Steel Industry Essay

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THE UNITED STATES STEEL INDUSTRY 1. Using the information contained in the case, conduct a five-forces analysis of the U.S. Steel industry. What conclusion can you draw from this?       Risk of Entry: The industry tends to be dominated by a few large established enterprises that have the scale required to bear the considerable costs and risks associated with steel changes and, moreover, can afford to spend large amounts of money to promote their steel in the marketplace. New entrants face a steadily increasing minimum efficient scale of production, meaning that more and more of a niche is required to achieve any economies of scale. Rivalry among established companies: Rivalry is high evidenced by the small number of competitors. Demand conditions are volatile based on economic and global issues. Bargaining power of buyers: Where large corporations and distributors can force price concessions, this can be considered a threat in the steel industry. Consumers themselves have a high level of bargaining power as they can be particularly pricesensitive in the volatile industry. Bargaining power of suppliers: In many cases, the steel industry is the supplier and raw materials provider to many processes. Having few suppliers, making suppliers become powerful in the marketplace. Substitutes: Many substitutes are in existence for mass-market steel, such as plastic, fiberglass, and lower priced metals. The cumulative effect of these five forces is that the mass-market steel industry can be considered in its mature stage. The stability of a mature industry like this is always threatened by further price wars and could lead an industry into decline. 2. Do you think there are any strategic groups in the U.S. Steel industry? What might they be? How might the nature of competition vary from group to group?  The steel

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