Alcoa Case Study

INTRODUCTION

In 1886, at the age of 22, Charles Martin Hall discovered the process for mass producing aluminum. In six years, from 1884 to 1890, the price of aluminum fell from $15/lb. to only $0.50/lb. creating unprecedented opportunity in manufacturing. Aluminum quickly became known for its versatility, light weight and strength. Since its foundation in 1888, Alcoa has been the largest aluminum producer in the world ("Alcoa Inc. About").

By 2010, the company had net revenue of $21 billion, an increase from $18.4 billion the previous year. As the world’s largest producer and supplier of aluminum products, among them primary and fabricated aluminum products Alcoa experienced relatively stable growth until their credit rating was downgraded to the junk level by Moody’s (“Alcoa 2010”).

Leading the way for future generations, Alcoa celebrated its first 125 years by setting new standards for breakthrough technology, strengthening communities and enhancing sustainability. From the world’s lightest planes to the sleekest mobile phones, Alcoa’s innovations accelerate advancements in the company’s key markets ("Alcoa Inc. About").

Alcoa has four primary business sectors: Alumina, Primary Metals, Flat-Rolled Products, and Engineered Products and Solutions. These sectors act as the company’s growth and development pillars and their integration influence the performance of each individual sector.

The alumina segment represents a portion of the company’s upstream operations and consists of its worldwide refinery system, including the mining of bauxite, which is then refined into alumina. Alumina is primarily sold directly to internal and external smelter customers worldwide or is sold to customers who process it into industrial chemical products. A portion of this segment’s third-party sales are completed through the use of agents, alumina traders, and distributors. One of the company’s financial strengths has been on the regional and...