Case | HBS Case Collection | December 2003

Alusaf Hillside Project

by Kenneth S. Corts and John R. Wells

Abstract

The aluminum industry has suffered from long periods of depressed prices and profits interspersed with relatively short-lived price and profit peaks. The case investigates why, this has occured, focusing on the decision Alusaf must make on whether to invest in a major new facility in the face of depressed aluminum prices. Courseware provides cost data on all the facilities in the industry to develop a supply curve. It also provides a supply and demand model that allows students to investigate: the drivers of average industry profitability and relative profitability of individual players in it; the impact of changes in demand over the economic cycle on the price of metal; the impact of different elasticities of demand on price and profitability; the impact of oligopolistic pricing on industry profitability; the impact of adding capacity on industry profitability; and the ability of a firm to preempt the aluminum market. A rewritten version of an earlier case.

Keywords: Decision Making; Business Cycles; Financial Crisis; Metals and Minerals; Financial Strategy; Investment; Price; Profit; Demand and Consumers; Industry Structures;

Citation:

Corts, Kenneth S., and John R. Wells. "Alusaf Hillside Project." Harvard Business School Case 704-458, December 2003.