Premium Essay

Nucor at a Crossroads

In:

Submitted By kodin82
Words 1363
Pages 6
Nucor at a Crossroads Case Analysis

In 1986, three distinct segments defined the U.S. steel industry; integrated steel mills, mini-mills, and specialty steel makers. The integrated mills have the capacity to produce a maximum of 107 million tons of steel per year, mini-mills produced a maximum of 21 million tons of capacity a year, and the nation’s specialty steel makers could produce a maximum capacity of 5 million tons of stainless and specialty grades of steel. This leads to a total capacity of 133 million tons of production per year. In 1986, the market consumed only 70 million tons of steel, leaving 33 million tons unused. Nucor is at a crossroads. It faces a saturated market suffering from significant overcapacity. Nucor’s only opportunity for growth seems to be to expand into the production of flat sheet metal. However, to compete in that area, Nucor would need to invest in a very risky new technology, a thin-slab casting plant that, if successful, would allow Nucor to manufacture flat sheet metal with a low minimum efficient scale and a low marginal cost of production. This case will examine Nucor’s history, the impacts of entering the thin-slab casting business, the advantages Nucor would reap, and whether they should build the new thin-slab casting plant.

Looking at the business landscape of the steel industry, it is amazing to see how well Nucor has done considering the industry is so competitive and has relatively low profitability. Using Porter’s model, the threat of rivalry is high due to weak domestic demand, excess global capacity, a maturing industry, low switching costs, high exit barriers, rising operating costs (increasing raw material prices), and more than 5 comparable competitors. The threat of entry is low due to high barriers to entry (economies of scale have been achieved and high capital requirements), growth and

Similar Documents

Premium Essay

Nucor at a Crossroads

...Nucor at a Crossroads MGMT XXXX-XXX Nucor’s Historic Performance, Competitive Advantage, and Five Forces Analysis With roots dating back to 1904 in the automobile manufacturing industry, Nucor’s business strategy has morphed many times over the course of the past century in response to struggling sales and unrealized business strategies. Since F. Kenneth Iverson’s appointment as Nucor’s President in 1965, however, Nucor has performed very well. With a focus on efficiency, Nucor is committed to minimizing bureaucracy and maximizing performance and productivity via the utilization of an open-door/continuous improvement/ entrepreneurial culture, a compensation scheme premised on performance-based incentives, and — last, but not least —commitment to technological advancement. With this approach, in an industry with 36 different companies, Nucor enjoyed the second largest market share in 1986, with 16 plants and an annual production capacity of 2.1 million tons of steel. In 1985, Nucor was ranked the most productive steel-maker in the United States and the second most productive in the world, averaging 981 tons per employee, per year. Nucor managed to achieve this success using a low-cost strategy, which proved to be particularly suitable in the highly competitive, commodity-like steel industry. Despite its positive performance, competition in the U.S. steel industry was keen in 1986. At that time, the industry had sustained seven straights years of decreasing domestic...

Words: 3362 - Pages: 14

Free Essay

Nucor at a Crossroads

...STANDER III Nucor en la encrucijada El 7 de diciembre de 1986, F. Kenneth Iverson, presidente y consejero delegado de Nucor Corporation, esperaba, en la oficina principal de su compañía en Charlotte, Carolina del Norte, la llegada de una delegación de SMS Schloemann-Siemag, líder fabricante germano-occidental de equipos para la obtención de acero. Iverson debía decidir si su compañía erigía una nueva planta siderúrgica para comercializar la nueva tecnología de colada continua de planchón delgado desarrollada por SMS. Los cálculos preliminares señalaban que sólo la fábrica costaría unos 280 millones de dólares, y que los gastos de puesta en marcha y el capital circulante, unos 30 millones de dólares cada concepto, elevarían el coste total a unos 340 millones de dólares, casi el patrimonio neto de Nucor. El éxito en la comercialización de la nueva tecnología representaría para Nucor la introducción en el sector de planos de acero, que suponía la mitad del total del mercado de acero en Estados Unidos. No obstante, el procedimiento SMS de colada de planchón delgado era una de las diversas tecnologías que competía en el mercado, todavía no lanzada comercialmente, y que sería probablemente superada, al igual que el resto de la tecnología, por otras nuevas tecnologías antes de fin de siglo. Además de sopesar todos estos factores, Iverson debía revisar el estado de la competencia en la industria del acero estadounidense y la posición específica que ocupaba Nucor. El mercado...

Words: 13759 - Pages: 56

Premium Essay

Cola Wars

...00 January 25 , h.11.20 January 25th, h.11.40 January 25 , h.12.20 January 25th, h.12.40 January 25 , h.13.00 January 25 , h.13.20 th th th th th th th th th th th th th th Name SALICE Valentina MARRONE Emanuela SPAMPINATO Giulia REITANO Boris D’ARRIGO Roberto ARDITA Giuseppe CARIOLA Elena FILIPPELLO Gloria FILOCAMO Andrea ALI’ Andrea RIZZO Emanuele ARENA Annamaria AIELLO Sebastiano SPORTARO Prospero CONTI Maria Cristina LUISI Paola FAILLA Stefania ALAIMO Massimo Maria AYARI Neila CALVAGNA Giorgia CRUCITTI Alessia Case study Cola Wars continue: Coke and Pepsi in 2006 Google Inc. Nucor at Crossroad Caterpillar Tractor Co Komatsu Ltd. Crown Cork and Seal Apple Inc. in 2010 Cola Wars continue: Coke and Pepsi in 2006 Google Inc. Nucor at Crossroad Caterpillar Tractor Co Komatsu Ltd. Crown Cork and Seal Apple Inc. in 2010 Cola Wars continue: Coke and Pepsi in 2006 Google Inc. Nucor at Crossroad Caterpillar Tractor Co Komatsu Ltd. Crown Cork and Seal Apple Inc. in 2010 Seminar guidelines 1. Each student has 20 minutes for presentation. You are required to provide a Powerpoint presentation (please download your Powerpoint file before presentations start) 2. Presentation must be organized as follows: - first, a summary of the case must be given; then - answer to each question (see below) must be provided. The answer must make explicit reference to the relevant parts of the theory and of the data provided by the case study. 1 QUESTIONS: 1. Coca Wars...

Words: 809 - Pages: 4

Premium Essay

Nucor

...Nucor at Cross Roads - Swot Hbr Case Week 3: Nucor at Crossroads Strengths * Strong leadership & progressive company culture => decentralized management philosophy, egalitarian benefits, performance based compensation, strong emphasis on customer service and quality, and technological leadership through consistent investment in R&D and modernization of plant & machinery * Strong financials => consistent growth in sales and profits during the last 3 years (1983 to 1985) with the most recent year (1986) resulting in a sales figure of $755Mn (down $3Mn from last year) and net earnings of $46Mn. * Flat structure => leading to improved communication (formal & informal) between corporate and factory and amongst factories (interplant) => leading to improved efficiencies / productivity * High employee morale, low staff turnover compared to industry average => a culture that promotes Is this essay helpful? Join OPPapers to read more and access more than 650,000 just like it! get better grades team work, high levels of commitment and hard work => compensation schemes designed to reinforce the relationship between pay and performance and to reward production groups rather than individual performance. Also attractive incentive and reward schemes for employees (eg. bonuses, stock options, health coverage, college education for children of employees). * Nucor’s geographic spread (by 1986 Nucor had 16 plants in 10 locations...

Words: 299 - Pages: 2

Free Essay

Caso Nurcor

...Caso: “Nucor at a crossroads”.  Teoría de Juegos. Sección 6.  Camila Alejandra Arce Cucoch Petraello.                    1. ¿Cómo explica el éxito de Nucor en el pasado? Recuerde los determinantes de la  rentabilidad, analice y llegue a una conclusión.  Para  explicar  el  éxito de  Nucor en  el  pasado, analizaremos  la  industria, su eficiencia empresarial y  su  visión  integradora,  como  determinantes   de  la  rentabilidad  entre los  años 1972 y  1986. En primer  lugar, la  industria  no  es  muy  atractiva,  ya  que  el  producto  es  muy  fácil  de  imitar,  los  proveedores  presentan   un  alto  poder  al  ser  un   material  escaso,   existen  barreras  por  la  alta  inversión  inicial   y  las  normas  ambientales  y  gubernamentales  que  se  deben  aprobar,  por  otro  lado,  la  competencia  presenta  una  empresa   dominante  (Nucor)  que  cuenta  con  economías   de  escala.  De  todas  formas,  para  Nucor  esto  no  presenta  un  mayor  problema  gracias  a  su  alto  grado  de diferenciación y  liderazgo  en costos. La  constante inversión,  compra de  activos  (mayoritariamente  nuevas  plantas)  y diversificación  de productos, hacen  que lidere  en  estos  ámbitos  (Anexo  6).  Su  buen  posicionamiento  se  puede  deducir  tras  analizar  el  anexo  7,  que  muestra  un  fuerte   y  constante  incremento  en  el  valor  de  las   acciones  en  comparación  con  su  competencia. En segundo  lugar,  la  eficiencia  empresarial  que  presenta...

Words: 1517 - Pages: 7

Premium Essay

Nurocor

...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...

Words: 2687 - Pages: 11

Premium Essay

Nucore

...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...

Words: 2687 - Pages: 11

Premium Essay

Nucor

...Nucor Corporation (A) We are a cyclical business... Basically when you are at the peak of the cycle—times are good, interest rates are low, people are building—our margins increase. When we go to the trough, of course, the margins are squeezed. But over the last 25 years Nucor has never had a losing quarter. Not only a losing quarter, we have never had a losing month or a losing 1 week. —John D. Correnti, President and CEO, Nucor In 1998, Nucor was a Fortune 500 company with 6,900 employees and had sales of $4.3 billion in steel and steel-related products. Its chairman, F. Kenneth Iverson, had headed the company for more than 30 years. During his tenure, the steel industry faced a number of problems, including foreign competition, strained labor relations, and slowed demand for steel (related in part to the substitution of alternative materials). Despite these industry challenges, Nucor’s sales during Iverson’s tenure grew at an annual compound rate of about 17 percent per annum. Selected comparative financial data are shown in Exhibit 1. In different years, both Iverson and Nucor CEO John Correnti were named Steelmaker of the Year by New Steel magazine. History Nucor traced its origins to auto manufacturer Ransom E. Olds, who founded Oldsmobile and, later, Reo Motor Cars. Through a series of transactions, the company Olds founded eventually became the Nuclear Corporation of America, a company involved in the nuclear instrument and electronics business in the 1950’s and...

Words: 5761 - Pages: 24

Premium Essay

Case Study Management Control System

... | NUCOR CORPORATION (A & B) As of 1999, Nucor Corporation( had been the most innovative and fastest-growing steel company of the last three decades. As an example of how a knowledge machine works, we see Nucor as a far more interesting company than, say, Andersen Consulting or McKinsey, because unlike professional service firms whose only output is knowledge, Nucor’s end product is steel, a tangible non-differentiable commodity. Yet, as we describe below, for much of the three decades from 1970 onward, Nucor had been a knowledge machine par excellence. Since the late 1960s the U. S. steel industry has faced numerous problems, such as substitution from other materials, foreign competition, slowing of steel demand, and strained labor relations and has reported one of the poorest profitability and growth records in the American economy. Yet, despite operating in a fundamentally troubled industry, during this time period, Nucor enjoyed an annual compounded sales growth rate of 17%, all generated organically. Furthermore, the company’s profit margins were consistently well above industry medians, and average annual return to shareholders exceeded 20% (see Box 1 for a business profile of Nucor Corporation). Nucor achieved this phenomenal and sustained success by excelling at a single task: creating and mobilizing knowledge in order to become, and...

Words: 6458 - Pages: 26

Premium Essay

Nucor

...University of Pennsylvania ScholarlyCommons Master of Science in Organizational Dynamics Theses 1-31-2007 Organizational Dynamics Programs Nucor Corporation: A Study on Evolution Toward Strategic Fit Regina Gordin University of Pennsylvania, regina.gordin@gmail.com Submitted to the Program of Organizational Dynamics In the Graduate Division of the School of Arts and Sciences In Partial Fulfillment of the Requirements for the Degree of Master of Science in Organizational Dynamics at the University of Pennsylvania. Advisor: Everett Keech This paper is posted at ScholarlyCommons. http://repository.upenn.edu/od_theses_msod/1 For more information, please contact repository@pobox.upenn.edu. NUCOR CORPORATION: A STUDY ON EVOLUTION TOWARD STRATEGIC FIT by Regina Gordin Submitted to the Program of Organizational Dynamics In the Graduate Division of the School of Arts and Sciences In Partial Fulfillment of the Requirements for the Degree of Master of Science in Organizational Dynamics at the University of Pennsylvania Philadelphia, Pennsylvania 2006 NUCOR CORPORATION: A STUDY ON EVOLUTION TOWARD STRATEGIC FIT Approved by: ________________________________________________ Program Director ________________________________________________ Advisor ABSTRACT For much of its century long history, Nucor Corporation and its predecessors displayed turbulent financial performance. Several attempts at a strategic realignment proved unsuccessful, and in...

Words: 18185 - Pages: 73

Premium Essay

Corporate Strategy and Hr Strategy

...Krishnan, Rishikesha T. “Linking Corporate Strategy and HR Strategy: Implications for HR Professionals,” In R. Padaki, N.M. Agrawal, C. Balaji and G. Mahapatra (eds.) Emerging Asia: An HR Agenda, New Delhi: Tata McGraw-Hill, 2005, pp. 215-223. Linking Corporate Strategy and HR Strategy Rishikesha T. Krishnan Associate Professor of Corporate Strategy Indian Institute of Management Bangalore Recognition of the link between corporate and business strategies and strategies related to the people function is not new. McKinsey’s 7-S framework that emphasised the need for the alignment of seven organisational variables (superordinate goals, strategy, structure, systems, staff, skills, and style) for organisational effectiveness is about twenty years old. But, during this time, the importance of people to organisational success has, if anything, only multiplied as businesses have become more knowledge- and technology-driven. As a result, even strategy gurus, who typically talk about esoteric topics like transnational corporations and integrated networks, today emphasise the importance of the “individualised corporation”. 1 In this paper, we attempt to integrate multiple perspectives on the links between corporate strategy and human resources strategy with the objective of giving HR professionals working within an organisational context some pointers on how they can contribute to better integration of corporate and business strategy with HR strategy. Corporate and Business Strategy Corporate...

Words: 3258 - Pages: 14

Premium Essay

Nucor

...University of Pennsylvania ScholarlyCommons Master of Science in Organizational Dynamics Theses 1-31-2007 Organizational Dynamics Programs Nucor Corporation: A Study on Evolution Toward Strategic Fit Regina Gordin University of Pennsylvania, regina.gordin@gmail.com Submitted to the Program of Organizational Dynamics In the Graduate Division of the School of Arts and Sciences In Partial Fulfillment of the Requirements for the Degree of Master of Science in Organizational Dynamics at the University of Pennsylvania. Advisor: Everett Keech This paper is posted at ScholarlyCommons. http://repository.upenn.edu/od_theses_msod/1 For more information, please contact repository@pobox.upenn.edu. NUCOR CORPORATION: A STUDY ON EVOLUTION TOWARD STRATEGIC FIT by Regina Gordin Submitted to the Program of Organizational Dynamics In the Graduate Division of the School of Arts and Sciences In Partial Fulfillment of the Requirements for the Degree of Master of Science in Organizational Dynamics at the University of Pennsylvania Philadelphia, Pennsylvania 2006 NUCOR CORPORATION: A STUDY ON EVOLUTION TOWARD STRATEGIC FIT Approved by: ________________________________________________ Program Director ________________________________________________ Advisor ABSTRACT For much of its century long history, Nucor Corporation and its predecessors displayed turbulent financial performance. Several attempts at a strategic realignment proved unsuccessful, and in...

Words: 18185 - Pages: 73

Premium Essay

Hr Policyn

...Krishnan, Rishikesha T. “Linking Corporate Strategy and HR Strategy: Implications for HR Professionals,” In R. Padaki, N.M. Agrawal, C. Balaji and G. Mahapatra (eds.) Emerging Asia: An HR Agenda, New Delhi: Tata McGraw-Hill, 2005, pp. 215-223. Linking Corporate Strategy and HR Strategy Rishikesha T. Krishnan Associate Professor of Corporate Strategy Indian Institute of Management Bangalore Recognition of the link between corporate and business strategies and strategies related to the people function is not new. McKinsey’s 7-S framework that emphasised the need for the alignment of seven organisational variables (superordinate goals, strategy, structure, systems, staff, skills, and style) for organisational effectiveness is about twenty years old. But, during this time, the importance of people to organisational success has, if anything, only multiplied as businesses have become more knowledge- and technology-driven. As a result, even strategy gurus, who typically talk about esoteric topics like transnational corporations and integrated networks, today emphasise the importance of the “individualised corporation”. 1 In this paper, we attempt to integrate multiple perspectives on the links between corporate strategy and human resources strategy with the objective of giving HR professionals working within an organisational context some pointers on how they can contribute to better integration of corporate and business strategy with HR strategy. Corporate and Business Strategy Corporate...

Words: 3258 - Pages: 14

Premium Essay

Business Strategy

...University of Illinois at Urbana-Champaign College of Business Department of Business Administration BADM 449: STRATEGIC MANAGEMENT / BUSINESS POLICY (FALL 2015) Section J: Tuesday – Thursday 11:00 A.M. – 12:20 P.M. BIF 2041 Name: Shinjinee Chattopadhyay Visting Assistant Professor Office: 465 Wohlers Hall Office Hours: Tuesday, 2-3.20 pm (Or by appointment) Office Phone: 217-300-1033 Email: schattop@illinois.edu Website: Maintained on Illinois Compass 2g INTRODUCTION AND COURSE OBJECTIVES Strategic management deals with decisions that fundamentally influence the direction of the organization and effective implementation of the direction chosen. Strategic management addresses the organizational structure, resources & capabilities, and the strategic positioning of the organization to create, capture, and sustain competitive advantage. In addition to economic value creation, management also must make decisions concerning the distribution of this economic value across stakeholders. In BADM 449, you will develop your skills at: • Understanding how firms create, capture, and sustain competitive advantage; • Analyzing strategic business situations and formulating strategy; and • Implementing strategy and organizing the firm for strategic success. Success ultimately depends not only on the soundness of the formulated strategy, but also on effective implementation through appropriate organizational choices. This capstone business course focuses...

Words: 5629 - Pages: 23

Premium Essay

Business Strategy Evolution

...The Wharton School of the University of Pennsylvania Management 223 - Business Policy & STRATEGY Spring Semester, 1999 Course Description and Syllabus Instructors: Phanish Puranam (PP) & Michael G. Jacobides (MGJ) Office: 2061(PP) /2055(MGJ) SH-DH (Management Dept. Suite) Tel: 898-1231 (PP) / 898-1224 (MGJ) Email: puranam@management.wharton.upenn.edu jacobides@management.wharton.upenn.edu Class Hours: Tuesdays and Thursdays 12:00 to 1:30pm Office Hours: By appointment (PP) Course Overview This course focuses on strategic management and strategic decision making and examines issues central to the long-term and short-term competitive position of the company or division / business unit. Students are placed in the role of key decision-makers or their advisors and asked to solve problems related to the development or maintenance of the competitive advantage of the firm. We start the course by looking at strategy at the level of the business unit, which is the fundamental level for competitive analysis. The perspective taken is of a manager in a given unit with particular assets, capabilities and competitive challenges. We look at industry analysis, examine the sources of competitive advantage, and explore generic strategies: How can we analyze the competitive environment, and what are the basic options for business-unit level strategy? What are the bases of competitive advantage? What is the nature of the value chain? Following...

Words: 5591 - Pages: 23