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David Fabb Holdings Limiad Page 20 Financial Profle end Plan 3.1.3 31.4 rod in coil and encouraged customers to have coil pickled in the parent (wide) coil form at Servo 2. The batch pickling facility at Stourbridge thereafter concentrated on pickling wire rod in coil The acquisition of SSH, enzbled Servo to re-enter the shect pickling market and although SSH and Servo share a similar customer base, the acquisition enabled Servo to offer an added high quality sheet pickling fecility. SSH has gained the reputation fora high quality produet, The business is performing well with increased number of shifts, which in effect has created hi igher ‘hroughput and increased productivity. The acquisition also provided extended capacity for shearing which enabled the targeting of more lucrative markets for heavy gauge shearing, Competitor Analysis Servo is a pure oligopoly, in that few companies produce essentially the same service, Corus being the main competitor, Outside of Corus, Servo is the largest and most comprehensively equipped service centre of its kind. Although parts of the services match with other processors, competitive edvantage has beon historically gained through achieving lower costs by pursuing a higher volume strategy. Servo is the largest and most comprehensively equipped of all service centres, offering a wide capacity range for slitting, decoiling, shearing and pickling, Other competitors exist but concentrate on one process, eg, slitting, decoiting or pickling, but not all processes are offered from one source. Customers’ overheads are reduced by storing their material at Servo, thus enabling them to choose the appropriate processing service without the need to incur additional transport costs Differentiation has been achieved, therefore, by seeking leadership along the lines of keener pricing structures and an impressive IT service. Servo is never knowingly undersold in the market, However, opportunities are presented for Servo te reap the benefit of charging premium prices for slitting and pickling because of the unique capacity offered for these processes, e.g. heavier coil weights, higher gauge end width raages, and slit width capacity. Competitive Forces Threat of new entrants: ‘There is a minimal threat of the establishment of another service contre of the calibre of Servo as it would take years to install such machinery, and build up the reputation that Servo has for such a comprehensive range of facilities. However, customers have in past years installed their own machinery, but with the current market conditions and economic climate, the expense of purchasing such machinery and the added problem of creating enough throughput fo render the facility cost effective and viable, renders this more unlikely. Threat of substitute services: ‘There is no threat of substitute services. Customers could have their product pickled at the mill, but such a service extends delivery deadlines and is more expensive route, compounded also by the fact that customers have to forecast months in advance to establish what product mix and quantities they need to order in the pickled state. Customers could also bny their materials directly fiom Corus in a slit, decoiled, or sheared product, but this also creates extended delivery times and a higher product cost

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