Case Study: Gulf Ferro Alloys

Pages: 7 (2254 words) Published: February 25, 2013
In our globalized world, business today knows no boundaries. Internet and cheap transportation allowed suppliers and consumers to trade no matter where they are and what they need. This status of wide open market, where alternatives are always available for the customers, has put most suppliers in a constant competition. Even if some major suppliers hardly face competitors of their caliber they have to stay in shape and alerted of new comers. In this common business atmosphere suppliers must possess and pursue presenting advantages over their competitors in order to attract the customers and execute sales. These advantages are known as competitive advantages and their sources are mainly quality, service, speed, innovation and cost competitiveness. Successful companies always attempt to deliver them all in order to survive, especially when the competition gets brutal during a slow economy. One of these Companies is Gulf Ferro Alloys (Sbayek).
Sabayek is a producer of Ferro Silico-Manganese (FeSiMn), which is one of the Ferro Alloys used in Steel manufacturing. In simple words, (FeSiMn) is made by smelting a mixture of mainly Manganese ore, quarts, energy coal and some additives in big blast electric furnaces. Most of these input raw material is imported from overseas, mainly South Africa, Australia and the United States. After smelting, the cast produced go through a process of crushing and screening to finally have the finished product in a rock form with diameters that range between 10-100mm, upon customers request. The only consumers for this product are Steel makers; where 10 to 13 Kgm of (FeSiMn) is indispensible to make one ton of Steel. Annually, Sabayek produces 80-100 thousands metric ton and around 85% of its total production is sold in the Middle East, especially in the Gulf region. Currently, Sabayek main competitors are the Indian suppliers.

Since late 2008, the global economic crises and the relatively weaker economic progress in the big industrial poles, such Europe and the U.S., have negatively influenced the steel industry by lowering its demand and reducing its prices which directly reflected on the Ferro alloys industry in return. However, the demand for steel, and consequently Ferro alloys, in the Middle East stayed strong and getting stronger. Nevertheless, the prices had to go down along with the international price levels as the major world suppliers started accumulating their stocks and supply surpassed the demand. As a result, the biggest economic titans, the United States and China, closed their borders for the Ferro Alloys by implying anti-dumping laws for importing and high customs for exporting in order to stabilize the market within. All of this caused the major Indian and East European suppliers to hunt for a sale with their teeth, and the competition has become fierce. While Sabayek has been enjoying being the only supplier in the Middle East with its own caliber, the company received a chock in 2009 in dropping sales and booking losses. This was its wakeup call. Sabayek realized that it should arm itself with competitive advantages over it competitors in order to get its performance records pack on the winning track. Thus, in this paper we intend to present case study of Sabayek’s quest in achieving and capitalizing competitive advantages over others and how that impacted on its organizational strategic performance in terms of sales and returns.

As the demand in the European market has been very low against the supply, concluding business deals for significant quantities has become very rare since the majority of steel makers are cutting back on their production. European customers have become awfully opportunistic and keep pushing the suppliers for further discounts on the prices. The whole Ferro Alloy industry has been facing difficulties with the sliding down price level. Several mills around the world have closed due to...

References: • Interview with Mr. Bader Nasser Al Ajmi, Sales & Marketing Manager.
• Interview with Mr. K. Manoharan, Finance Manager.
• Metal Expert, World Ferro Alloys News, Issue 25 (61), June 18, 2012.
• CRU Monitor: Bulk Ferro Alloys, March 2011 ED.
• MESTEEL. “GCC Construction Steel Output to Exceed 23 mln mt by15”. 4 April 2012.
• Metal Bulletin. “Manganese highlights: European prices sliding on reduced demand”. July, 2012.
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