Alcoa Inc is Aluminum Company of America. It is the world's third largest producer of aluminum, behind Rio Tinto Alcan and Rusal. Alcoa conducts operations in 31 countries more than 200 locations. Alcoa is a world leader in the production and management of primary aluminum, fabricated aluminum, and alumina combined, through its active and growing participation in all major aspects of the industry: technology, mining, refining, smelting, fabricating, and recycling. Aluminum and alumina represent more than three-fourths of Alcoa’s revenue. Non-aluminum products include precision castings and aerospace and industrial fasteners. Alcoa’s products are used worldwide in aircraft, automobiles, commercial transportation, packaging, building and construction, oil and gas, defense, and industrial applications. Alcoa’s operations consist of four worldwide reportable segments: Alumina, Primary Metals, Flat-Rolled Products, and Engineered Products and Solutions. Alcoa is a member of DJIA, S&P 500. It is traded in NYCE with a symbol AA. * Industry: Aluminum.
* Sector: basic materials.
The top aluminum production companies (competitors):
Rank | Company| Output (thousands metrics tons) |
1| United Co. Rusal | 4,127|
2| Rio Tinto Group | 3,829|
3| Alcoa Inc| 3,669|
4| Aluminum Corp. of China | 3,127|
5| Norsk Hydro ASA| 1,705|
6| Dubai Aluminium Co| 1,386|
7| China Power Investment Co| 1,381|
8| BHP Billiton Ltd| 1,249|
* Alcoa has 18% of the market share based on the output production. The market for Alcoa competition is Oligopoly. There are few major producers who provide the supply for the market. It gives the price competitive advantage in over all supply market.
Porter’s Five Forces Model of Industry Competitors.
Threat of new entrance: There is a small probability that the new companies will come to the market and will be a threat of a competitor. The aluminum industry requires huge capital investments. There are high barriers of entrance because of the access to the natural resources and distribution channels. I am convinced that the competition in aluminum industry will continue among existing current leaders.
Threat of buyers: Alcoa has production of the differentiated product lines. The power of consumers is significant because Alcoa does business with consumers who have large volume of buying powers. Markets as aerospace industry with buyers as NASA, Airbus; Energy industry; raw aluminum; automotive; building and construction; commercial transportation, consumer electronics, industrial production and services, oil and gas, packaging. The power of buyers is significant. The buyers market has the form of Monopsony. The risk of loosing one buyer can tell on the revenue of the company significantly.
Bargaining power of suppliers: Alcoa implement the differentiated corporate level strategy vie vertical integration. It allows forcing the market power and leveraging Alcoa’s core competence. The market power decreases the risk on the suppliers. Mergers and acquisitions help to prevent of the suppliers power in the value chain production and distribution of Alcoa.
Main mergers and acquisition:
2011 Acquisitions. On March 9, 2011, Alcoa completed an acquisition of the aerospace fastener business of TransDigm Group Inc. This business is a leading global designer, producer, and supplier of highly engineered aircraft components. 2010 Acquisitions. In July 2010, Alcoa completed an acquisition of the commercial building and construction business of a privately-held company, Traco. 2009 Acquisitions. In March 2009, Alcoa completed a non-cash exchange of its 45.45% stake in the Sapa AB joint venture for Orkla ASA’s 50% stake in the Elkem Aluminium ANS joint venture. In June 2009, Alcoa completed an acquisition of a fasteners business located in Morocco for $3. This transaction did not have a material...