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Porter's Five Force Analysis on Nucor Case

Porter's Five Force Analysis on Nucor Case - Cong Hui...

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Cong Hui Porter’s Five Force Analysis We came out with the idea that the level of threat of new entrants is relatively low, since there are high entry barriers of the steelmaker industry. Both of the integrated steelmakers and minimills are in oligopoly market structures. The integrated steelmaker market was dominated by U.S. Steel, LTV Steel, and Bethlehem Steel. The minimills industry was led by five large firms. While 36 companies operated a total of 51 mini steel plants, 43% of all minimill steelmaking capacity was controlled by them: North Star (2.4 million tons), Nucor (2.1 million tons), Northwestern Steel and Wire (1.8 million tons), Florida Steel (1.6 million tons), and Chaparral (1.1 million tons). The level of the bargaining power of buyers is relatively high, due to the generally good amount of steel companies and little product differentiation, also low switching cost. Though the dependence on external sales for Nucor had increased dramatically since the early 1970, Nucor had made a good control of its buyers’ bargaining power. It did not allow discounts for preferred customers or, on large outside orders, in order
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