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Competing Against Low Cost Steel Imports

Nucor is the second largest steel producer in THE UNITED STATES on total production capacity in the long run of 2006, with 18 plants. With the year 2006 Nucor was the most profitable material producer by having the capacity to create 25 million a great deal of steel with profits of $14. 8 billion and world wide web income of $ 1. 8 billion. In the late 1960s Nucor set up the material mini-mill industry and after that, mini-mills have grown to be broadly can be found in the top incorporated metallic companies out of most niche marketplaces. Nucor in the later 1980s made a brave entry in to the flat-rolled metallic market, afield of big metallic. Nucor follow low-cost control strategy, product development by using technology and technologies, quality systems, strong romance between employees and output, commercial culture and using target diffrenation, in order to lessen and achieve low costs per lot produced. The marketplace show of Nucor increased by 17% in both years 2005 and 2006. According to the four universal competitive strategies Nucor follow low-coast specialist strategy as their proper direction. These are determined to attain lower overall costs then rivals and appealing to a wide range of consumers. Nucor used growth strategies that happen to be new acquisitions, new plant life construction, continued seed improvements and cost reduction initiatives, and joint projects. Nucor internally has generated a recycleables strategy to control immediately and indirectly through global development with joint endeavors, the creation of 6 to 7million tons of flat iron of high quality metals for consumption of its material mills. Such acquisition is imperative to meet buyer demand for made material goods. Nucor has a wide array of products and each product must go through a different procedures cycle. This is an implication to the efficiency of each product. Nucor externally has the capacity to deliver shipments any place in USA. This is a profitable competitive gain that ensures quick and on-time delivery of products. Nucor adopts successful marketing and sales strategies. Consistent with its goals to become a global player, it continues to build long-term human relationships with agreement customers who purchase value added products, 92% of the creation of Nucor's metallic mills was sold to outside customers in 2005-2006. It shows how Nucor is keeping long- term agreements, and keeping profitable value-added products. Nucor is known for expanding and commercializing new successful product technology for the metallic manufacturing business. The same enables it to lessen its operating costs and contend effectively on the market. Considering Nucor infrastructure, centralization at the business in the first 2000's has reinforced the current success and backed the various products. Stable training and employee relation building plays a part in the continuous progress. As for services and quality, Nucor focuses on fast delivery and increased customer integrated solutions. Quality control is considered important to keep up the durability and exact technical specs of the created product. Considering political factors, variations amongst countries' laws provides beneficial and unfavorable circumstances for a huge company to conduct business in that country. Nucor handles tax policy in USA paying federal, condition, and local taxes, affecting its important thing. Nucor has to understand the fees of other countries organized for contracts execution. As for financial factors, exchange rate fluctuations and interest rate changes are considered by Nucor as bases for decisions on growth, and competition. Markets are attractive for steel company's access when the money is week, and interest rates low. No better advancement has already established more effect on the steel industry than the recent technical improvements. Even though many industries are outsourcing much of their processing, Nucor has been able to undertake the opposite approach and develop in the local market. Technology heightens efficiency of factories, decreases inventory, and enhances product quality. The efficient mini-mill can be an exemplory case of this.

Strategic Issue

Given the internal and exterior factors, that metal situations on earth had been improved upon by 2005-2006. The prices were higher in the U. S by 50% in 2000 as well as Nucor's Sales. However foreign material companies, dumping in home local market and U. S market below market prices that contributes to over capacity and even more supply than demand. Inside US and Outdoors US market. The Demand increased by 6% should Nucor continue concentrating on the U. S steel market or begin to extend into another overseas markets? Or should they suffer from budding volume of low priced overseas imports in the US market as well as how to compete with overseas steel manufacturers? Do they have to expand the capability of the business steel-making and start building new plants, new acquisitions, and new joint endeavors?

External Environment

External factors include those affects cut side the industry in the macroeconomic that should be considered in shaping the company's strategies in long-term way are legislative factors, monetary, socioeconomic, and technical factors.

Political and Legislative

Businesses are greatly regulated, from talk about to federal government to international. These polices challenge the ease of achieving profit margins. A company must package with the neighborhood regulations of another business when wanting to remain competitive in a foreign place. For Nucor Organization, the growing international competition requires addressing and dealing with various types of laws and regulations, mainly taxation. Nucor bargains intensely with the taxes policy and rules in america paying federal, condition, and local fees. Each imposes heavy results on their bottom line.

Taxes however do not always negatively impact an enterprise. Many international metallic companies were providing their products at below market cost to undercut domestic competition. Taxes enforced protect the home industry. The exact same is important when competition is high. Nucor is a big company that is subject to international trade contracts. It is fiscally essential for a firm to understand the costs associated to all or any polices and tariffs on transfer and export procedures, especially that competition ad globalization are required to maintain profits in the future.

Economic factors

As Nucor's strategy has always been to become a market leader, a lot of its growth originates from international market segments, especially developing ones. Thus, it is always exposed to exchange rate fluctuations. Marketplaces become attractive when their money is weak. This was the situation of the material industry during the economic downturn in 2001. When marketplaces become attractive scheduled to weak money, the demand for steel would increase and consequently the supply to meet up with the increasing demand.

To finance the top expenditures, loans are incredibly common. As rates of interest decrease, corporate loans increase to create an expansionary current economic climate. The same will create positive effects on corporate spending of major metallic buyers, and consequently suppliers. Hence, metal demand and offer would increase.

Socioeconomic factor

Steel industry operates on the business to business model. The same allows for higher efficiency and protects from the risk impact of negative interpersonal factors. These factors include consumer action, styles, geographic location, consumer thoughts, ect. . . A corporation like Nucor must understand the sub-cultures of each market section where it is available, and concentrate on the most profitable.

Nucor considers expansion through acquisition. This bears along the chance of mixing up two distinct cultures. Nucor must be able to preserve and embrace new knowledge employees, skilled labor, and other valuable property. Moreover, the prevailing individual ethnicities can be considered a source of risk, so ensuring adequate safeness environment should be considered a concern. Nucor differentiates itself by high salary, incentive established pay, and a flat organization. Each of these has a confident impact on the prevailing Nucor organizational framework. The existing task and risk is always to create equilibrium between protecting a confident culture, and an increased profit strategy of which lower salary is somehow essential.

Nucor Corporation identifies its role in safeguarding the surroundings. It gives attention to the environment of the areas where it functions and recognizes its importance to the employees. Safeguarding the environment is critical to its operations and long-term success. To illustrate, Environmental compliance is important for Nucor management identical with all the business functions.

Technological factors

While many competition within the metallic industry are outsourcing a lot of their manufacturing credited to increased technology, Nucor can take the contrary approach and increase in domestic market. Technology heightens efficiency, lessens inventory, and improves the product quality. Nucor, for example was able through the new technology used to effectively use the small factory development "little mill" to increase its capacity utilization. The mini-mill simplifies the procedure when compared to the more traditions included mill. It reduces many edges in the development routine and also uses greater ratio of scrap metallic. This in exchange reduced the amount of air pollution from making metallic significantly through the elimination of the several elements of the old blast furnace process.

Technology also provides greater enhancement for engineering and sales. The merchandise have detailed computerized models with test statistics, and efficiency attributes. The sales office is able to directly package with customers through the internet. Transactions are smooth and process quickly. Technology has enhanced the material industry techniques but it has its pull backs that require to be considered. For instance, computer failing, database errors, and any simple individual error make a difference the business enterprise. Having specialists and IT professionals will have its positive effect on controlling these dangers.

Industry Analysis

There have been two major factors influencing the metal industry- loan consolidation of global companies, and revolutionary technological changes among rivals affecting prices, production, and consumer satisfaction. Country wide restrictions have melted to encompass an ever increasing world market.

Since, the beginning of the 21st hundred years, the industry has been hovering around 75% capacity utilization, an even too low for most companies, thus, forcing them to globally consolidate. Examples of these consolidations are the three Western european companies who merged to form the world's largest steel maker and both Japanese companies who did the same to form the second-largest metallic producer.

Driving Forces

The defining characteristics of the industry are increasing globalization of the industry, and scientific changes. As for globalization, this is a driving power as it has an impact on the overall industry development. When considered, globalization will pave the way for loan consolidation between companies allowing them to be strong players in the industry where their success or inability will have an impact on the entire industry growth. Technical changes can have great effect on the industry. When more improved upon technologies are employed, production and prices will be influencing the industry growth. The global steel market grew by 8. 2% in 2007 to attain a value of $529. 7 billion. In 2012, the global metal market is forecast to have a value of $759. 1 billion, a rise of 43. 3% from 2007.

Key Success Factors

The Key success factors (or KSFs) are competitive factors most influencing every industry member's ability to prosper. KSFs include;

Necessary resources, competencies, and features (organizational style)

Competitive capabilities

Expertise in a particular technology

Scale economies or experience curve benefits

Strong network of general distributors, and suppliers

Nucor was set up in 1966 and continues to grow strongly according to lots of key success factors and strategic organizational strengths. The company's organizational style is remarkable and includes a amount of factors that contribute to Nucor's success. First, the business uses a decentralized business style. In 1966, Iverson assumed the role of leader to be decentralized manner has been used and been very successful. A decentralized business style distributes the administrative tasks or forces among several authorities rather than a big quantity ("Decentralization"). This style has allowed Nucor to enable their managers and employees. By Boosting the level of empowerment allows each department manger control over day-to-day decisions and transactions that will increase success. Nucor's decentralized business style also helps the Co. to be lean. Lean manufacturing comes with the creation of goods using less waste materials, less human work, developing, tools, inventory, and less time. Equal to their trim business style, Nucor is regularly seeking for improvement. Stable try to decrease creation cost is always important and ultimately really helps to lower costs of metallic to buyers. In addition, a give attention to working with employees assists with reducing worker turnover and increase efficiency. Safety is an important awareness for Nucor and it is consistently monitored and improved. Staff surveys are conducted every three years which helps to give an understanding on employee behaviour and concerns. Management then compares the research across plant life and divisions to control potential problems areas and increase employee satisfaction.

Finally, Nucor focuses on creating strong romantic relationships with outside people. This allows it to establish long-term sustainability with these get-togethers. Furthermore, structure and supply cost may also be decreased which allows for lower costs for buyers. Strong interactions set up ensure long-term sustainability and lowered charges for Nucor.

The booming business composition of Nucor combined with the management styles implanted has allowed the Co. to become a leader on the market. The Company has generated an established brand and has created brand understanding both domestically and internationally. It presently has a substantial market talk about of the U. S. market and it is budding as a global leader in rough industry. In addition, their increase in size has helped them increase development capacity. Finally, Nucor has a solid technological focus which is works at all times to boost processing and production speed. Innovation is always considered and helps the business remain a leader.

Being the greatest steel manufacturer, Nucor remains a profitable company in one of the most cyclical sectors throughout the market. Nucor likes this success for many reasons, employee relationships, quality, output, and aggressive give attention to innovation and specialized quality. Nucor's strategy low cost providing, they know they are available a commodity that the competitive edge on the market is reducing prices through creativity and efficiency.

Firms in other Establishments Offering Replacement ProductsPorter's five causes analysis

Suppliers of RECYCLEABLES, Parts, Components, or Other Resource


Rivalry among rivalling Sellers

Competitive stresses created by the jockeying of rival retailers for better market position and competitive advantage


Potential New Entrants

They five competitive pushes affecting industries appeal are:

Competitive rivalry: (High Menace)

The global competition in the metal industry encounters Nucor and the great array of rivals that load the industry. Intense competition among competitors in the local market of Nucor causes a cyclical impact within the industry. Each rival strives to succeed bids of contracts, triggering a stiff price battle in the market. As price is the primary factor for differentiation among competitors and it is the bases of the industry, the company with the cheapest set costs will survive the longer, and become the most profitable. Nucor's use of both basic pay and incentive pay ensure result is in accordance with pay and, therefore, lessens its resolved costs.

The business design differentiation is also key means of competition. Nucor has a decentralized composition with control being at the factory level. This edge allows for targeted decision making, and efficient use of earnings.

Extremely high exit barriers are a significant risk to competitive competition. During times of monetary downturn or overproduction, inefficiencies are weeded out. AMERICA offers one of the strongest protections for businesses with its bankruptcy laws and regulations to ensure they makes it through these a down economy. Counter this though, the U. S. also has a few of the toughest regulations against shutting inefficient plant life. Extremely high leave barriers are a major risk to competitive competition.

Competition from Substitutes: (Low to moderate Threat)

This threat is considered low as there are few substitutes for the utilization of steel. From auto making, to structural supports, to fasteners, there are relatively few products available with the durability, toughness, and cost efficiencies of metallic. The largest alternative to metal would be use of another material. Plastics are at the top of the list, but have not found the same sturdiness as steel. Lumber may have cosmetic charm but cannot battle with steels' robustness. Alternatives increase market occurrence sometimes of economic downturn and times of increase in steel materials cost. To hedge this menace many manufacturers maintain inventories of metal reserves. Large companies also operate metallic futures to ensure steadiness of price and assured supply for a future specified time. The target is to maintain low costs and market share during times of monetary fluctuation.

Bargaining Vitality of Purchasers: (High Menace)

The buyers impose the best; they are the bases for price competition by influencing the demand. The ultimate goal of the buyer is to get the best quality product at the lowest price. The ultimate goal of the seller (Nucor) is to get most attainable profit for the least cost. As the market is filled with numerous suppliers and taking into account the two different goals of suppliers and clients, the steel industry is often a buyer's market.

Bargaining power of Suppliers: (High to average Threat)

The way to obtain raw materials, metallic shreds, flat iron ore, or recycled metallic can have a great effect on the price strategy. Most of the metal used for production in US is brought in. Due to the difficulty in suppliers' ability to constantly meet the demands of the companies such as Nucor, joint projects between suppliers and manufacturers are set up. Precisely the same ensures low costs for manufacturers. Acquisition of the dealer may also be undertaken by the product manufacturer. Also, the energy of unions labor and unionized labor, could have an effect on the labor costs for metallic produces in positioning weak competitive push and on cost drawback vis- -vis firms with nonunion labor.

The Risk of Entry: (Moderately Strong Threat)

The main determinate for an accessibility into a business is the expenses associated. Barriers to entry have increased due to merging and globalization growing of several competition. Economies of level and capital requirements are the greatest barriers I the steel industry. Larger variety orders of recycleables are usually low priced. Higher production volumes directly discount the associated costs. During times of strong expansion, such as the 1960's-1980, economies of size are incredibly good. During stagnation or tough economy, these solutions often cause diseconomies due to under utilization of capacity.

Product differentiation is also a major barrier to admittance. Steel is not sold on its overall difference, but more commonly on price. Many manufacturers make use of the same solutions and process. Price wars have emerged in minimization of fixed costs as mentioned earlier. Directly with this, there are few turning costs in one manufacturer to some other. Little brand loyalty is recognized in an industry that will not charm to consumer commitment or brand image. Entrants must discover a way to compete based on lower costs.

Access to recycleables is additionally a barrier. Often recycleables must be bought in large amounts (economies of scale). The cost down sides associated with small materials purchases can be huge and immediately increase overall production costs; this make competition challenging in market where margins are already slim. Government coverage is not really a major hazard to entry on the local level, but at the international level the barriers are enormous. More developed connections by large material manufactures with governments allow for easy creation of contracts in a foreign territory.

The creation of these contacts does take time, executive work time, and vast amounts of money. Because so many metal manufacturers must be internationally competitive to keep up profits, government policy is threatening entrance barrier. At first glance it may seem to be the mature metal industry would not be very attractive. This may be true to a fresh entry on a small range, but with the progress of globalization the material industry is again becoming very attractive.

Industry Profile and Attractiveness

The Industry position and competitive composition future for a low-cost steel manufacturer such as Nucor is of interest because of the good shape of the financial situation to gain sales and market talk about nevertheless the industry market environment maybe un attractive to some rivals but also for some other rivals it may signify some opportunities. The demand for metal internationally has been rising strongly in recent years, and this will probably continue. The industry has become attractive for new entrants from the international market since these businesses aren't burdened by union agreements and since governments might provide special incentives to be able to help them establish a customer platform in material, which can assist in creating an important part of the nation's financial infrastructure. But the U. S has already been dumped with outsider steel products, it is still considered to be a reliable and potential market for other global companies.

As summation of the Nucor case provides many insights into the company and the industry. Generally, the metallic industry is an extremely strong industry to be competitive in effectively. The question this is actually the steel industry a nice-looking one? The response would yes, if the getting into company is already in the industry and well setup and highly regarded. Moreover, it's very important that the business is able to acquire others and/or form joint endeavors. Nucor currently has done an incredible job moving itself up from next to bankruptcy to an industry leader. Major amounts of issues have been satisfied and get over throughout the business's life. However, this will not mean that there will never be more major troubles for Nucor. Nucor is nowadays is facing growing competition from both local and international rivalries. It's critical that Nucor is growing and increase global market show. Current management must continue steadily to focus on Nucor's central product and capitalize on a successful successful organizational structure. Can Nucor continue steadily to succeed as a worldwide steel company into the future? This is the main concern.

Nucor is with the capacity of continuing its entrepreneurial heart as it expands bigger because it's marketing and management techniques. Since Nucor has been an progressive and risk-taking company, their gains will continue to extend. Nucor has embodied techniques which have been profitable to the business. An example of these techniques is the actual fact that Nucor professionals would set benchmarks for quality and end result for groups of 25 to 30 employees and encourage them with every week bonus deals. By emphasizing quality and efficiency in employees and then rewarding them for this, Nucor only boosts its own earnings.

Company Situation

Nucor Situation Introduction

Nucor handles key specific issues in the material industry including the fast expansion of steel makers in the world reflecting as an elevated capacity in metal development creating prices war, and the competition in an industry where technology consumption has been a way for conserving costs. Despite their field of expertise into metallic, Nucor Corp. has become a benchmark for both U. S. metallic industry and U. S. industry in general. Nucor is one of the fastest growing & most efficient steel manufacturers on earth. Regardless of the declining demand for material, Nucor's development has been phenomenal, from pouring its first batch of material in the 1960s to support in-house operations; the business is becoming one of the most notable five producers of metallic in the U. S.

Nucor has consistently achieved technological feats other metal companies thought impossible. Their hourly pay is among the lowest in the industry, yet they have the highest output per staff member of any metallic designer in the U. S. But can it continue to do this?

Financial Analysis

According to Nucor Organization Financial Ratios data for 2005 - 2006 provided in Desk 2

Profitability : Success ratios are used to determine a business's capacity to generate cash flow as compared to its expenditures and other relevant costs incurred throughout a specific time frame. For most of these ratios, having an increased value in accordance with a competitor's ratio or the same percentage from a prior period is indicative that the business does well.

Gross profit percentage FYE 12/06 increased by 14% reflecting a rise in sales for 2006.

Liquidity ratios remained almost the same reflecting the continuous ability of the company to meet its obligations and invest further in the new solutions adoption strategy.

Activity : Are ratios that evaluate a firm's ability to convert different accounts within their balance sheets into cash or sales Inventory turnover and total advantage turnover were positive and carefully in-line with earlier results. Nucor keeps the ability to draw class investors with its relatively strong financial performance, though down a little from past years. The increase in activity ratios is damaged by the upsurge in sales FYE 12/06.

Leverage : Ratios used to determine the financial leverage of the company to get an idea of the business's methods of financing or to measure its ability to meet financial obligations. There are many different ratios, but the key factors looked at include debt, equity, belongings and interest expenses. Leverage ratios decreased by 1% FYE'12/06 when compared with year 2005. Exactly the same reflects the power of the company to meet its commitments and the decrease in reliance on leverage to meet its strategic plans.

As globalization and acquisition is the target, the leverage ratios are important. Debt has continued to be relatively low as compared to assets and collateral, 23% and 44%respectively.

Liquidity : Are ratios used to ascertain a company's ability to repay its short-terms debt obligations. Generally, the higher the value of the proportion, the larger the margin of safeness that the company possesses to repay short-term debts. The existing strategies may necessitate short-term lending options to finance acquisition. With these ratio levels, Nucor is within the position to search for good interest rates. Total cash reserves for 2007 were about $1. 4Billion, which will directly aid a globalization and expansionistic strategy.

As conclusion, at the end of season 2006 Nucor is at very good condition economically and the financial performance is strong for the 2004-2006. The time frame in desk 1 shows how Nucor increased tons sold through the 12 months 2000- 20006 with increasing in sales and market talk about of these products.

SOWT Analysis

In this part which is merely but powerful tool for sizing up a company's reference talents and competitive efficiencies', its market opportunities, and the external risks to Nucor future well-being of Nucor Desk 2.

Nucor's strengths

Technology & Development: Is one of Nucor's key advantages due to the amount of resources they can save because from it. Nucor also offers established plant life with low pollution levels. The ability for Nucor to utilize this to its benefits allows them to be more competitive with the marketplace by substantially minimizing their production cost. In addition, it allows those to be green, which is a huge worldwide communal concern nowadays.

Continuous Inventions allows Nucor to hold its technological advantage on the competition. Nucor is definitely moving and always improving its business circuit by using continuing advancement. Nucor is an industry leader as it pertains to advancement.

Strong market position: Nucor Corporation has many different competencies that let it hold a solid position in the metallic industry. Included in these are its implemented new systems, successful management framework, strong established market relations, and the long successful existence on the market. The company has wonderful industry position and positive financial results for days gone by over 40 years.

Corporate Beliefs: One of Nucor's strategic talents is its beliefs of empowering its employees and minimizing the inefficient tiers that plagues corporate. Company composition is decentralized with minimal management levels.

Cost control: Nucor focuses on cost control. To be competitive in market with little product differentiation, price is the primary competitive factor. Among Nucor's center competencies is the fact that its skills in keeping costs low. Precisely the same is retained by adopting technological innovation that helps increase production at lower costs.

Nucor's Weaknesses

A weakness is something a company lacks, does inadequately, or a condition positioning it at a drawback available on the market and these are;

Missing features in key areas resulting in dependence on a volatile market location: Nucor encounters some significant weaknesses with its location. Nucor has plants, which can be found within the united states. The issue is that Nucor cannot effectively provide international markets as good as competitors having crops worldwide. The delivery of material to abroad countries is extremely expensive. Nucor is not in a great market position. Customers can go some place closer to buy their material essentially knocking off a big shipment cost. Nucor also does not give offers on volumes purchased. Nucor's most crucial weakness lies with its home market. With the united states Market being its primary customer bottom part, Nucor is not able to offset losses because of a varied location worldwide. Nucor happens to be in a Market where development is declining significantly.

Deficiencies in competitively important physical, organizational, or intangible property through high development and technology costs: The development policy followed with dependency on scrap metallic and energy prices and the volatility in these markets are the biggest weaknesses of Nucor. Huge capital requirements for enlargement and technological modernization are other weaknesses of Nucor.

Nucor's Opportunities

Identified best potential clients for progress and profitability through acquisitions: As for the US, steel economy, is still beat by cheap overseas metal, many companies which have continued to survive, specifically Nucor, have many great opportunities to capitalize on Asia market by 71% on sales growth and 76% sales development in Middle East market see table 2. As much US steel making companies get caught in personal bankruptcy, Nucor can acquire them, increase development capacity, and increase their economies of size.

Product diversification providing Good match with its financial and

organizational resource features: Another opportunity is more product diversification to lessen volatility in product markets. The higher all of the products offered, the less could be the dependence on a specific product or market source for income, the same will reveal as a strength encouraging sales and income era.

Joint endeavors: Joint endeavors can be one path for Nucor to accomplish international growth. You'll find so many more opportunities in this field especially when government polices allow.

Nucor's Threats

Competition: The largest threat the organization will encounter going forward is the declining of these market talk about and profitability caused by growing imports of cheaper overseas metallic. As globalization boosts, consolidation among companies improves allowing large companies to exist on the market with strong financial bases permitting them to be strong competition on the market. Competition will push Nucor to constantly spend money on new systems and even seek out new ways to remain a market innovator.

Increasing raw material cost: the rush to economies of scale through industry loan consolidation. Huge conglomerates are purchasing the small competitors due to overcapacity brought on bankruptcies. Not only does this limit the magnitude to which competition will drive costs down, but also it increases the price of recycleables. The metal industry does not contend on quality, service, or location of creation in an international industry. Simply put, price is everything in the metal industry, especially in a period of mass globalization.

Domestic market invasion: Nucor faces significant threats through the global market end at home. For example, in the global market the Chinese continue steadily to dump steel. The competition with Chinese metal designers hurts Nucor because there are extremely little government restrictions in China. Crops in China are included mills with large range pollution effects on the surroundings. Chinese companies do not have to pay significant fines and conform to environmental expectations like in the US.

On the home front Nucor encounters a danger from companies announcing plans to build making plants. That is a serious menace to Nucor because of the invasion of the local market by the exterior companies


Strategic Problem

Nucor faces a problem with the surplus capacity of metal production on a global scale. The high capacity has created a price conflict for metallic, as well as steel dumping into the U. S. market which has diminished profit during the last couple of decades. Another problem they face is insufficient creativity of technology. For Nucor to keep up, and continue to post profits in the future they need to identify areas to increase technology to lessen development costs and increase throughput.

Strategic Recommendations

Strategic Recommendation: A

With the high capacity existing in the market, the Nucor Company will have a problem selling material at their current prices. The first proposal is to strategically check out their current jv suppliers. It really is feasible to assume that there are now cheaper suppliers on a worldwide scale. In order for Nucor Corp. to reduce their production costs, they must find a way to decrease the price of their raw materials. Nucor has been around a jv with suppliers since the 1980's. When this relationship was in the beginning created these were able to develop at such an enormous rate anticipated to cheap supplies. With countries like China, and Korea becoming industrialized the ability for Nucor Corp. to capitalize on lower resource costs is grand. Without looking into the probability that Nucor's current joint ventures are not giving them the best package on metallic, Nucor might miss a essential part of catapulting them in to the next 10 years.

Strategic Recommendation: B.

Establishing technological command is definitely a key factor in the success of Nucor Corp. To allow them to continue to be competitive in market that has such excess capacity they must become more competitive technologically. They need to invest in technology that will either lower their current development costs, or greatly increase their current throughput. If they are able to lower their production costs, this will drastically help their success. Boosting their throughput allows them to keep up current levels of cost, while taking more steel into the market place. With more volume they'll be in a position to absorb the price war and unwanted capacity of the existing market.

Strategic Option Trade-Off Graph

Option A

Option B


-Lower creation costs,

-Better connections with foreign countries,

-Increased Earnings,

-Potential for innovative methods,

-Lower creation costs,

-Increase throughput,

-Hedge company for growth,

-Could move Nucor into top position in U. S. market,

-Would create competitive advantage for Nucor on many levels


-Negatively impacting on current connections with joint projects,

-Could make company bargaining electric power stronger

-Extremely high costs of new technology,

-May not achieve desired results,

-Could be difficult to use in old mills

Strategic Justification:

For Nucor, tactical option A would supply them with the fastest and most effective way to produce parting in the revolutionized metal industry. Costs would be minimal in obtaining information and going to with potential new suppliers. The gains from obtaining cheaper raw materials would include lower production costs, they will be in a position to increase their global reach possibly by partnering with a foreign company of a rapidly developing country, they would see an increase in net income, and there's a possibility for finding of new strategies to provide of raw materials for Nucor Corp.

Strategic Implications and objectives:

Competitive Advantage

With the low creation costs, Nucor Corp. will combine that with the already infamous hierarchy, positive work force, and already existing sound brand in the industry to compete at the very top level. With an entry into a new market it would be possible to Nucor to build up its brand in a new country and increase sales. Their gross earnings which observed a drop of over 3 million from 2006 to 2007 is likely to see a rise for 2008, but Nucor Corp. must understand that a strategic move would impact important thing profits greater than a little increase.

Managerial Implications

It was interesting to start to see the impact a highly profitable industry can have on new entrants. Nucor Corp. which has been at the forefront of the metal industry has already established numerous innovative techniques which have retained them strong. Because the revolutionizing of the metal industry in the past due 1980's there has been extremely rigid competition in the steel industry.

A company such as Nucor shows how with development, creativity, and a strong autonomy you can survive. Success, however, is not guaranteed and without continuously reshaping one's position it is not hard to see how a giant can quickly become obsolete.

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