PIE Analysis on Metal Container Industry
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Managerial Strategy Task 1
Conduct a PIE Analysis of the Metal Container Industry
Later that afternoon, as you are settling into your office, Vice President Henry Clark sends you an e-mail explaining the details of the metal container industry analyses he has asked you to prepare.
E-mail from Henry Clark on the Metal Container Industry
Rationale
You will learn to analyze the factors that affect an industry's ability to create and capture value. Understanding how to perform an industry analysis is the first step in being able to create or analyze a strategy.
Your Deliverable
Prepare an analysis of the metal container industry that includes:
? A vertical chain for the metal container industry.
? A potential industry earnings (PIE) analysis that discusses the effect of various factors (including the six forces) on the metal container industry's ability to create and capture value. Limit your analysis of each factor to three to five sentences.
Download the template provided:
Task One Template
Suggested Approach
Read the project materials and learning resources associated with this task.
Project materials:
? Metal Container Animation
? Metal Container Industry Overview
? Magazine Article (interview with beverage container industry analyst in Container Industry Today)
Learning resources:
? What is Industry Analysis?
? Vertical Chain
? Industry Structure
? Using PIE
? Industry Competition
? Buyer and Supplier Power
Additional readings:
? Saloner et al, Strategic Management, pp. 119-47 and 239-64.
? Porter, Competitive Advantage, pp 1-30.
E-mail from Henry Clark on the Metal Container Industry
To: You, Analyst
From: Henry Clark
Subject: Metal Container Industry
As I told you this morning, one of our clients is currently thinking of acquiring a company within the metal container industry and has asked us to determine the overall attractiveness of the metal container industry.
I'd like you to analyze the profit potential of this industry. What factors are most responsible for its success?
I am sending you some materials that will help you in your research. Included are a number of articles and an explanation of the can-making process that will help you familiarize yourself with the industry. You will also receive an overview of the metal container industry, which a former associate of mine prepared before leaving Kegan.
I look forward to seeing your analysis. Good luck.
Henry
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Solution Summary
Discussion on the main steel suppliers (Bethlehem Steel, National Steel and United States Steel Corporation) as well as aluminum suppliers (Alcan, Alcoa, and Pechiney). Also elaborates on Value Capture Factors such as Degree of Rivalry, Barriers to Entry, Strength of Buyer Power, and Strength of Supplier Power.
Solution Preview
Please see the attached file for a better formatted version.
Vertical Chain for the Metal Container Industry
Supplier (Input)
The main steel suppliers are Bethlehem Steel, National Steel and United States Steel Corporation. The main aluminum suppliers include Alcan, Alcoa, and Pechiney (acquired by Alcan in 2003).
Manufacturer/Process (Product or Service)
There are two types of producers here: captive and merchant. The captive producers make cans for its products (this usually includes its affiliates, subsidiaries or even the parent company). Meanwhile, merchant producers make cans for external use only. The major aluminum cans producers are:
Ball Corporation - Merchant
Ball Corporation specializes in low cost products and creative customer agreements. Ball has $3.3 billion in revenue and makes metal and plastic packaging for the beverage and food markets. It has some exclusive customers with 1/3 of sales to Pepsi and Coca-Cola. It is the sole supplier for Coors and 16% of its overall sales are to Miller Brewing Company.
Crown Cork & Seal Company - Merchant
Crown Cork is the world's largest consumer packaging company with $7.2 billion in revenue. Crown makes metal packaging (cans, closures, and ends) for beverages, pet food, soups, ready-made meals, etc. Crown has started to invest in polyethylene terephthalate plastic containers and is acquisition minded with a focus on innovation.
Metal Container Corp (a wholly owned subsidiary of Anheuser-Busch) - Captive
MCC makes metal cans and is captive producer of beer cans for Anheuser-Busch. MCC is the only independent, major captive provider; however it supplies cans to Pepsi and Coca-Cola.
Rexam PLC - Merchant
Rexam is the world's largest producer of beverage cans (and the second largest producer of beverage cans in the US). It is also the fourth largest producer of consumer packaging in the US. Rexam makes aluminum, steel, glass, caps, and closures with Coca-Cola purchasing the majority of its cans from it.
Three are approximately 50 steel and bi-metal producers in the US. The most notable merchant providers are: Ball (steel, plastic, ...
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