Cmc- Commercial Metal Company Analysis

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Macro environment Commercial Metals Company competes in the steel industry. Commercial metal is competing against other steel companies regionally and globally. The steel industry is highly cyclical and therefore, very susceptible to changes in the economic environment. Economic recessions lead to a large decline in business as their main buyers are also largely affected by recessions. In addition, the fact that the US government has recently open doors to Chinese steel companies to operate businesses in the US, this may start to influence the economic environment of the US steel industry as well. Fluctuations in the value of the U.S. dollar also affect the steel industry. A strong U.S. dollar makes imported metal products less expensive, resulting in more imports of steel products into the U.S. Economic difficulties in some large steel producing regions of the world have lead to decreased local demand for steel, and thus steel products have been exported to the U.S. at lower prices. This makes steel products made within the U.S. more expensive than imported steel. In the social environment there has been a push towards going green and recycling which is very beneficial for the steel industry as steel is 100% recyclable. Society today places a heavy focus on using recyclable products and, this gives the steel industry a sustainable advantage and lowers the threat of close substitutes. Actions of the federal government affect the steel industry through a variety of avenues. Among these are trade, tax, antitrust, research, and environmental policies. In 2002, tariffs on imported steel intended to aid the ailing steel industry raised the price of steel within the United States to between 35% and 60% above pre-tariff prices. As a result, customers of steel companies struggled to stay in business and overall demand for steel dropped sharply. Tariffs are not the

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