Essay About Suppliers And Metal Container Industry

Cc&s Case
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The industry has little or no growth at all because the product in itself is considered a commodity, which suggest that you have to place a huge pressure on the prices. Also, competitors find it difficult to differentiate themselves because buyers consider the price when purchasing the product; thus, the rivalry is very high making the industry is unattractive. In addition, there are more than a 100 firms that are within the industry, but new companies are not entering the market because the industry shows a trend in decreasing profit margins. Capital needed to enter the market is considered mediocre but the market size is extremely large; this makes the entry medium. There are many substitutes for the metal container industry such as glass, plastic and more. These substitutes are being used in order to limit the use of metal containers. Thus, the industrys substitutes are very high. The buyers are giants in their industry such as Coke and Pepsi, and the orders are bought in huge volumes making the product considered as a commodity, and this gives them power to set prices with demanding quality & delivery. This makes buyer capable of backward integration to manufacture their own cans. The suppliers for aluminum are dominated by Alcan, and Alcoa. They are oligopoly in the industry of steel is growing slowly and dont have many substitutes. Thus, suppliers can forward integrate to become both a supplier and a competitor. The growth trends in converting from the use of metal to the use plastic and glass is growing prominently. This can may affect the use of metal completely.