In the modern world of market economy it is extremely hard to predict the future of a certain brand or product. It is mainly due to the huge variety of options to choose from and thus customers fast-changing preferences. These create pressure and a high rate of competition between the businesses. At times and in specific regions of the planet, however, it is the customer who is at the disadvantaged or challenged position owing to the lack of certain produce and a high demand for it.
The Product Experiencing Supply Constraints
The investigation reveals that the product that was hard to supply as a result of the growth of Asia Pacific international demand was steel. It is established that steel has been the most difficult product to trade in the market particularly during this period due to pressure on prices exerted by the steel makers, making it unaffordable to specific segments of the consumers.
Impact on the Suppliers of Steel Relative to Mitigating Constraints
The challenge associated with the supply of steel is largely attributable to the increase in the demand for the commodity. The research by Christopher indicates that the initial production quantity was exceeded by approximately 500 to 600 million tons on top of the estimated 1.5 billion tons in 2016. As a result, the steel manufacturers were forced to seek for an alternative market for their excess commodity. The United States stirred a prices war in the market since it would produce more that the global steel market could import, particularly when most firms would purchase steel from their domestic manufacturers which also reasonably increased their output. However, the production was initially increased due to the expansion in demand for the steel, an aspect that made the steel firms experience challenges in global supply because of overproduction.
However, it is important to note that the constraints in the supply of steel from other countries to the United States are largely associated with the gap between international and domestic steel prices. In the USA, the service centers which are usually the largest consumers of steel noted that they prefer purchasing it from foreign suppliers when the spread is wide, an aspect that counterbalances the transport costs . The issues in the steel industry in the country resulting from the increase in Asia Pacific international demand are attributable to the fact that some global customers are now choosing between the suppliers from China and those from other parts of the world . As a consequence, this makes it a challenge for the United States steel industries to find new consumers to sell their commodity in the international market.
The Product Cost Impact Due to Supply and Demand of Steel and Customer Relationship Management
The product price effect reveals that US dollar encourages the local manufacturers to expand their export as the US steel becomes more competitive than that of hot rolled steel firms of China which is currently a global producer of steel. As a result, it has prompted the increase in the demand for steel in US while forcing the foreign importer out of the local market, an aspect that, however, makes them sell less than they had initially planned globally but more at home .
The presence of such issues has made it difficult to sustain a proper consumer relationship, especially among the foreign importers, which in turn has led to the loss of the customer loyalty. The fact that US steel industry manages to produce their commodity at a lower cost makes it possible to sell the product at prices lower than its competitors that favorably influences the domestic trade and creates long-term relationships that benefit firms even at the absence of the foreign buyers . This makes it possible for the US steel industry to maintain a proper level of production and establish the development of its local consumer base and economy in general.
Risk Mitigation Strategy Recommendation
In respect to the analysis, it is recommendable for the foreign steel companies to undertake an in-depth market research to ensure that they do not over budget their production and thus eliminate unnecessary losses. Since new steel companies are emerging, it is also advisable for older firms to establish good public relation campaigns that will ascertain they maintain customer loyalty and long-term prosperity. However, this will be possible if the companies embrace stringent quality standards attracting consumers with high quality steel products that can stand out in the market. As a result, this will create stable balance between the supply and demand both at the domestic and international market.
Conclusion
In conclusion, it is evident that US steel customers regarded it economically sound to purchase steel from Asian countries rather than from the domestic market. However, since US has made steps towards supporting local producers and limiting the import volumes, it has made it possible to stabilize the prices and further contribute to the production sustainability for domestic enterprises. As a result, the budgeting of the country is structured in accordance with the current demand that matches the supply. Finally, eliminating the constraints that relate to the market availability in addition to the proper customer relationship management will be important in sustaining a competitive advantage in the steel market.
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