Recently, European Union (EU) governments approved a five-year EU trade protection

Recently, European Union (EU) governments approved a five-year EU trade protection

Category:
September 3, 2023
3 Views
0
0

Recently, European Union (EU) governments approved a five-year EU trade protection against grain-oriented electrical steel (GOES) from Russia, Japan, China, South Korea, and the United States. The protection would consist of minimum import prices on shipments of GOES from any of the five listed countries. This measure was enacted as a punishment for exporters in these countries for allegedly dumping their product (i.e., selling below cost) on the European market. The European Steel Association lauded the plan, noting it would help protect an important subdivision of the steel industry. However, transformer manufacturers, who use GOES as an input to their production, have protested the minimum prices. They argue minimum prices will result in prices for GOES that are too high and lead some of these manufacturers to downsize or move production facilities outside the EU. Describe the various rivalries depicted in this scenario, and then use the five forces framework to analyze the industry. (LO1, LO3, LO4, LO7)

Answer and ExplanationSolution by a verified expert

Explanation
Consumer-producer rivalry exists because of the difference in interests of consumers and producers. Consumers try to negotiate for lower prices while producers negotiate for higher prices. Transformer manufacturers need to buy GOES so they would negotiate for lower prices. However, minimum support prices will result in prices that are too high which will spark a consumer-producer rivalry.

Producer-Producer rivalry exists between different producers of GOESas each country tries to service the customers in the EU. Since consumers are meager, the producers face vigorous competition.

The five forces framework analyses the market based upon the entry, power of input suppliers, power of buyers, industry rivalry, and the availability of substitutes and complements.

The trade protection plans trigger the entry of new firms in the GOES industry which shoots up the competition but slumps the profits of the manufacturers. This trade protection plan limits the power of the suppliers of the GOES which is the input for transformer manufacturing. The presence of substitutes of GOES would make profits lower if the producers try to drive their prices up. Prices will also be lower because of industry rivalry and competition. The sustainability of the business of transformer manufacturers depends upon their success in negotiating and acquiring lower prices of the GOES.

Verified Answer
There exists Producer-Producer rivalry between the input supplying countries and consumer-producer rivalry in the EU.

The trade protection plan causes new firms to enter the GOES industry in the EU which causes the competition to increase resulting in industry rivalry. It reduces the power of GOES suppliers and increases the availability of GOES substitutes in the market.

Purchase this answer to view it.
Click the button to login/signup and buy full solution at 2 USD only.

The Best Research Paper Writing Service

Would you want to pay someone to write your paper professionally from scratch? 100% Original and 0% AI Content!.

🎓 Write my Essay
📚 Write my Persuasive Essay
📋 Humanize AI Content for Turnitin
💻 Write my Reflective Essay
📑 Write my Research Paper
📜 Write my Thesis Paper
📘 Write my Dissertation
📋 Write my Case Study
📝 Write my Online Exam
✒️ Write my Term Paper
Write my Paper