Analyzing Brazil's Iron and Steel Industry with Porter's Model

This report applies Porter's National Advantage Model to analyze the iron and steel industry in Brazil, evaluating its potential for growth. The analysis focuses on the diamond framework, including factor conditions (e.g., existing infrastructure and workforce), demand conditions (domestic and international demand), competitive intensity (key players and competition), and supporting industries (e.g., automobile and machinery). The report finds that Brazil's iron and steel industry has significant potential, particularly due to its existing export capacity, competitive environment, and complementary industries like automobiles and machinery. The conclusion emphasizes the need for optimization within the steel sector to maximize growth opportunities in accordance with Porter’s model, highlighting key players like Gerdau SA and Arcelor Mittal. The report suggests that with strategic improvements, the iron and steel industry can provide significant economic benefits to Brazil.

Running head: NATIONAL ADVANTAGE MODEL
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Name of the Student
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Author Note

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Introduction
The study is in regards to utilizing the National Advantage Model of Porter to find the
industry that is best suited for a given country. The country selected for the analysis of industrial
prospects is Brazil. Brazil is one of the fastest growing economies in the world and has
significant resources that can be optimally utilized. The model is used to understand the
industries that have the best potential for growth in the country and contribute towards the
further development of the country. The national advantage model of Porter depends on the
diamond framework. The most important factors in the diamond are competitive intensity,
demand conditions, factor conditions and supporting industries.
Analysis
It is important that the industrial and economic conditions of Brazil are evaluated through
the Porter’s national advantage model to determine the industries with the most effective growth
potential. The four factors discussed above can be used to analyze the industrial situation of the
country namely, competitive intensity, demand conditions, factor conditions and supporting
industries. The country has many different industries that contribute towards its growth. Some of
the more important are agro industries concentrated mainly on coffee and tobacco,
manufacturing industry and iron and steel industry
Factor conditions
The factor conditions of any country refers to the production factors that are present in
the industrial sector of a given country. In the country there is significant prospects for iron and
steel industry growth. Already the country is the 10th largest iron and steel exporter in the world
(Lora et al., 2015). The country has a significant portion of the working population that work in

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the steel producing units as it has a large population. The country has a large number of steel
producing plants located across the entirety of the nation. A strong advantage is the fact that the
domestic production of steel is far more than the domestic demand. There is the presence of
strong transport network across the country. The mining company CVRD is responsible for
supplying most of the iron ore (Vale weigh, 2019).
Demand conditions
The production of steel exceeds domestic demand. This is a factor that can lead to the
further growth and development of the iron and steel export industry. The demand for steel in the
local market is significant. Brazil is also a significant producer of automobiles. Hence, the
requirement for steel in this sector is also significant. The home demand has been reduced to a
certain extent currently but has a potential to be rejuvenated. This can prove to be a strong
backbone for the international growth of the steel industry of the country.
Competitive intensity
The competition in the steel industry in Brazil is strong. The industry has a long history
as a result of which it has as significant number of competing firms. The top markets for
Brazilian steel are the US, Turkey and Argentina. The largest competing firms in the country are
Gerdau SA, Arcelor Mittal Brasil, USI MINAS and Companhia Siderurgica Nacional (CSN).
These four large companies are greatly competitive and contributes greatly towards the
competitive factors that determine the effectiveness of the competition of the Brazilian iron and
steel market. The advantage of this competition is that there is a strong competitive environment
that is maintained as these four companies are very much similar to each other in terms of
competition (Huggins & Izushi, 2015). Gerdau SA and Arcelor Mittal specialize more on the

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long products and USI MINAS and CSN specialize in Cold rolled and galvanized steel (Sawe,
2019). This creates a strong competitive environment that helps in maintaining effective growth.
Related or supported industries
As mentioned previously Brazil has a large automobile and automobile assembly
industry. This can effectively complement the steel industry growth. The steel industry and the
automobile industry can work together to improve the export rate of both of the industrial
sectors. Additionally, the country also has a large machinery industry that account for around 7%
of the industrial production of the country (www.trade.gov, 2019). This industry can further help
in the optimal expansion of the iron and steel industry. Hence, it can be seen that there is
significant scope for the complementary industry for iron and steel in the country.
The findings suggest that the iron and steel industry of Brazil can provide the economy
with further growth opportunities in future. The industry has to be optimized in accordance with
the procurement, supply and resource utilization.
Conclusion
The implications point to the fact that the iron and steel industry of Brazil can provide
significant growth opportunity to the economy of the county. It can be concluded that Brazil
need to pay more attention towards optimizing the iron and steel industrial sector in accordance
with Porter’s national advantage model.

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References
Brazil steel sector cuts output projections as economy, Vale weigh. (2019). Retrieved from
https://www.reuters.com/article/brazil-steel/brazil-steel-sector-cuts-output-projections-as-
economy-vale-weigh-idUSL1N2271UC
Huggins, R., & Izushi, H. (2015). The Competitive Advantage of Nations: origins and
journey. Competitiveness Review, 25(5), 458-470.
Lora, F., García, E. M., Rautenstrauch, A., Mosel, A., dos Santos Silva, B. C., Müller, R., ... &
Coelho, R. S. (2015). Press Hardening Technology: Current Challenges and Potential for
Expansion in the Brazilian Industrial Sector. SENAFOR 35th. Anais... Porto Alegre.
Sawe, B. (2019). The Biggest Industries In Brazil. Retrieved from
https://www.worldatlas.com/articles/which-are-the-biggest-industries-in-brazil.html
www.trade.gov (2019). Retrieved from https://www.trade.gov/steel/countries/pdfs/exports-
brazil.pdf