Effects of Globalization on the US Steel Producers - Research Paper Example

Effects of Globalization on the US Steel Producers Table of Contents Abstract 2 Introduction 3 Literature Review 4 Data Collection 6 Data Analysis 7 Conclusion 8 Recommendations 9 References 10 Abstract Globalization is an integrated term related to the people, industries and government policies of different nations. With the virtue of globalization, people today can share the new ideas, technologies, and techniques. These developed traits can further be implied by them into their own corporations with an aim of betterment. Therefore, globalization has a great impact on the culture, political system and economic development of any and every economy. Likewise, the US steel producers are also affected by globalization. For instance, the competition has increased in the international steel industry making it more challenging and complex. However, an industry can gain opportunities and incur threats simulataneuously due to the impct of globalization. The US steel industry is also fluctuated with many of the factors active in the global market. Introduction US steel industry is one of the major steel producing sectors in the inetrnational market. It chiefly produces iron-ore and coke for steel manufacturing. Worth mentioning, it achieved a net sales of 16,873 million doller in the year 2007 which was a steep rise when compared to the net sales amounting 15,715 million dollar in the year 2006. Besides producing steel, it is also involved in other business activities, such as developing transportaion via rail and barge operations (United States Steel Corporation, 2007). Recently it was observed that the US steel industry has been effected by globalization. The US steel producers always want to be more competitive in a global market in order to strengthen themselves and take proper advantage of the opportunities that are prevalent in a global perspective. With this concern, the purposes of this research paper are to study and analyse the impact of globalization on the participants of the US steel industry and recognise how it affects the steel producers. Literature Review The integration of globalization with the US economy occurred rapidly which in turn affected the US steel industry quite strongly. Notably, the consequences raised by the integration of US steel industry with the global market were severe. For instance, the globalization provides the US consumers more choices and lower prices which increases the power of buyers at large. It also increases the employment rate in the global market (Plummer, 2006). As steel is chiefly produced in the US and in the South Korean industries, threre exists a wage restrain between the two economies. This illustrates the fact, that if the wages of the US steel industry is too high, then it will not be able to compete with South Korean steel suppliers and other economies as well. This would most probably lead the US steel producers to decline along with an increased constraint of unemployment. According to Plummer, hardly any other economy could compete with the US technology three decades ago. But presently several countries have advanced in technology as a result of globalization. This reveals the fact that the US economy requires to concentrate more on its competitive edge when compared with the international market. On the similar context, the imports and exports are also affected because of globalization which in turn influences the US based steel industry largely (Plummer, 2006). American Institute for International Steel, Inc’s study on The US Steel Market reveals that steel industry of the US has a record of profit gained from the exportation of steel in the global market. Higher prices of steel in global markets in comparison to that of the US steel industry has resulted in exports amounting approximately to 13 million tons. In this milieu, China, Europe and India are recognised as the major receivers of the US made steels (American Institute for International Steel, Inc, 2009). High freight rate and attractive prices in Turkey, Oman, Russia and Europe have made the small steel producing companies’ businesses difficult. US is unique with regards to producing steel than developing countries. The US steel industry is termed to be extremely competitive and strong. It has been witnessed that at times US. Steel charges greater prices for steel products than their global competitiors but still it maintains its competitiveness in the global market. The US steel companies had made a record in profit in the year 2006 and the output increased in 2007 (American Institute for International Steel, Inc, 2009). The global economic problem during 2008 had affected the liquidity, increased the inventories which in turn raised the steel prices. Consequently, the high steel prices have increased the credit for everyone in the supply chain. The price of the US steel decreased slowly at first in 2008 and then the steel prices decreased at a faster rate. When the market was upward the first buyer got the best price for products and when the market was downward the last buyer got the best price (American Institute for International Steel, Inc, 2009). The globalization has affected the demand of steel for the domestic industries and importers as well. The steel prices of China was moving up at a rapid speed. Strong demand and pricing in China escorted the international steel industry into new era. In comparison to the US steel industry the internal prices of China are slightly higher. Notably, if the situation continues, it is most likely that the Chinese marketplace will again influence in the global steel market more than the US (American Institute for International Steel, Inc, 2009). According to Kim and Leung (2006), after tariff imposition the imported price of steel will increase while the domestic cost of steel in Taiwan would be stable. As a result, the analysts also stated that the industry trade among the Taiwanese and the US steel producers will also decrease. However, domestic steel may be benifited from the tariffs but it shall harm the US steel-consuming business, the US consumers and Taiwanese steel producers (Kim & Leung, 2006). According to Horace & Mullins (2008), the US Steel produces at present produces only a fraction amount as compared to its past years. The US steel now employs only 8000 employees in contrast to 300,000 during the early 20th century. The impact of globalization have had downside affect on the US steel (Horace & Mullins, 2008). Data Collection The qualitative method of research can be used for collecting relevant data in this case. The reason for using this method is that the answers can be collected in a standardized way through literature reviews. The qualitative method is more objective oriented than the other methods such as personal interview or the focus group method. The time needed for collecting data using this method is minimal in comparison to other methods. It is also referred to as a cost effective method of data collection (Barker, 2007). This research requires vast amount of information because more data will help in in-depth understanding of the research subject. Secondary sources will be suitable for evaluating this research. Various secondary research methods can be used for collecting information such as literature reviews. The sources used in this method can be referred to as books, journals, articles and other internet sources. The reason for using secondary data is that it is very simple and less time consuming in comparison to the quantitative research methods. The data is easily available from everywhere and this method also minimizes the risk of unreliable data. However, special emphasis should be provided to the aspects of biasness and inefficiency of the data collected. In this regard, only authentic sources should be used. Data Analysis Qualitative methods can be used for analyzing data regarding the research topic. Qualitative method provides vast data in detail and rich information about the topic. The reason for which qualitative method is used is because it can provide information regarding the impact of globalization on the industry in a comprehensive manner. With its applicability to analyze intangible factors such as social rules, religion and civilization, a qualitative research becomes more effective in this case. This method is also termed useful to describe variation, explain relationship and individual experiences (FHI, n.d.). Notably any particular analysis is not required for a qualitative research unlike the quantitative method. For instance, quantitative method uses statistical tools for data analysis but in qualitative research method statistical tools are not relevant. In this case, a descriptive review method can be implied as the data analysis tool. Conclusion Globalization has reduced the barrier between nations and encouraged open economy along with cultural and social integration. In other words, globalization has enhanced the aspect of free trade among economies. The global steel manufacturer companies have adapted the techniques and strategies which are already implied by US steel producers in order to gain benefits. This indeed affected the US steel producers largely. For instance, globalization has made US steel producers more efficient because they have to deal with strong competitors. It led to larger export with cheap cost and the US Steel is still considered to be a strong global competitor in the international platform. Recommendations US steel is one of the top steel producing companies in the world. Globalization has made many other economies their biggest rival. To make US steel industry more competitive, they should carefully study the opportunities and use them effectively. Proper strategy should be established with an aim to generate larger revenue and purposefully concentrate on reducing the challenges of globalization. These would not only strengthen their competitive advantage but also help to sustain the world class standard for its steel products. References American Institute for International Steel, Inc., (2009). The US Steel Market -- Review and Forecast. American Institute for International Steel. Retrieved Online on February 22, 2011 from http://www.aiis.org/default.asp?contentID=71 Barker, P., (2007). Evaluation Cookbook. Learning Technology Dissemination Initiative. Retrieved Online on February 22, 2011 from http://www.icbl.hw.ac.uk/ltdi/cookbook/info_questionnaires/index.html FHI, (No Date). Qualitative Research Methods Overview. Family Health International. Retrieved Online on February 22, 2011 from http://www.fhi.org/nr/rdonlyres/etl7vogszehu5s4stpzb3tyqlpp7rojv4waq37elpbyei3tgmc4ty6dunbccfzxtaj2rvbaubzmz4f/overview1.pdf Horace, J. & Mullins, P., (2008) City Of Steel Feels The Downside To Globalization. Dominican University of California. Retrieved Online on February 22, 2011 from http://www.dominican.edu/query/ncur/display_ncur.php?id=2659 Kim, H. K. & Leung, C. K., (2006). Protectionism Actually Hurts US. Jobs And Economy: An Investigation Of Proponents And Opponents. International Business & Economics Research Journal. Retrieved Online on February 22, 2011 from http://www.cluteinstitute-onlinejournals.com/pdfs/2006270.pdf Plummer, M. G., (2006). The ASEAN Economic Communityand the European Experience. Regional-Economic-Integration. Retrieved Online on February 22, 2011 from http://www.adb.org/documents/papers/regional-economic-integration/WP01-Plummer.pdf United States Steel Corporation, (2007). Financial Highlights. Annual Reports. Retrieved Online on February 22, 2011 from http://www.ussteel.com/corp/proxy/documents/2007-annual-report.pdf Read More