establishing a niche position in commodity market (Essay Sample)

Name Course Institution Date What does the Company do? Steel Works Inc. is one of the biggest companies in the United States of America. It was founded by three male material scientists from MIT in 1980. It specializes in manufacturing custom and specialty use steels. By 1993, it had annual sales revenue of $400.This company has been very important in the region since it has the capability to recruit more than 2500 people at its different five location. Its brands have been facing challenges in the market due to poor strategic vision formulation and implementation. With its first product, Dura Bend, the company became reputable as high technology provider thus enhancing it to establish a niche position in commodity market. Business Problems Faced by Steel Work As business thrives to achieve success in the world of scarce resources, challenges are inevitable. Challenges can be technical, operational or even financial. At steel work lnc, some of the challenges encountered are : * Inventory levels are extremely high. Rising inventory beyond expected level leads the organization to make a loss. High inventories are associated with high holding costs, tied capital as well as increased labor cost to manage and handle the inventory. When such costs are accumulated together, they will cause profit margins to decline in steelwork inc. * Customer service level is the worst. Customers are key to success or failure of the business. Since customers have the purchasing power which dictates trends in business, managers need to produce goods and services which meet their needs. * Customers are going to competitors. In every perfect market, competition is mandatory. Customers will always switch to entities which have a good reputation, standard priced goods and where they are satisfied with their services. Some of the reason why the customer is switching to competitors may be due to increased prices, low-quality goods and stock-outs in the entity. * Losing market share. Market share refers to sales of company’s product over a period of time. The higher the sales the higher the market shares. Losing market shares implies that business is not generating enough revenues from its resources. If the same trends continue, steel works inc. will be faced with liquidity issues and this can lead to its closure. * Sales are dropped 30%. Declined sales automatically lead to decline profit. Low sales can be attributed to low-quality goods, stock-outs as well as lack of market for produced goods. * Expenses are up 25%. Potentia...