Nucor Steel Case Study

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.

Nucor has been facing many industry challenges including the overall development of the industry. They are competing with foreign firms on cost and efficiency. Nucor has a low cost strategy because as they say their product is not necessarily very attractive. It does not have attractive or unique selling features other than its cost. The commodity of steel is in a very competitive market. Nucor understands that innovation and productivity are going to be key factors to keep their buyers satisfied with their prices. Nucor is facing many challenges with a growing world market and many of their competitors merging in order to create stronger more dominate

The core strategy of Nucor is that of cost leadership via the use of technology. Through innovation and the use of high quality technology to process their steel, Nucor was able to achieve this cost advantage.

The five driving forces are outlined below. Then the more specific elements behind these forces are presented in light of how they have already influenced NG or on how they have set NG up for possible future actions. For the most part, the information about the company comes from its corporate website. Other supporting studies and press stories are cited as needed. This should provide an overview of why the company is so unique.

Economical: Strong Australian currency affects steel manufacturing export and import (Smith 2011) Job cuts and industry shuts due to weak domestic demand and downturn in the construction industry (ABC News 2011). Social: Changing in preference: the growing availability of alternative materials may replace steels such metallic glass (Vieru 2011). Skilled worker shortage in Australia (BusinessSpectator 2012) Technological: With the development of steel industry, new renewable resources are required due to nonrenewable resources will be less and less such as iron ore and carbon (Szargut, Ziebik & Stanek 2002) Environmental: Steel Industry has impacts on air quality due to the emissions, which may lead climate change. Environmental pollution requires steel business to reduce the emission in order to develop a clean energy future by advanced technology. Water saving issue. (Costello 2011) Legal: Changes in taxation regulation such as the federal government passed 30% tax on iron ore and coal mining profit (Scott 2012).

This report discusses the challenges that The Nucor Corporation faces during this era of social and economic climate change. Using Porter's Five Forces Analysis and Four Generic Strategies, we will assess the steel industry standards as it relates to the strategies implemented by the Nucor Corporation. We will also assess what Nucor’s strengths and weaknesses are, and if they will be able to continue

Upon Review of Nucor Corporation’s current findings, analysis of internal strengths and weaknesses, as well as a comparative analysis at the industrial level of the steel industry, the following includes a summary of findings and recommendations for Nucor Steel Corporation:

U.S. Steel and other steel companies for decades, relied on the tried and true strategies of vertical integration and price control (Hoerr, 1988). In the 1960’s, foreign competition from developing countries like South Korea, Taiwan and Brazil entered the market "with low material and labor costs, modern equipment, and the support of government policies" (Hoerr, 1988, p. 99). Because of lower costs and concern over supply created by constant threat of strike, many

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.

Nucor Corporation is one of the three largest U.S. steel producers with production capacity of more than 26 million tons and 20,400 employees. The company is also the world's largest steel recycler,

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 must now consider the need to keep up with the changing dynamics of a globalized corporate world. Nucor already has a business model that proved to be successful in the American markets. Using the same business model, Nucor should now consider penetrating and exploiting other international markets that promise low costs of production and higher revenue generation such as India and China. This could be done by either setting up operations in those countries or getting into

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.

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.

TATA steel strategy was to integrate the value chain of steelmaking to aid the growth of Asia’s bubbling construction economy. When presented with the opportunity (financially the government policies made it easier) to gain access to the other markets, they later acquire CORUS which was an established name in Europe, but were not cost effective in their operations (Tarun Khanna, Krishna G. Palepu and Richard J. Bullock, 2009). This acquisition provided them the right synergy by combing the low cost upstream production in India with the high-tech research aspects of Corus and areas like procurement, marketing, back office operations and R&D. This was also required due to the trends in world steel industry whereby there has been a global