what kinds of competitive forces are members of steel indust

what kinds of competitive forces are members of steel industry facing

Solution

Ans;-

Capital requirements

The need to invest large financial resources in order to compete creates a barrier to entry, particularly if the capital is required for unrecoverable expenditures in up-front advertising or R&D. Capital is necessary not only for fixed facilities but also for customer credit, inventories, and absorbing start-up losses. While major corporations have the financial resources to invade almost any industry, the huge capital requirements in certain fields, such as computer manufacturing and mineral extraction, limit the pool of likely entrants.

Cost disadvantages independent of size

Entrenched companies may have cost advantages not available to potential rivals, no matter what their size and attainable economies of scale. These advantages can stem from the effects of the learning curve (and of its first cousin, the experience curve), proprietary technology, access to the best raw materials sources, assets purchased at preinflation prices, government subsidies, or favorable locations. Sometimes cost advantages are legally enforceable, as they are through patents. (For an analysis of the much-discussed experience curve as a barrier to entry, see the insert.)

Access to distribution channels

The newcomer on the block must, of course, secure distribution of its product Sometimes this barrier is so high that, to surmount it.

Bargaining power of the buyers and suppliers,

Threat of new entrants,

Rivalry among existing companies.