Summary: Bargaining Industry In Bahrain

3.0 Industry Environment Analysis
3.1 Threat of new Entrants
Threat of new entrants to the Aluminum industry in Bahrain is considered relatively low. One reason is government interference in trade where they try to protect the domestic industry by imposing import tariffs, strict policies and land issues, making the entry barriers high.
Another reason is the capital requirements and fixed costs that are very high, as the total investment in the aluminum industry in Bahrain accounts to approximately US $ 2.4 billion (“Investment in the Aluminum industry”, n.d.).Furthermore, Garmco benefits from economies of scale, buying and selling in bulks, which reduces their marginal costs (“Economies of Scale”,n.d.). Garmco has the capacity to produce 120,000

Their heavy dependence on Alba as their main supplier for raw materials makes Alba have strength over them. Furthermore, due to lack of supplier concentration, Alba can increase prices, as a result, negatively affecting Garmco. Also, the bargaining power of supplier is high, as there tends to be a threat of forward integration, which is Alba buying Garmco.

3.3 Bargaining Power of Buyers:
Bargaining Power of Buyers to Garmco is low. Customers have little power to exert pressure on Garmco to decrease their prices while continuing to produce good quality coil, foil and sheets. Considering that Garmco has presence in 4 continents, they have more than 2000 customers worldwide (“Welcome to Garmco”, n.d.). Thus, if one customer stops buying from Garmco, others will not.

3.4 Threat of Substitutes
The threat of substituting Garmco products is moderate because although aluminum tends to be inexpensive and more long lasting than other metals, there are substitutes to it, thus, demand becomes elastic when there are alternatives. For example, in packaging it can be substituted by plastics, glass, and paper while in mechanical and ground transportation uses it can be substituted by magnesium, titanium and steel along with being substituted by copper (Nargas, n.d.). The prices of these substitutes may be more convenient to customers than Garmco’s

Tangible Resources:

• Physical Resources:The Huge piece of Land Garmco Operates on is spacious enough for Garmco to expand and build new facilities, which allows them gain, a competitive advantage. Furthermore, Garmco has sophisticated equipment that helps produce high quality products. As of September 2015, Garmco has been given a contract to expand their Re-melt project, which in return, will allow them produce 120,000 slabs of aluminum. The project involves building a cast house, which will enable them recycle metal, allowing them to gain competitive advantage,create jobs and save costs (technical Review, 2015).

• Financial Resources: Garmco secures its financial resources from its various shareholders from different countries in the Gulf Region.

Intangible Resources

• Reputation:Garmco has gained an outstanding reputationfor providing high quality products that meets and exceeds their customer requests (“QEHS Policy, n.d.). Garmco has been in business for more than 30 years, thus, is highly experienced in the fieldand has been able to build a strong brand image (Trade Arabia, 2014).It has been awarded many international certifications, which enhances its brand image and increases its reputation. These certifications include quality, environment, Health and safety, Business continuity and information security and Technical and Process