...Small Business & Entrepreneurship 35th Annual Conference 1 NUCOR CORPORATION 2008-2009 Thomas M. Box Pittsburg State University Pittsburg, KS 66762 Phone: 620-235-4582 Email: tbox@pittstate.edu Warren D. Miller Beckmill Research, LLC Drawer 1158 Lexington, VA 24450-1158 Phone: 540-463-6200 Email: wmiller@beckmill.com ASBE 35th: Proceedings Page -401- Association for Small Business & Entrepreneurship 35th Annual Conference 3 ABSTRACT Nucor Corporation 2008-2009 is a strategic management case appropriate for first-year MBAs or seniors in an undergraduate capstone course. The focus of this case is the strategy of the most successful steel-maker in the United States as of 2008/2009. It has a difficulty level of five. Secondary issues include Porter’s Five-Forces Framework of industry analysis and the effects of the global economic slowdown in the last quarter of 2008 and the first quarter of 2009 on Nucor’s business. The case is designed to be taught in a single 75-minute class and is expected to require two to three hours of outside preparation by students. In order to facilitate students’ understanding of the economics of accounting figures, we have rearranged the balance sheet so that “earning assets” equal “permanent funding sources.” For real wealth to be created, the average return on earning assets must equal or exceed the weighted average cost of capital demanded by permanent funding sources. Nucor has been the most successful American steel maker for more than...
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...an Analysis of Case #10 Nucor Corporation and prepare a (4-5 page report). Discuss the trends in the steel industry and how it may impact Nucor’s strategy. The trend had been major steel production using blast furnaces. New technology using arc furnaces adopted by Nucor led to increased production and cost savings. The arc furnace technology took less labor, increased production, and was considered the new most cost-effective strategy among the steel industry. It was Nucor’s decision to adopt this process and be the first to introduce this new process to the United States. Many steel companies were going out of business due to reduced demand for steel and failing economies across the globe in the late 90s into the 2000s. Nucor chose to buy these failing plants when easily convertible to their production lineup. This also in many cases was a cheaper route than building new plants. The acquisition strategy proved to be essential as these failing firms were already setup for steel production at mass quantities and Nucor was able to inherit their ties and partnerships as well as their presence in their surrounding geographical area. The constant drive for efficiency and cost effective production was another strategy chosen to increase competitive advantage, market share, and ultimately become the number one steel producer among heavy competition. Discuss the organizational structure and management philosophy at Nucor. The management structure of Nucor was very different than...
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...Nucor’s strategy. Nucor Corporation started as a Nuclear Corporation of America. The latter was a highly diversified and marginally profitable company; the company products included instruments, rare hearths, semiconductors and construction. One of the company potential acquisitions was Coast Metals, a family owned producer of specialty metals. When the acquisition fell through, Nuclear hired one of the top engineers as a consultant to recommend other acquisition targets. Ken Iverson who was the president and CEO of the Nucor Corp. had strong technical skills and general management experience. The Nuclear Corporation of America was involved in the nuclear instrument and electronic business. The company went through many years of severe financial strains; he was responsible for the supervising the joist operations as well as the research, chemical and construction segments. Shortly after Iverson became the CEO of the company, he concluded that the best way to put the company on sound footing was to exit the nuclear instrument and electronics business and rebuild the company around its profitable South Carolina based Vulcraft subsidiary which was in the steel joist business. So Iverson moved the company’s headquarter from Phoenix, Arizona to Charlotte, North Carolina, in 1966 and proceeded to expand the joist business with new operations in Texas and Alabama. The company adopted the name Nucor Corp. in 1972, than he initiated a long term strategy to grow Nucor into a major player...
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...Small Business & Entrepreneurship 35th Annual Conference 1 NUCOR CORPORATION 2008-2009 Thomas M. Box Pittsburg State University Pittsburg, KS 66762 Phone: 620-235-4582 Email: tbox@pittstate.edu Warren D. Miller Beckmill Research, LLC Drawer 1158 Lexington, VA 24450-1158 Phone: 540-463-6200 Email: wmiller@beckmill.com ASBE 35th: Proceedings Page -401- Association for Small Business & Entrepreneurship 35th Annual Conference 3 ABSTRACT Nucor Corporation 2008-2009 is a strategic management case appropriate for first-year MBAs or seniors in an undergraduate capstone course. The focus of this case is the strategy of the most successful steel-maker in the United States as of 2008/2009. It has a difficulty level of five. Secondary issues include Porter’s Five-Forces Framework of industry analysis and the effects of the global economic slowdown in the last quarter of 2008 and the first quarter of 2009 on Nucor’s business. The case is designed to be taught in a single 75-minute class and is expected to require two to three hours of outside preparation by students. In order to facilitate students’ understanding of the economics of accounting figures, we have rearranged the balance sheet so that “earning assets” equal “permanent funding sources.” For real wealth to be created, the average return on earning assets must equal or exceed the weighted average cost of capital demanded by permanent funding sources. Nucor has been the most successful American steel maker for more than...
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...NUCOR STEEL Nick Hartnett & Matt Ketellapper FNCE 4820 Professor Madigan 4/7/2011 “The safest, highest quality, lowest cost, most productive, and most profitable steel and steel products company in the world.” - Nucor Mission Statement Executive Summary Nucor Corporation (“NUE” or “the Company”) is the second largest steel manufacturer and fabricator in the US. Key Drivers of Value 1. 2. 3. 4. Increasing steel spot price Successful economic recovery Government protection Cost control mechanism Key Risks 1. 2. 3. 4. Steel & scrap prices Cyclicality Exposure Foreign competition & government policy Other raw materials prices DCF Valuation Discounted cash flow valuation produced a stock price of $66.22 per share, indicating that Nucor is undervalued. A bull market scenario could reach a stock price of $120.62 and a bear market scenario could reach $28.85 per share. Multiples Analysis Multiples analysis based on P/CF, P/E, P/BV, P/S, EV/EBITDA produced an average stock price of $52.74, indicating that NUE is currently undervalued. The strongest multiples were P/CF and EV/EBITDA. Base Volume G-rate Composite price G-rate Total Capacity G-rate 10 year Average Growth Stock Price Bear Volume G-rate Composite price G-rate Total Capacity G-rate $ 4% 2% 4% 66.22 Volume G-rate Composite price G-rate Total Capacity G-rate Stock Price Bull $ 8% 11% 9% 258.04 Stock Price $ -4% -4% 0% 28.85 Volume G-rate Composite price G-rate Total Capacity...
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...ASSIGNMENT #4: HRM ISSUES/DIVERSIFICATION STRATEGIES Introduction This paper presents the analysis of the Nucor Corporation case (Thompson, Strickland, Gamble, 2010, Nucor Corporation, p. C-193). Nucor is one of the largest producers of steel in the United States with a production capacity that exceeds 26 million tons. Nucor was among the first steel companies in the United States to use electric arc furnaces to melt recycled steel. In 2007, Nucor recycled nearly 10 million cars in its production processes, the equivalent of one SUV every four second (Nucor.com). Trends in the Steel Industry Steel Industry Trends are not at all static in this industry and is a very dynamic. The country that is producing the maximum amount of steel may not be in the first position in the coming years. Analysis of the Steel Industry Trends show that from the period starting from 1910 until the year 1960, the first position in terms of producing the largest amount of steel in the whole world was captured by United States of America. During this period, it was observed that almost half of the total steel production around the globe was produced by USA. However, the scenario started to change after the countries like Japan and China came to the fore. Again, in the recent years, India as well as Brazil has shown tremendous performance in the steel production side. According to the recent Steel Industry Trends, China is the largest steel producing nation. However, it has also been seen that the...
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...Case study for Nucor steel company Case studies bring interesting, real-world circumstances in the study of business fields. Managers make different decisions in their companies, and each decision has a direct influence in revenue, costs, and profits. In analyzing the case study of Nucor steel company, different central firm issues, firm goals, the constraints to improving the firm and the relevant alternatives to counter the problems are addressed. To grow in steel market, metal producers are increasingly expanding territories, not only to better manage input costs, but also to secure access to strategic raw materials. With improving economies’ growth is expected to boost desire for many to purchase the product in the medium term. Steel producers and mini-mill companies are situated in the midst of a very competitive environment in both domestic and global scale which adversely affects their profitability. This competition among steelmakers is to capture a significant portion of the steel market in light of the fact that, the global supply of steel far exceeds the demand for steel products (Thompson, 207). The first competitive forces impacting steelmakers is the force to drive down the profitability of steel industry, steelmakers are primarily affected by the abundant steel supply versus demand, which depresses the market price of steel as a commodity. Competition among steelmakers is to lower product prices in order to capture a significant portion of potential customers...
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...Assignment #4: HRM Issues/Diversification Strategies: Nucor Corporation Strategic Management, Business 599 Introduction In this paper, we will present an analysis of Nucor Corporation in Case # 10 (Arthur, Strickland, & John, 2010). The paper will discuss the trends in steel industry and how it may impact Nucor’s strategy. In addition, the paper will describe the organizational and management philosophy at Nucor. Furthermore, the paper will identify 3 HRM issues related to strategy implementation and recommend actions to address these issues. Recommendation whether a related or unrelated diversification should be used will also be discussed. Finally, we will be looking at Organizational structure issues the company would need to address to implement the strategy. Trends in Steel Industry and Its Impact on Nucor’s Strategy An analysis of the steel industry trends shows that from the period starting from 1910 till the year 1960, the first position in terms of producing the largest amount of steel in the whole world was captured by United States of America. During this period it was observed that almost half of the total steel production around the globe was produced by USA. But things started to change after the countries like Japan and China came to the fore. Again, in the recent years, India as well as Brazil has shown tremendous performance in the steel production industry. According to the recent steel industry trends, China is the largest steel producing...
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...GBA 490 Nucor Individual Written Case Major Issue 1: Nucor is forfeiting market share to foreign steel producing companies who are exporting goods into the United States. In 2011 direct steel imports from foreign competitors accounted for 22% of the U.S. market despite significant unused steel making capacity. Many foreign steel producers have costs at or below that of Nucor. These low production costs allow for foreign companies to undercut the prices offered by Nucor. This in turn leads to the reduction of jobs in the steel industry in the United States. Due to differences in exchange rates and foreign companies receiving government subsidies outside steel producing companies are able to offer unusually low prices for their steel products. Until the World Trade Organization enforces regulations to limit these unfair trade practices, or the U.S. government imposes higher tariffs on imported goods Nucor will continue missing out on large portions of market share within the United States. Major Issue 2: The level of earnings that Nucor is enjoying is nowhere near the level that they had been making before the financial crisis of late 2008. They were in the red in 2009 losing roughly 293 million dollars and have since been creeping steadily back up to a mere 778 million in net earnings in 2011. This is roughly half of the earnings they were reaching from 2004-2008 as they were netting and average of 1.5 billion dollars per year. The steel industry is one that is very volatile...
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...HR Strategy Evaluation: Case Study of Nucor Corporation Executive Summary: Human resource management in the alignment of business strategy is essential to achieve firm’s goals and objectives. Nucor is a US based steel manufacturer and known to its innovation with low cost and high productivity. Nucor’s success is explained through its effective HR strategies of lean management structure, teamwork, less formalization, recruiting and reward. All sixteen operating facilities of Nucor work independently with only four management levels that help to achieve its business strategy of low cost and innovation. Rewards are paid based on employee productivity. However, at Nucor productivity targets are achievable and less than industry averages. Moreover, rewards are also awarded onto team performances that ranges from 8 members to 20 members. This stimulate team member to assist each other to achieve such goals. There is no job description and no performance appraisal as Coblin HR manager thinks that it is wastage of time. He also attributed absence of job description to the changing nature of work at Nucor. At Nucor employees are selected primarily on the basis of ability to work with coworkers with less supervision. In short Nucor HR strategies of lean management, decentralization, rewards and less formalization assist to achieve its business strategies of low cost, innovation, productivity and high performances. However, criticisms are also made to some of Coblin’s strategies....
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...in the United States. Throughout this expansion, the relationship between management and labor soured. The Nucor Corporation broke into the industry with a workforce that consisted of farmers, mechanics, and other motivated workers. The company experienced various pains, eventually won community trust and respect within the industry. Trends in Steel Industry and how it may Impact Nucor’s Strategy “Due to growing demand for scrap metal, its cost has become increasingly volatile in the 1990s. In 1994, for example, prices climbed as much as $50/ton to $165-170/ton while 10 million tons of American scrap were exported to offshore customers. In 1996 prices reached $200/ton, and were expected to climb, but instead declined to $170-180/ton by the end of 1997” (Boyd & Grove, p. 6, 2000). Like many industries, the slumping global economy has significantly impacted demand in the steel industry as well. As the automotive and construction industries recover, the steel industry should begin to see a gradual upswing in demand. However, the steel industry will encounter difficulty trying to maintain growth revenues greater than 15% until other industries recognize major recoveries. Nucor faces challenges of low demand, foreign competitors, strained labor relations, and union issues. Any attempt to place trade barriers on steel imports could have global repercussions. Nucor may be compelled to reduce costs, increase controls over its manufacturing strategy, and compete on the basis...
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...Running Head: NUCOR CORPORATION: COMPETING AGAINST LOW-COST STEEL IMPORTS Nucor Corporation Sheri Johnson Dr. James Glenn BUS 599-014016 November 28, 2010 Assignment 4 Abstract This paper will explore articles that I researched regarding Nucor Corporation as well as research that I conducted from online articles and material that I read from the book. This paper will discuss the trends in the steel industry and how it may impact Nucor’s strategy; discuss the organizational structure and management philosophy at Nucor. Identify three HRM issues related to strategy implementation and recommend actions to address these issues. I will be given my own recommendations for related or unrelated diversification that the company would need to address. 1. The trends in the steel industry Nucor Corporation is the second-largest steel producer in the United States and has had net sales of $4.6 billion in 2000. Nucor recycles approximately 10 million tons of scrap steel. It operates in 9 states and produces carbon and alloy steel in bars, beams, sheet, and plate; steel joists and joist girders; steel deck; cold finished steel; steel fasteners; metal building systems; and light gauge steel framing. The company emerged from near Bankruptcy in 1966 to become one of the fastest-growing steel. The steel industry is a dynamic, innovative sector, which is constantly adapting and refining itself to become more competitive in the market. The industry does this...
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...LVMH: Diversification Strategy into Luxury Goods Strategic Issues By 2002, Moet Hennessy Louis Vuitton was the world's largest luxury products company, enjoying annual sales of 12.2 billion euros. LVMH carries the most prestigious brand names in wine, champagne, fashion, jewelry, and perfume. Upon entrance of this luxury product industry, LVMH was aware that they produced products that nobody needed, but that were desired by millions across the world. This desire in some way fulfills a fantasy, making consumers feel as though they must buy it, or else they will not be in the moment, and thus will be left behind. The LVMH business portfolio began to take shape in 1987 with the merger between Louis Vuitton and Moet Hennessy which was a four billion dollar merger. Over the course of time, LVMH has acquired over 50 luxury brands, such as Donna Karen, Fendi, and Sephora. They called it, "a collection of star brands and rising stars." LVMH found this industry to be timeless and modern, highly profitable, and very rapid growing. Despite all of the above mentioned, LVMH did experience some bumpy times. Some of these times were induced through internal problems, while others were caused by externalities, like Sept. 11. With such a wide range of product offerings, LVMH was on top of the industry in certain aspects, but has room for growth in other areas. One instance in particular nearly caused a division in the company. Hennessy believed the company should focus on wine, spirits...
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...way to create economic and political independence. The people who are opposed to drilling for oil in the U.S. are saying that doing so will hurt the environment. The United States should ease limits on natural gas exploration and clear a backlog of 5,000 drilling permit applications to lower fuel prices, industry leaders said. The United States has gas supplies that might last 177 years "if the restrictions can be lifted," James Hackett, chief executive of gas producer Anadarko Petroleum Corp., said at the National Press Club in Washington. Speeding approvals for drilling on federal lands and building liquefied natural gas import terminals would help industries that need competitively priced energy, said Daniel DiMicco, CEO of steelmaker Nucor Corp. "At the end of the day, we've got to make a decision," Mr. Hackett said. "Will we continue to be the only nation that doesn't fully develop its own resources?" (Mills, 2006, p. 5) America can solve its own energy crisis by drilling on our own...
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...financial practices have served us well in the past and are serving us well today. As a result, their financial position remains strong despite the negative effects on our business of the current downturn in the economic cycle. NET SALES Net sales to external customers by segment for 2010 and 2009 were as follows: (in thousands) |Year End December31 |2010 |2009 |%change | |Steel mills |$10,860,760 |$7,159,512 |52% | |Steel products |2,831,209 |2,691,322 |5% | |Raw materials |1,814,329 |1,076,964 |68% | |All other |338,329 |262,498 |29% | |Total net sales to external customers |$15,844,627 |$11,190,296 |42% | Note:Net sales for 2010 increased 42% from the prior year. The average sales price per ton increased 13% from $637 in 2009 to $720 in2010, while total tons shipped to outside customers increased 25%. [pic] [pic] 25 In the steel mills segment, production and sales tons were as follows: (in thousands) |Year End December31 |2010...
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