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STEEPLE ANALYSIS OF IRON AND STEEL INDUSTRY

Social Factor: 1) Changes in social trends (income distribution) can impact on


the demand for products and the availability and willingness of individuals to work. 2) Attitude to work.

Technological Factor: 1) New technologies create new products and new processes. 2) Installation of power supply plants at major production centers has lead to increase in production and meet the demand. 3) Infrastructural Growth in the country helps more consumption of steel. Thus, helping the industry to grow. 3) Mobile phones have played a major role, as through this, work can be done easily and faster. 4) Computers, software have helped the company to design the products as per there suitability and help them 2 maintain the records of the firm and carry out quick and easy procedures.

Economic Factor: 1) Higher interest rates may deter investment because it costs more to borrow 2) Inflation has provoked higher wage demands from employees and raise costs 3) Fluctuation in prices of steel (metal) has caused slow growth of the industry. 4) Recession has been playing its role, as the demand for raw material has gone down due to export orders.

Environmental Factor: 1 Transportation - transport of goods from one place to another causes pollution which leads to global warming. 2) Due to climatic change- in rainy season the consumption of steel used for construction reduces as it becomes difficult for the workforce to construct.

Political Factor: 1) Change in central excise duty, change in value added tax. 2) Change in central sales tax (CST), has benefited in domestic trade. Legal Factor: 1) Health and safety-this should be aimed at ensuring the workplace is as safe as is reasonably practical. It covers issues such as training, reporting accidents and the appropriate provision of safety equipment. 2) Employment law- Working hours of the worker and minimum wage paid. 3) Consumer laws; this is designed to protect customers against unfair trade practices.

Ethical : Our employment/government policies and practices are continuously being updated so we ensure that we do all that we can to improve fairness and dignity in the workplace.

MICHAEL PORTERS 5 FORCE MODEL USED IN IRON AND STEEL TRADING INDUSRTY.

Barriers to entry: We believe that the barriers to entry are medium. Following are the factors that vindicate our view.
1. Capital Requirement: Steel industry is a capital intensive business. It is

estimated that to set up an integrated iron and steel business, it requires minimum of 2crorers depending upon the location, contacts in the organization. New competitors need to enter a market in size, committing large amounts of capital to purchase fixed assets, to finance inventory and receivables and to finance initial operating losses. Clearly, the greater are the economies of scale, the greater the expected capital requirements to enter the industry. Higher capital requirements mean the pool of potential entrants is much reduced, limiting the threat of entry

2. Product differentiation. In iron and steel industrial there are many

products which are available and of regular use. But, the most important part out here is the Quality. There are cheaper products available in the market to, but by selling a branded differentiated product, consumers will be willing to pay a premium price for a relatively cheap physical good due to either loyalty attached to being seen with such a product.

3. Government Policy: The government has a favorable policy for iron and

steel traders and suppliers. Furthermore, the regulatory clearances and other issues are some of the major problems for the new entrants. For eg: Change in Central Excise Duty And Change in central sales tax (CST), has benefited in domestic trade.

Bargaining power of suppliers: Iron ore is an essential raw material used in the production of steel. When the demand is more the suppliers exert power due to their possession of a stronger competitive position(QUALITY AND BRAND NAME) will raise prices in order to improve their own returns on capital at the expense of the buyers. But when the demand for the product goes down, the suppliers do not bargain with the buyers and sell at the affordable rate for which

they think is most suitable, as they need money to run their plant when they cant stock the product and meet there demands. Bargaining power of buyers: Similar to those facts of powerful suppliers, buyers also act strong while purchasing goods in quantity from the supplier. Buyer tends to negotiate the pricing of the product to as low as possible to make a substantial profit and to improve own returns on capital at the expense of the supplier. Competition: It is more in the iron and steel trading industry as Steel being the cheapest metal people tend to enter the market with more of investment and try competing with the pricing of their rivals. Many cheaper products are available in the market, so to compete with them keeping the branded product in hand and comparing the price it becomes difficult and hence you might just lose out on your customer. Competition may occur in a different way to. For e.g. not paying full octroi or not taking the goods in bill may cost the same branded quality product in a cheaper price than what the other people sell.

Threat of substitutes: It is medium to low. Although usage of aluminum has been rising continuously in the automobile and consumer durables sectors, it still does not pose any significant threat to steel as the latter cannot be replaced completely and the cost differential is also very high. Steel being a hard product, its strength cannot be matched with any other metal. So for infrastructure steel is used maximum so that it can last for long.

SWOT OF IRON AND STEEL TRADING INDUSTRY.


SWOT is an acronym for Strength, Weaknesses, Opportunities and Threats. It is sometimes called situational analysis. SWOT is a technique for comparing or matching an organisations internal strengths and weaknesses with opportunities and threats found in the external environment. It is a useful strategic planning tool for evaluating the strengths, weakness, opportunities and threats involved in a project or in a business. SWOT analysis is based on the assumption that if managers carefully review internal strengths and weaknesses and external threats and opportunities, they can formulate and select a useful strategy for ensuring organisational success

Strength
These are resources and capabilities of my organisation that can be used as a basis for developing a competitive advantage. It is an important organisational resource which enhances my organisations competitive position. Some of the internal strengths of my enterprise are: Skilled workforce. Adequate financial resources. Superior image and reputation such as strong brand names. Insulation from strong competitive pressures. Product or service differentiation.

Weakness
A weakness is a condition which puts the organisation at disadvantage. The absence of certain strengths may be viewed as weakness. Weakness makes the organisation vulnerable to competitive pressures. Weaknesses require a close scrutiny because some of them can prove to be fatal. Some of the weaknesses inherent in my organization include: No clear strategic direction.

Outdated facilities. Lack of management vision; depth and skills. Inability to raise capital. Weak distribution network. Low employee morale. Poor track record in implementing strategy.

Opportunities
An opportunity is considered as a favourable circumstance which can be utilised for beneficial purposes. Some opportunities that my firm include are: Strong economy. Possible new markets and an unfulfilled customer need. Emerging new technologies. Complacency among competing organisations. Vertical or horizontal integration. Expansion of product or service line to meet broader range of customer needs. Removal of international trade barriers.

Threats
Shifts in customer tastes away from the organisations products or service. Emergence of substitute products. Entry of lower cost foreign competitors. Shortages of resources Recession in economy

MARKET AUDIT.
IS MY PRODUCT RIGHT ?
We take into consideration various aspects of our product. Thus we need to have extensive range of products to withstand the competition. We have different products for the customer so it becomes easier for them to select the most appropriate product used for the particular job. Providing an option for replacement of the product becomes difficult but at the time of selection of the product, we do replace the product if insisted by the customer and later on if there is a complaint regarding the product which is very rare, we do agree to take the product back to the warehouse which is also a part of after sales service.

IS MY PRICE RIGHT?
We have a high end consumer market with high income asking for better service and satisfaction. Thus the pricing strategy of the product is to provide the product at most reasonable price so people tend to buy in bulk. So more the turnover more is the profit. Thus we have low margins.

IS THE PLACE RIGHT ?


Retail business: The place where the office is located is the main hub for iron and steel in the city. Many industry officers, purchase managers visit the place and take the products from us as it is easier for them to come and select things where they can get all the industrial products from. Wholesale business: it is located at kalamboli which is also called the steel hub of india as all type of goods are available and customers can choose different varieties of product they want. It becomes easier for people who have factories outside the city to procure goods from the wholesale office as they do not have to incure Octroi charges and the goods available are cheaper as compared to the retail business.

IS THE PROMOTION RIGHT ?


Promotion in iron and steel trading industry work more on word of mouth promotion technique. Customers promote the name of our company to other buyers in the market as we provide them better services than anyone else plus help them whenever they need help. So this is one way of promotion. Second:

By means of business website like indiamart.com where they make buyers and suppliers meet is the best way of promoting the firm.