11. Evaluate Three Rivers’ situation. What should Three Rivers do?

Three Rivers Steel Company is one of two major producers of wide-flange beams in the United States. The other producer is United Steel Corporation (now USX). A few small firms also compete, but they tend to compete mainly on price in nearby markets where they can keep transport costs low. Typically, all interested competitors charge the same delivered price, which varies some depending on how far the customer is from either of the two major producers. In other words, local prices are higher in more remote geographic markets.
Wide-flange beams are one of the principal steel products used in construction. They are the modern version of what are commonly known as I-beams. USX rolls a full range of wide flanges from 6 to 36 inches. Three Rivers entered the field about 20 years ago—when it converted an existing mill to produce this product. Three Rivers’ mill is limited to flanges up to 24 inches, however. At the time of the conversion, Three Rivers felt that customer usage of sizes over 24 inches was likely to be small. In recent years, however, there has been a definite trend toward the larger and heavier sections.