Case 4 1 VERSHIRE COMPANY GROUP 1 
Case 4-1
Vershire Company
In 1996, Vershire Company was a diversified packaging company with several major divisions, including the
Aluminum Can Division- one of the largest manufacturers of Aluminum beverage cans in the United States.
The Aluminum Can division‘ s growth in sales slightly outpaced sales growth in the industry at large. The division had plants scattered throughout the
United States. Each plant served customers in its own geographic region, often producing several sizes of cans for a range of customers that included both large and small breweries and soft drink bottlers.
Most of these customers had between two and four suppliers and spread purchases among them. If the division failed to meet the customer‘ s cost and quality specifications or its standards for delivery and customers service, the customer would turn to another supplier. All aluminum can producers employed essentially the same technology, and the division’s product quality was equal to that of its competitors.
Industry Background
• Traditionally, containers were made from one of several materials: aluminum, steel, glass, fiberfoil(paper and metal composite), or plastic.
• The metal container industry consisted of the hundred-plus firms that produced aluminum and tinplated steel cans.
• Aluminum cans were used for packaging beverages(beer and soft drinks), while tin- plated steel cans were used primarily for food packaging, paints, and aerosols.
• In 1970, steel cans accounted for 88% of the metal can production, but by 1990s, aluminum had come to dominate the industry.
• In 1996, aluminum cans accounted for over 75% of metal can production. The sot drink bottlers who purchased the containers were primarily small independent franchisees of Coca-Cola and Pepsi Cola, which represented their independent bottlers in negotiating terms with the container companies.
• Most beverage processors maintained two or more suppliers; and some processors integrated backward, manufacturing cans
Vershire Company
In 1996, Vershire Company was a diversified packaging company with several major divisions, including the
Aluminum Can Division- one of the largest manufacturers of Aluminum beverage cans in the United States.
The Aluminum Can division‘ s growth in sales slightly outpaced sales growth in the industry at large. The division had plants scattered throughout the
United States. Each plant served customers in its own geographic region, often producing several sizes of cans for a range of customers that included both large and small breweries and soft drink bottlers.
Most of these customers had between two and four suppliers and spread purchases among them. If the division failed to meet the customer‘ s cost and quality specifications or its standards for delivery and customers service, the customer would turn to another supplier. All aluminum can producers employed essentially the same technology, and the division’s product quality was equal to that of its competitors.
Industry Background
• Traditionally, containers were made from one of several materials: aluminum, steel, glass, fiberfoil(paper and metal composite), or plastic.
• The metal container industry consisted of the hundred-plus firms that produced aluminum and tinplated steel cans.
• Aluminum cans were used for packaging beverages(beer and soft drinks), while tin- plated steel cans were used primarily for food packaging, paints, and aerosols.
• In 1970, steel cans accounted for 88% of the metal can production, but by 1990s, aluminum had come to dominate the industry.
• In 1996, aluminum cans accounted for over 75% of metal can production. The sot drink bottlers who purchased the containers were primarily small independent franchisees of Coca-Cola and Pepsi Cola, which represented their independent bottlers in negotiating terms with the container companies.
• Most beverage processors maintained two or more suppliers; and some processors integrated backward, manufacturing cans