Differentiation of the Products
The differentiation of the products also is a force too because some of the competitive companies they have a good quality products and they are older in the market place, so they have their brand names. So they have the power of the buyers. So plus the government policies, the U.S. steel industry had to focus on the global market because the company can sell the products either to another industries or they distribute it through their distribution suppliers through the exporting.First of all the financial requirements or the capital and it’s a hug capital that this steel industry needs because of the big market and demand of steel dementedly and internationally. So all the factors playing a part like the location as we noticed in the case that the rural locations has a low labor cost than the other locations, also the technology used affects the capital requirements. So finally the bargaining power for the supplies has to be high and the bargaining power for the consumers has to be mixed because some steel industries they have their own key of raw materials or sources of raw materials, so they depend on the first on the suppliers or imports and that’s what the U.S. steel industry should avoid to cut the cost.
The lower cost is a very important issue in producing the steel because of the competition especially domestically, so the benefits of the economies of scale requires or leads to lower the prices by lowering the costs, and that’s happen by finding a lower cost raw materials like the iron ore and coal and reducing the costs of the research and development.