Chaparral Steel Case
Answer 3 A.) Strategy to be pursued proactively:
On a broad level, an organisation can adopt any of the three strategic concepts i.e. a) Differentiation b) Cost Leadership c) Response.
Differentiation: Steel is such a product that not much product innovation can be done.
Cost Leadership: Chaparral Steel is already a cost leader in the market with its limited range of products. But if it needs to expand itself in terms of capacity, it needs to come up with a new product line and that too at a low cost. Chaparral needs to continue its strategy of low cost leadership with addition of new product lines to tap the market potential for larger steel products. The only competitor being Korean companies, if Chaparral plays its cards right, it can have virtual monopoly in the larger steel products segment. This is the strategy that Chaparral should proactively pursue.
Response: Delivering orders on time is one strategy which in the steel manufacturing industry may not yield much result as everyone in the industry is more or less at the same level and the level cannot be increased.
We shall now consider how the strategy of low cost leadership will impact product, process and capacity strategy. 1. Product Strategy : Chaparral’s current product line Rebar and merchant shapes ranging up to 4”. With the increased planned capacity expansion, company should focus on adding new products to its portfolio.
Product scope: a. Introduce new products in category of larger bars and wide range beams. b. Size of existing products to be increased. Product Scope: Variety augmentation through new product launches.
Product Profile: Company should concentrate on development and launching of more, newer streams of end products to continually match changing customer’s needs. The reason for introducing these new products is: 1. Existing market is not going to grow to double the size in few years whereas existing capacity expansion plans will increase the
On a broad level, an organisation can adopt any of the three strategic concepts i.e. a) Differentiation b) Cost Leadership c) Response.
Differentiation: Steel is such a product that not much product innovation can be done.
Cost Leadership: Chaparral Steel is already a cost leader in the market with its limited range of products. But if it needs to expand itself in terms of capacity, it needs to come up with a new product line and that too at a low cost. Chaparral needs to continue its strategy of low cost leadership with addition of new product lines to tap the market potential for larger steel products. The only competitor being Korean companies, if Chaparral plays its cards right, it can have virtual monopoly in the larger steel products segment. This is the strategy that Chaparral should proactively pursue.
Response: Delivering orders on time is one strategy which in the steel manufacturing industry may not yield much result as everyone in the industry is more or less at the same level and the level cannot be increased.
We shall now consider how the strategy of low cost leadership will impact product, process and capacity strategy. 1. Product Strategy : Chaparral’s current product line Rebar and merchant shapes ranging up to 4”. With the increased planned capacity expansion, company should focus on adding new products to its portfolio.
Product scope: a. Introduce new products in category of larger bars and wide range beams. b. Size of existing products to be increased. Product Scope: Variety augmentation through new product launches.
Product Profile: Company should concentrate on development and launching of more, newer streams of end products to continually match changing customer’s needs. The reason for introducing these new products is: 1. Existing market is not going to grow to double the size in few years whereas existing capacity expansion plans will increase the