Annals of Warsaw University of Life Sciences - SGGW

company. However, we expect only a small probability of building of world companies
branch stores, because steel companies have tendencies to expand into Asian countries, China
or South American countries. There are barriers for entry of new competitors on the market;
because of it the threat of entry of a new steel company on the market is slight. The entry of
new business into the branch is very demanding for capital, equipment, etc. Established
companies use effect of learning process, experience, scale, what brings reduction of costs;
they have established distribution channels, own distribution companies, what brings increase
of barriers for the entry on the market.
C. Pressure of substitutes
Pipes from other material can be a potential substitute for steel pipes. Steel pipes are
extruded by plastic pipes in the gas industry; for medium and low pressure distribution.
Another possibility of modification of steel pipes is stainless pipes, aluminium or copper
pipes, but their rate of substitution is questionable because of their prices. Due to the excellent
properties such as hardness, strength, cutting properties, wear resistance, and heat resistance,
steel is considered to be the best material which is 100% recyclable. The threat from the side
of substitutes is rather presented by different brand or type of pipe. We can conclude that the
threat, it means power of substitutes, is low.
D. Bargaining power of customers
The bargaining power of customers is proportional to the size of purchased volumes of
production. Customers put pressure to improve quality, reduce errors, improve the properties
of used material, to shorten delivery terms and prolong maturity of the invoice. Manufacturers
of cars, who buy precision welded pipes with small diameters, require mandatory
certification. They have substantial bargaining power and push to ensure more flexibility in
prices, quotation and more favourable terms of delivery. The analyzed company customers
are mostly small but also large firms, which purchasing power is medium.
E. Bargaining power of suppliers
Suppliers of the main input (steel scrap) have stronger bargaining power than other
suppliers. Suppliers have moderate bargaining power, because there are no substitute products
of steel scrap; and the steel scrap is the strategic material, which is only in a limited amount.
The Porter analysis results in determination of the competitiveness order of the production
programme’s individual groups in the sector. As we can see from the Figure 1, the seamless
pipes can be recommended as the most favourable for further development. Split pipes and
precision welded pipes are rated as the least attractive.
Rolled pipes
Precision
seamless pipes
Welded pipes
Split pipes
Large
welded pipes
Precision
welded pipes
Internal rivalry in the branch 3,5 1,5 3 4 4 3,5
Entry of nex businesses 1,5 2 2,5 3 3 3
Possibility of substitutes 3,5 2 3 3,5 2,5 2,5
Bargaining power of suppliers 2 2 3,5 3 4 4
Bargaining power of customenrs 2,5 1,5 4 3,5 3 4
∑ 2,6 1,8 3,2 3,4 3,3 3,4
Order of the competitiveness 2. 1. 4.–5. 3. 4.-5.
Fig. 1 The Porter analyses of the selected company
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