|
Case
| HBS Case Collection
|
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.