U.S. 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:

Barriers entry for cost-efficient foreign producers and mini-mills

Product substitution and economies of scale

Rivalry among established firms in industry:

Is high, the domestic competition such as mini-mills where taking over the industry and setting price wars.

Foreign companies were taking market shares.

Bargaining power of suppliers:

The number of suppliers is decreasing because of bankruptcies. Few suppliers

The size of suppliers would be average as there are still suppliers international.

The service that you are getting is the same, not unique.

The ability to substitute is high and easy.

The cost to change from suppliers is not that competitive.

Threat of substitutes: switching to substitutes are high, companies had to change their prices to compete with substitutes as aluminum, plastics, and composites.

Bargaining power of buyers:

The number of customers is high.

The price of the supply is sensitive with the economy and the price of the dollar.

The cost of customers to switch and the differential of product are low.

In the steel industry because the risk of entry is low many companies have the struggle to make a profit in the company. Thus is the same for the rivalry of established companies because it is high the ability to make a profit is difficult to accomplish. The conclusion that I drew from the five-force model is that the steel industry is getting attractive again and making a profit isn’t as difficult as it was.

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