1. Using the consolidated financial data for Crown, Cork and Seal, identify and post trends you think are both positive and negative for the company.
Positive Trends
In reviewing 1982 to 1988, Crown Cork and Seal’s net sales, net profit rose, and gross margin increased. These numbers grew while their selling, general and administrative expenses decreased from 3.3% of sales in 1982 to 2.8% of sales in 1989. The company’s return on average equity nearly increased as well; in addition, long-term debt was reduced and stock prices soared.
Negative Trends
1. Competitive pricing:
Following the low operating costs, operating margin in the can industry dropped by 3% between 1986 -1989 due to;
• Production capacity for beverage can increased by 7% in 1989
•
…show more content…
Diversification and consolidation:
Due to small profit margins, too much capacity and high material and labor prices made a number of major corporate to opt to diversify and subsequent consolidation. For instance, America Can move to a totally unrelated filed insurance by slowly reducing can manufacturing.
2. If you were Avery, what strategy would you pursue to position Crown, Cork and Seal for the future and why?
I would express my interest in the plastic industry and offer to buy Continental Can Company. It is most evident that plastic containers are the future trend after looking at SWOT Analysis together with the Five Forces Analysis. Accordingly, it was the perfect chance to bid for Continental Can Company ownership. Acquiring ownership of Continental Can Company would prove advantageous to Crown, Cork and Seal and make it more competitive in the target markets.
Advantages of entrance to the plastic container industry;
• Increase in market gap for the container industry
• Lowering freight costs because of the light weight of plastics.
• Plastics can be shaped and made in different patterns hence advantageous for marketing and shipping.
• Plastics are made from natural resources such as
7. Sales had dropped in 1993 but operating profit margins increased due to increase in
Rocket-Blast, LLC, a beverage maker, has seen its profit margins reduced which presents a real problem for the company going forward (Precord & Macdonald, nd). Management has decided that operating costs must be reduced in order to increase profit margins to
But divesture of three out of four divisions leads to a very small portfolio which leads to chances of high risks as well. The process of restructuring and forming a better portfolio would provide the firm with a lot many opportunities including exploring newer and more compatible product lines and segments, thus increasing its opportunities to earn better revenues with efficient management.
At the end of 1991, PepsiCo had EBITDA of $2.1 billion or operating profit margin of 10.8% - down from profit margins of 12.2% and 11.7% in 1990 and 1989, respectively. In addition, net sales only grew by 10.1% in 1991 – considerably low versus growth of 16.8% and 21.6% in 1990 and 1989, respectively. Recent acquisitions of Taco Bell franchises in 1988, bottling operations in 1989, Smiths Crisps Ltd. and Walkers Crisps Holding Ltd. in 1989, and Sabritas S.A. de C.V. in 1990 aided sales in growth in 1989 and 1990. Additionally, a joint venture with the Thomas J. Lipton Co. in 1991 to develop and market new tea-based beverages may lead to greater sales in the future. However, there is some need for an immediate return on its investments in order to sustain historical revenue growth and increase the current profit margins.
The benefits of these assumptions are that while maintaining the current growth rate of 13%; we can maintain our COGS. One of the major factors contributing to the firm’s poor profit margin is operating expenses.
1. Context: In early September’08 Giant Consumer Products, Inc. (GCP) realized that Frozen food division, which had been growing at 2.8% (compounded annual growth) rate since 2003 to 2007 and accounted for almost 33% of GCP’s overall business volume, is not doing well now. The sales as well revenue volume is around 3.9% behind the target. Most specifically marketing margin (key parameter for GCP business) was also under plan by 4.1%. GCP had been doing well in wall-street but performance of past couple of quarters has increased the worries of GCP i.e. whether GCP will able to maintain its profitable growth.
...ative aspects of diversification, for example through better corporate planning, human recourse management and reaching further synergies between its various business lines.
This overall decision was based on our prices keeping up with inflation and costs of suppliers and operational cost as well as keeping our customers in mind, while in maintaining long-run relationships with predictable prices. To further boost sales, we have modernized our marketing efforts in the international markets which caused a slight increase in our fixed advertising dollars rate spent from $0.0305 to $0.0457. With a proven positive relationship between the amount of advertising dollars spent and revenues earned, we believe this was a solid based decision. In further reducing cost and improving efficiency in our supply chain, we have lowered our financial expenditures ranging from categories to telephone costs, to postage and delivery and office supplies. By using efficient strategies and harnessing technology improvements, we have improved on maintenance and repairs for example our employers improving on their learning curves and being efficient on production, which improved direct labor hours and eliminated waste on material costs. Costs have gained slightly in our SG&A for example in personnel, which went from ($92,308,951) in Budgeted Year One to ($104,496,328 in Budgeted Year Three) due to the increase in salary rates as a result of an improving economy. Another area where prices rose were the COGS rate where the price of materials increase from ($113,196,181 in forecasted budgeted year one to $134,138,652 in year three) and a more detailed breakdown can be found in the production
The protection enhances the ability of sustaining a business in a competitive marketplace for the long run. A firm should also undergo the DYB strategy to get rid of business units and other resources that do not add value to the company 's performance. It should adopt the GYB strategy, in which it would utilize the business opportunities lying at its disposal to its advantage. As a direct result of these two strategies, the company would gain a substantial competitive edge against rivals, as well as boost its profitability in the long run (Grimm, Lee & Smith, 2010). Knowing that today 's business environment is characterized by heightened competition that has led to extensive gaps between industry leaders and laggards, and that there are greater churns among the industry rivals, the GYB and DYB strategies are essential for any modern company. More importantly, the GYB strategy should be focused towards the increase of
Because Costco needs to maintain very low prices, a lot of pressure is put on the profit margin of the company. In the past, Costco has kept relatively low profit margin levels versus other competitors within the industry. Costco’s profit margin is considerably less than the competitors. In order to increase its profit margin and remain a competitor in this industry, I recommend that Costco find a way to decrease costs while keeping their prices low. Internal and external analysis elements show that Costco’s managers must formulate new strategies for sustained growth and development of the firm (Gregory,
This video provides an overview of product diversification. It explains that there are two types of diversification, which are related diversification and unrelated diversification. In addition, the video informs that diversification often involves merger and acquisition activities. Furthermore, it stresses the importance of keeping diversifications balanced, as in some instances, companies that do not take advantage of diversification, can miss out on some benefits, and/or could experience negative effects. However, on the other hand, the opposite could also occur, because some companies that over-diversify, extend themselves too far and can experience detrimental and disadvantageous effects as well. The key is staying
The purpose of this report is to compare financial reports from the two largest soft drink manufacturers in the world. The Pepsi Co. and Coca Cola have been the industry's leaders in their market since the early 1900's. I will use relevant figures to determine profitability, and break down key ratios in profitability, liquidity, and solvency. By breaking down financial statements, and converting them to percentages and ratios, comparisons can be made between competitors regardless of size.
When companies merge, frequently they have an opportunity to combine locations or reduce operating costs by integrating and streamlining support function. This economic strategy has to do with economies of scale: When the total cost of production of services or products is lowered as the volume increases, the company therefore maximizes total profits. This occurs when a larger firm with increased output can reduce average costs. Lower average costs enable lower prices for consumers. Mergers can give the acquiring company an opportunity to grow market share without having to really earn it by doing the work themselves - instead, they buy a competitor's business for a price.
As stated in class, plastics can leach toxic chemicals from the seawater and they are broken down into smaller particles by UV light. These fragments can then be eaten by organisms, allowing the toxins the plastic absorbs to be incorporated into the organism's body and consequently allows these toxins to accumulate in the food chain. This is particularly important for us because we often eat these animals with plastic and chemicals incorporated into their
Polymers are also commonly referred to as plastics so now you can put in to perspective how much we use polymers. You can also realize how damaged and different our world would be with out polymers. Polymers such as plastics have changed the way we do things in our society for the better. With the use of polymers scientist were able to create an effective and cost efficient substitute for metals and ivory, which we used to use for making common items such as handles, pool balls, and game pieces. They were all made of ivory and since ivory is very rare and hard to obtain it raises the prices of all items made of this material. With out plastics plates, cups and silverware would still be being made of metals or other expensive material. But eventually people started replacing these things with plastic. Which is easier to make and cheaper to buy. Over all plastic has countless uses and is currently used to make many objects with out it a lot of items would not be able to be mass produced and would not be affordable to the majority of the people.