Nucor Case Study Essay

More attention to own business than to competitors is their strategy. South magazine observed that Nucor is “stripped down, no nonsense” organization. It keeps maintaining low cost and efficiency, which is the key to making profit in steel industry, by keeping the employee force at the level it should be, empowering them, being totally honest, involving them in decision making process, and using effective incentive compensation system.

These driving forces very easily impact the steel industry’s competitive structure in a bad way. These driving forces make it very difficult for steel companies to compete in this industry.

What are the primary competitive forces impacting U.S. steel producers in general and the producers like Nucor that make new steel products via recycling scrap steel in particular? Please do a five-forces analysis to support your answer.

Nucor Corporation is made up of 11,500 teammates whose goal is to "Take Care of Our Customers." We are accomplishing this by being the safest, highest quality, lowest cost, most productive and most profitable steel and steel products company in the world. We are committed to doing this while being cultural and environmental stewards in our communities where we live and work. We are succeeding by working together.

Another recommendation that I have for Nucor is instead of buying existing plant capacity, make new plants elsewhere or form a joint venture with a supplier to help save money. (Exhibit 3) This would decrease cost of supplies so they would have the extra money to build elsewhere or build a ne plant. By using the SWOT analysis (Exhibit 1) it let me break up Nucor into different parts to see what their strengths and weaknesses are. Nucor is solid with technology and treating the employees correct but the weaknesses that affect Nucor are more market based with some internal problems. Nucor has products for many different industries including automotive and housing. This can cause issues for Nucor if those industries take a fall, which they have over the last 5 years. It’s a good idea to be in these industries but Nucor has to realize what can happen to sales and revenues when one or both of those industries take a fall. Nucor has been expanding more in the United States, recently just building a plant in Louisiana (Exhibit 5). This plant will be a 750 million dollar purchase and will be a mill for pig iron. Nucor is expanding all over the United States but needs more presence internationally plan and simple. Nucor is a solid company with shareholder equity increasing each year; they have a solid stock in the NASDAQ market and continue to be a healthy steel company. They can and will

Major competitors in the U.S. steel industry include Nucor Corp., ArcelorMittal USA Inc., and United States Steel Corp. Major international players include Tata Steel Limited, Jindal Steel and Power Ltd., and Steel Authority of India Ltd.

Nucor is a classic case in how a firm can develop sustainable competitive advantages through resources that fit the VRIO criteria. It is worth noting that Nucor has achieved this in an industry that few would describe as attractive.

Nucor Steel is one of the major steel producers in the world and a market leader in America that is facing a threat of competitive pressures from potential international players.

Nucor has created a company that is both internally and externally fit to the environment. The firm responds well to the driving forces of the industry and has opted to take a low-cost strategy with the relentless pursuit of innovation and strong employee productivity in order to combat the issues of the steel industry. In 2000, Nucor decided to expand its operations by acquiring new firms and new factories while continuing with its low-cost operations. The competitive strategy of Nucor has helped it become one of the leading manufacturers of steel and steel products in the United States.

B. Nucor (NUE) was ranked the first of steel producer in the U.S., and the first “mini-mill” operator, with operating facilities in 14 states. Nucor’s products include sheet steel, bar, structural, plate and others. The company was known for its aggressive pursuit of innovation and technical excellence, rigorous quality system, environmentally friendly products. Nucor’s core strategy is that of cost leadership through the use of technology; it is known as being the low-cost provider. Most business is conducted in the U.S., but the company does have foreign operations and looks at international expansion as a strategic opportunity.

So, from my perspective, these are the main trends in the strategic environment that have influenced steel company profits over the past few years. Nevertheless, the fact that most steel companies operate largely within their national or regional markets, adapting their strategies only to them, was, obviously, the primary aspect that contributed for the worsening of the situation.

Nucor Corporation with 24 plants/divisions and 8,000 employees, operated in nine states recycling more than 10 million tons of scrap steel annually. Producing carboy and alloy steel in bars, beams, sheet, and plate; steel joists and joist girders; steel deck; cold finished steel; steel fasteners; and metal building systems, the corporation was known as the most modern and efficient, having streamlined organizational structure, incentive-based

Within its value-chain primary activities, Nucor focused on the operations’ efficiency by having continuous casters which reduce additional processes and capital investment while increasing productivity for its operations. This allowed Nucor to produce steel at competitive margins relative to its competitors and imports. In terms of its supply-chain management, Nucor also managed its own fleet of approximately 150 trucks for on-time deliveries of materials. To reduce freight costs, plants were intentionally located near markets in rural areas to have products closer to its customers. With a cost leadership strategy, Nucor also placed emphasis on tight cost control by terminating unprofitable divisions and saw no use in internal advertising, R&D, legal and environmental departments within its value-chain. These services were provided by external contractors and investors with greater expertise. To further minimise costs as an alignment to the strategy, Ken Iverson’s receives the lowest yearly pay among all CEOS in Fortune 500 with no corporate luxuries such as corporate planes and country-club memberships for the

Their mission is as follows: “Nucor is made up of more than 20,000 teammates whose goal is to take care of our customers by being the safest, highest quality, lowest cost, most productive and most profitable steel and steel products company in the world. We ae committed to doing this while being cultural and environmental stewards in our communities where we live and work.” Their commercial excellence is based off of five principles: stay market driven, forge strong and loyal relationships, be easy to do business with, create sustainable results and do everything together. The Chief Finance Officer, John Ferriola, said “We care about our teammates, customers, environment and communities in which we live and work. It’s not just our way of doing business; it’s our

Porter’s five forces analysis is a tool is useful for us to analyse the threat of competition in an industry. Porter believed that the industries were influenced by five forces; competitive rivalry, threat of new entrants, bargaining power of suppliers, bargaining power of buyers, and the threat of substitutes. Analysing these areas can allow you to see attractiveness of the market and find a competitive advantage.