Crown Equipment Corporation Company Analysis

Company overview

Crown Equipment Corporation is a company that manufactures and designs equipment that is used for handling materials in manufacturing industries, distribution, and warehousing. Such equipment includes narrow-aisle reach, electronic forklift, rider, hand, turret, stockpickers, stackers and walkie pallet trucks. In addition, the company provides wireless fleet maproducts (such as reporting services), and infolink. Services such as lift rental services are also offered (Dicke, p. 24).

In 1988, the company was known as Crown Controls Corporation before changing its name to Crown Equipment Corporation. The company’s headquarters is in Ohio, New Bremen and was founded back in 1945. Crown Equipment Corporation is a private company that is categorized as Straddle, Industrial: Fork, or Lift Trucks among others. Currently, the company employs about 7,456 staff and is estimated to hold $1,821,459,000 of annual revenues. Crown Equipment Corporation was recently ranked “fourth largest manufacturer of powered industrial forklift trucks in the world” (McNee, p. 56). McNee Reports show that “Crown Equipment Corporation had impressive $1.6 billion sales revenue in 2009” (p. 56). The company was reckoned to be one of the biggest and the most successful international companies in USA. For example, it took the 269^th place in 2008 edition of Forbes’.

Historical background

Crown Equipment Corporation started as a manufacturer of temperature controls for coal-burning furnaces as well as television antenna rotators (Design Teams, p. 25). By the time a company was stated on its own, it had a lot of corrections and improvement that resulted in an effective industry. “The company started producing television antenna in 1949 when the market for television emerged” (Design Teams, p. 25). For the following one decade, the company’s growth received a lot of support from mechanical and electrical components manufacture, subcontract work, the U.S government, as well as the military (Design Teams, p. 25).

“Crown Equipment Corporation started developing specialty lift trucks immediately after it shipped its first model in 1956” (McNee, p. 56). “Such lift trucks included order pickers for the Government, stockpickers, U.S. postal service hamper-dumper truck, as well as caskets carrying funeral parlors” (Rohan, p. 28). Later, Crown decided to concentrate on two lines of lift Trucks: a battery operated – series and a hand – operated series. In 2000 the manufacturing stopped its active development for some time.

In 1962, the company employed David B. and Deane Richardson of Richardson Smith for the company to get an additional help in developing “a hand controlled and a medium-duty pallet truck” (Rohan, p. 28). The American Iron and Steel Institute awarded crown in 1965 for its excellent design of the pallet truck. Essentially, Crown had counted on good design as its key corporate strategy. The only sources to rely on during that period were “electric rider trucks and gas trucks, during Crown’s concentration on niche markets, therefore, it did not affect the competitors as such” (Rohan, p. 28). In 1970 the sales have greatly increased after Crown were posed an order by Levitz placed a huge order on Crown.

In 1970 Crown was chanced to become a member of the Industrial Truck Association. Due to the success that he experienced thanks to the hard work and to the creative way of thinking, Crown also managed to open a plant in Australia. Electric lift trucks are some of the major products that are produced by Crown today. The company’s dealer network is responsible for handling the sales and services of the company. Some dealers are independently-owned (they operate across the world) while others are Crown-owned.

Products

Besides making its business operations more efficiently, the success of Crown Corporation can be attributed to its model. The products that Crown sells are the heart of its business. The company has continuously produced quality products which continue to receive credit due to its design excellence. It has certainly bagged more than 50 prominent design awards. Customers from all over the world were greatly satisfied with the quality of lift trucks that have been recognized as productive and reliable. The design of the company is not left behind as well and makes the worldwide customers admire and enjoy its style together with the industrial achievements of the highest international level. “The Crown line of lift trucks has earned a reputation as safe, reliable and productive by customers throughout the world (Rohan 28). Its superior design has always been a competitive edge. The company’s lift trucks are used in factories for applications such as distribution in manufacturing facilities and conveying goods through constricted walkways of warehouses (Rohan, p. 28).

A side-stance design was introduced by Crown during the early 1970’s. Immediately, the design took the leading place at the international market because of the innovative style that was used by Crown. It was accepted at once and adopted accordingly. It became popular all throughout the world and became highly recognized. “Thirty years later, the company introduced the 5200s Series Truck which came with an operator’s lean, sit or stand alternatives” (McNees, p. 56). The product had unmatched productivity capabilities together with an industry first which gave it a winning edge.

“In 1951, the company decided to diversify its repair and manufacturing of electronic and mechanical parts for the government and the private industry” (McNees, p. 56). The company actually stretched its business in these areas, especially following various successful bids. Although, the company had succeeded dramatically, it did not stop its diversification bids. It still went into lift truck manufacturing. The company diversification strategy was drawn from its philosophy that “the material handling industry needed a smaller line of high quality lift trucks for intermediate-duty use” (McNees, p. 56). Following such efforts, Crown became the fastest growing material handling company in its line of products.

Crown ventured into a material handling plant outside U.S for the first time in 1966, when it opened a plant in Australia. Up to the present days, the company has still saved a leading position at the international market offering good sales to the marketing modern world. The Australian regional headquarters is responsible for the company’s marketing, services and sales efforts (Basic Handlers, p. 54).

Crown’s entry into the European market commenced in 1968. “Crown purchased an Irish manufacturing plant from its parent company, a German firm, Steinbock, to manufacture Crown’s popular hand pallet trucks (PTH).” (Basic Handlers, p. 54 ). In 1968, the company launched its operations in London. A lift truck line had been established in U.K by the end of the first decade, and by 1970s, the company had managed to market its equipment throughout the European region by the help of its own independent dealers.

Competitive strategy and business model

A business model can be described as an architectural design of diverse key constituents of the value creation system of a company. As noted by Amit and Zott, a business model elucidates how companies create value to consumers, generate income and consequently, maintain their viability as regards a certain business environment (p. 56). As a result, a business model is usually described by agreeing on a set of constituents, which describe the model. Osterwalder’s template illustrates the significance that market differentiation, through creation of a ‘value proposition’, along with cost management, offers to the triumph of any business model (p. 67).

Crown has dealt majorly in material handling equipment for a long time. This makes small and new firms to face difficulty in entry despite the fact that marginal cost can be lower than the production cost. By gaining brand loyalty, Crown is able to remain in the competition since establishing loyalty in computer products is very difficult. The fact that Crown and other big companies enjoy economies of scale limits new competitors from entry in the market. However, Crown faces rivalry from big companies that are already established in material handling industry. This brings about price fixing, product designing and intensive advertising in order to rival the competitors. Crown does this by maintaining a brand image and production of quality products that are desired by customers. The buyers bargaining power hardly affects Crown Company due to moderate demand. This enables Crown Company to fix prices as it desires. Substitute goods cause a great threat to Crown products. Since Apple products are more expensive than other computer company’s substitute products causes a great threat to Apple products. Apple products incompatibility also causes great disadvantage to the company in relation to subsidiary products. In spite of this, Crown remains a formidable competitor in the market as it sells itself with superior products. Since Crown Company depends on certain companies to offer them key component parts, change of suppliers would seriously affect it. This would make them incur huge costs in seeking new suppliers in the market. The suppliers would retain the bargaining power of the apple Company (Leander, 2002).

Crown Equipment Corporation has managed to remain as one of the largest lift truck manufacturer, despite being a privately owned company due to its competitive profile. The company manufactures, designs, services, distributes and supports material handling products that have superior quality, hence providing the customers a maximum satisfaction and value. Since 1956, when the company entered the industry, it had managed to set itself apart with the competitors falling to its unique business model and product design which uses vertically integrated manufacturing. The company manufactures most of its products, which includes drive units, motors and electronic modules.

The company has also maintained a good reputation on its exceptional product design through continued award-winning. “From the smallest hand pallet truck to the highest-lifting turret truck, Crown seeks to provide users with safe, efficient and ergonomic lift trucks that increase productivity for our customers around the world.” (Design Management Institute Case Study, p. 41)

To improve the performance of the company in this industry, there are three factors that Crown needs to take into consideration; these are, the value of the service offered to consumers; the amount of competition; as well as the producers’ bargaining power with regard to the suppliers. The foundation of the business environment of the company is created through its relation with three important groups of players: the customer, supplier, and competitor. This is what the company’s industry environment entails.

As a result, the firm has to create value for its customers by understanding them so as to make a profit. Secondly, during creation of value, Crown sources for goods and services from suppliers. Consequently, it has to value its suppliers, and recognize ways of forming business relationships with them. Lastly, the firm’s capacity to make profit through value-creation activities is dependent on the level of competition between competing firms that compete for similar value-creating prospects. For this reason, the company ought to be aware of its competition (Olofsson and Farr, p. 20).

With the headquarters in Ohio, the company’s products are manufactured and sold all over the world. The global networks are extensive and strong hence providing a range of storage solutions, quality material handling equipment as well as support services. The company’s retail network extends throughout Europe, America, Africa, Asian-pacific regions and Middle East.

Table 1. Corporate and manufacturing locations

Just like many other industries during 1980s, the lift truck market was attacked by Japanese competitors. Under that onslaught, many American firms which yielded much power in the domestic market started becoming weak as a result. “Although the U.S. government later determined that many of these foreign rivals were guilty of dumping–selling goods below fair market value in order to capture market share–the damage was already done.” (Maloney, p. 56).

The company trains its sales and dealer personnel so that they are conversant with all the disciplines. They are also helped in advertisement and promotional campaigns, right from the corporate headquarters in Ohio and Munich. “The Munich offices in Germany, was started in 1980s to provide services such as purchasing, design, marketing and engineering capabilities for Europe, India and Middle East” (Dicke, p. 12). A great number of the web site and blogs were created containing the information of the dealers operations and development of the sales. In the United States such places as Greencastle, Celina, Ohio, etc. are responsible for the manufacturing of the company. Crown’s international manufacturing capability is very strong, and has manufactured lift trucks in different places including Mexico, Australia, Queretaro, China and many others.

The company possesses good abilities in the manufacturing sphere having “building lift trucks in Sydney, Australia (since 1966), Suzhou, China (2006), Roding Germany (1986) and Queretaro, Mexico (1973)” (Dicke, p. 12). “The company’s sales and service centers are situated in Spain, Singapore, New Zealand, Netherlands, Malaysia, Korea, Germany England, and Belgium together with thirty other locations in United States” (Basic Handlers, p. 12).

New products and Entry approach

Despite the massive competition that many domestic manufactures faced from the overseas competitors, 85 percent of Crown’s products were produced from home. This policy was actually more than patriotism. According to Yengst, Crown preferred “vertical integration so that the company can maintain the fidelity to its manufacturing quality and designs”(Dicke, p. 12). Rather than outsourcing, “the company accomplished virtually everything, from forming sheet metal and plastic parts to designing and manufacturing circuit boards for electronic controls, in its own plants.” (Dicke, p. 12). As such, “a factory was built in Ohio, New Knoxvilleto manufacture electric motors” (Dicke, p. 12). Indeed, the merger and acquisition trend that was circulating around forklift industry during those times could not deter them.

The Crowns design expertise during the 1950s and early 1960s played a part in its entry into an intensely competitive lift truck industry. The company introduced Crown’s FC line in 1990s, which offered vehicles with improved comfort and adjustable seating. This was one of the best innovative developments in 35 years. This series was awarded several design awards as well as helping the company to capture significant market share.

Another development that proved timely is the focus on production of electrically-powered lift trucks. The electric model overthrown the previous internal combustion engine, and hence making the operation quieter and reducing the maintenance cost. Its increased working life also wooed customers who were previously using internal combustion engine. Similarly, the emission regulations which were more stringent together with the general environmental issues contributed towards adoption of electric-powered lift trucks (Petreycik, p. 21).

To counter the competitors who had established roots in the domestic market lift truck industry, Crown entered the foreign market by establishing sales operations, distribution and manufacturing in England, Ireland, Germany, Australia, and Mexico. A great growth of the sales was noticed in 1992, 1993 and 1994 as it was a matter of the first and of the highest demand, that gave it a noticeably increased popularity. Apparently, Crown remained strong and healthy during 1990s, seemingly as a result of the company’s emphasis on vertical integration, forward-looking design, and globalization (Maloney, p. 12).

Crown Company remains very competitive in the material handling industry. However, there is increased competition from other companies who strive to edge the Company products from the market. It is therefore important for the company to continue carrying out intensive market research. Marketing and advertisements would also be beneficial to the company in expanding its operations (Schoening, p. 23).

The main purpose of Crown during 1960s and 1970s was the material holders and its abilities, the increasing of the range of the capacity. Internal combustion engines were superior over the lift truck industry. Nonetheless, Crown focused on production of electric vehicles. “It is during this time that the company entered into rider trucks which included the first industry’s side-stance model” (Basic Handlers, p. 12). As a result of this innovation, the company earned its first national account (Basic Handlers, p. 12).

Narrow-aisle reach trucks were introduced during 1980s. These products were developed by Smith/Richardson. The developers had reduced the distance that the equipment had to make between shelves in a factory by a third. The entry of TSP series of turret stockpickers resulted into expansion of this line. Consequently, with the help of Narrow isles, the customers could be able to “squeeze squeeze more rows of shelves in their storage facilities, and higher reaches meant those shelves could tower ever higher, effecting more efficient use of space and cost savings for Crown clients” (Avery, p. 5). This innovation earned the company a Design Excellence Award in 1981, which was awarded by the Design of the Decade (Avery, p. 56).

With the intensified level of competition among organizations, quality has become a key management issue; and as a result, Total Quality Management (TQM) has become essential for many organizations that are pursuing sustainable competitive goals. Though introduced in the 1980s, the term had acquired a wide application by organizations by the end of 20th century. Even though the definition of this term is not easy, as there are multiple views as to what TQM means, there are some commonalities that result from various definitions. These include terms such as customer and supplier relationships, top management support, and employee involvement (Ang et al., p. 20).

Crown use Total Quality Management (TQM) to pursue its organizational growth and success in both national and international markets. To achieve this, Crown recognizes that each activity and each person affects and is in turn affected by others. TQM is thus chosen as a strategy to improve competiveness, by enhancing effectiveness across all processes and functions (Ambroz, p. 23).

The material handling industry has developed rapidly for the past few decades. The development of this industry has especially been as a result of technological developments which have seen the improvement of service quality. Nevertheless, as the industry expands, the competition continues to heighten while at the same time the need for quality improvement becoming more critical. Crown which operates in scores of countries across the world is a typical which organization which upholds the principle of TQM to ensure sustainable growth and competitiveness in the market. Crown has taken several steps to achieve a greater market share and to face the market competition which is rife within the hotel industry (Design Management Institute Case Study, p. 45).

Crown has applied the principles of TQM by putting the customers first. The company has achieved this by involving everyone in the organization and through integrated efforts to ensure the expectations of the customers are met or even surpassed. Crown achieves this goal by first identifying the customer needs, and then meeting them accordingly. In this respect, the management of the hotel recognizes that the organizational services and products have got no value if they do not constitute of what the customer really wants. Nevertheless, identification of the customer needs is not an easy task. This is especially because the customers’ needs and preferences differ, especially considering that Hilton Hotel operates across the world making needs and preferences which are even more diverse (Ambroz, p. 20).

In addition, it is not easy to meet customer expectations since varied customer exhibits differ from the levels of expectations. To counteract these challenges, Crown persistently draws together information which helps the company to remain at par with the customer wants. This is achieved through data collection methods such as market surveys, focus groups and customer interviews just to mention but a few. Crown is guided by the principle that they are in business because of their customers and, as such, they must focus on their interests and ensure that they are satisfied (Ambroz, p. 20).

Continuous improvement also remains a center focus on Crown’s strategies. This is controversial to the traditional systems that assumed that a company which is successful and have achieved a certain level of quality does not need further improvements. Ambroz used an analogy to describe this concept when he maintained that the Japanese “believe that it is better to take frequent small doses of medicine than” (p. 149). Continuous improvement which was referred to as Kaizen by the Japanese requires that “the company continually strive to be better through learning and problem solving” (Babbar and Aspelin, p. 56). Although the management of the Crown believes that the company cannot achieve perfection, they take measures to ensure that the performance is evaluated and improvements made where necessary. To ensure a continuous improvement, Crown can pursue two approaches. That is, bench marking and the plan-do-study-act (PDSA) cycle (Environmental Protection Agency, p. 56).

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