Business Poli

Topics: Steel, Iron, Iron ore Pages: 2 (413 words) Published: April 2, 2013
Pulkit bakshI --50122

Pulkit bakshI --50122

Threat of new Entrants is high as with the introduction of mini mill technology, smaller setups would be possible. Although steel industry is a capital intensive business, the introduction of the new technology would reduce this requirement and make it easier for new entrants.. Bargaining power of buyers: Unlike the FMCG or retail sectors, the buyers have low bargainin gpower. However, with the emergence of steel mini plants, buyer’s bargaining power will increase slightly, with falling switching costs and lower scale of purchase. Competition is already high as the industry is truly global in terms of competition with large producing countries like China significantly influencing global prices through aggressive exports Fragmentation will further increase rivalry in the domestic sector. Bargaining power of suppliers is low for the fully integrated steel plants as they have their own mines of key raw material like iron ore coal for example Tata Steel. However, with smaller units coming up, bargaining power of suppliers might see a little improvement. Threat of substitutes will further reduce as steel is already replacing its major substitute aluminium in a number of industries.

Threat of new Entrant is traditionally low due to high existing loyalty to major brands(airbus and boeing), high fixed costs in R & D, scarcity of resources (technical ), high costs of switching companies (maintenance cost), government restrictions or legislation, but with increasing backlog it might just open doors for a few interested players. Bargaining Power of Suppliers is high as it is mainly dominated by Boeing and Airbus. For this...
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