 2012. Rexam PLC. 2012. Packaging Unwrapped. http://www.rexam.com/files/pdf/packaging_unwrapped_2011.pdf. Accessed April 18, 2012.
This report focuses on the packaging industry of the company and what products Rexam uses to leverage the industry. The information was appropriate to my research because it allowed me to better understand Rexam’s packaging structure and the industry it competes in.
Roderick, J. 2011. Thomson Reuters Intellectual Property Report Reveals New Trends in Food Packaging Industry. Thomas Reuters Online. http://thomsonreuters.com/content/press_room/legal/426522. Accessed February 23, 2012.
This article by Reuters focused on the future of the consumer packaging industry and gave four key areas of focus. This information was needed for my research because it helped explained the strategies again to expect for the future and a company must act on all four to reduce risk of future innovation socioeconomically.
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The Wall Street Journal 2012 . (WSJ.com,2012). http://quotes.wsj.com/. Accessed April 21, 2012. Appendix A: Porter’s Five Force’s Detailed Analysis Summary:
Datamonitor360- Global Metal, Glass, and Plastic Packaging
Factors Affecting or Reflecting the Power of Buyers
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Characterization Future Trend Buyers industry more concentrated than industry purchases from
No No
Buyer Purchase in Large volumes Yes Yes Buyers can find substitutes for the industries product
Moderate Moderate
Firms in industry market relationship-specific investments to support tansactions with specific buyers
High High
Price Elasticity of demand of buyer’s product high or low
Low Low
Buyers pose credible threat for backward integration
Yes Yes
Product represents significant fraction of cost in buy’s business
Moderate Moderate
Prices in the market negotiated between buyers and sellers on each individual transaction
Yes Yes
Factors Affecting or Reflecting the Power of Suppliers
Characterization Future Trend Supplier industry more concentrated than industry it sells to
No No
Frims in an industry purchase small volumes No No
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relative to other customers of supplier Few substitutes of supplier inputs Yes Yes Firms in industry make relationship-specific investments to support transactions with specific suppliers
Yes Yes
Suppliers pose credible threat of forward integration to the product market
No No
Suppliers able to price discriminate among prospective
Yes Yes
Factors Affecting or Reflecting the Threat of Entry
Characterization Future Trend Significant Economies of Scale Yes Yes
Importance of reputation of established brand loyalties in puchase decision
Yes Yes
Entrants access to distribution channels Yes Yes Entrants access to raw materials Yes Yes Entrants access to technology Yes Yes
Entrants access to favorable locations Yes Yes Experianced-based advantages of incumbents Yes Yes
Network externalities: demand-side avantagies to incumbents from large installed base
Yes Yes
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Government protection of incumbents No No Prerceptions of entrants about expected retaliation of incumbents/reputation of
incumbents “toughness”
Yes Yes
Factors Affecting or Reflecting Pressure from Substitute Products and
Support from Complements
Characterization Future Trend Availability of close substitutes. High High
Price-value characteristics of substitutes Yes Yes Price-elasticity of industry demand Yes Yes Availability of close complements High High Price-value characteristics of complements Yes Yes
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Factors Affecting Rivalry Amoung Existing Competitors
Characterization Future Trend Degree of Seller Concentration? Moderate Moderate Rate of industry growth? Moderate Yes Significant cost differernces among firms No No Execess capacity No No Cost structure of firms: sesnsitivity of costs to capacity utilization
No No
Degree of product differentiation amoung sellers?
Low Low
Brand Loyalty of existing sellers? No No Buyer’s costs of switching from one competiter to another
High High
Are prices and terms of sales transactions observable?
No Yes
Can firms ajust prices quickly Yes Yes Large/ and or frequent sales orders? Large Yes Large Yes Use of facilities pactices Yes Yes History of cooperative pricing No No Strength of exit barriers HIGH HIGH
