BA 4910 Nucor Essays

Submitted By Slreed1974
Words: 1492
Pages: 6

1. Context Key Question
What is the context for the issues of this case?
Industry – Steel Company
1985 7th largest steel company in America
Revenues of $758 million in 1985
2000 11 million tons of steel produced
Revenues of nearly $4.8 billion
Nucor’s biggest rival was a steel company in Europe that bought several steel manufacturers in the US to create Mittal Steel. Nucor Steel Background
Nucor derived from a called Nuclear Corporation of America in the 1950’s and 1960’s
1964 - F. Kenneth Iverson appointed President and CEO
1966 - Moved company headquarters from Arizona to Charlotte, NC.
1968 - management decided to integrate backwards into the steel making industry
Benefits – Supplying its own steel requirements
1972 – the company adopted the name Nucor Corporation
Fortune 500 Company
Largest mini-mill steel maker in the world
Steelmaking capacity is nearly 25 million tons per year
Recycle nearly 1 ton of steel every 2 seconds

Over-capacity steel making industry
1986 the industry produced over 130 million tons of steel, the outlook declined in per capita consumption.
Consumer demand decline
Slowing economy, particularly in auto sales
Economic recession and terrorist attack
2000 and 2001 economic recession
9-11-2001 terrorist attack affect the entire steel industry
Import pressure
International competitors importing steel into the US market at cut-rate prices
High labor and energy costs
High labor costs and energy costs presented a problem when dealing with the mining of iron ore.

2. External Analysis Key Questions: (4)

What are competitive and environmental forces impacting the industry?
How are the forces shaping the industry?
What factors are most critical to competing successfully in this industry?
Mittal Steel USA
U.S. Steel
AK Steel Group
Along with these three there were several lesser-sized steel-makers with plants that competed directly against Nucor.
Foreign competitors such as – China, Japan and India

Nucor has several mini-mills that recycle scraps to produce crude steel slabs for the main producing steel plants.
Electric companies
The coal industry
Natural gas for fuel

Construction companies
Automotive industries (second biggest consumer)
Appliance makers
Oil and Gas companies

Substitute Products
The biggest issue with substitute products is not the product itself but it is the Overseas Steel producers flooding the steel industry market with lower priced goods
The use of composites – Composites do not compare to the strength of steel
Aluminum is now being used as an alloy New Entrants
Barriers to entry is at a medium level – but the entry level cost has significantly gone down over the years.

3. Internal Analysis Key Questions: (3)

What is the organization's competitive advantage and related strengths?
What is the organization's competitive deficiencies and related weaknesses?
What are the organization's vision, mission, and short-term objectives?
In 2000 Nucor embarked on a four-part growth strategy that involved ne acquisitions, new plant construction, continued plant upgrades and cost reduction efforts.

Nucor Slogan – “Nucor – It’s Our Nature”

Short Term/Long term Objectives
Strategic Acquisitions – to make acquisitions that would strengthen Nucor’s customer base, geographic coverage, and line-up of product offerings
Commercialization of new technologies and new plant construction
The drive for plant efficiency and low-cost production
Global growth via joint adventures

SWOT Analysis Strengths
The world’s first installation of direct strip casting of carbon steel
Hedges and raw material surcharges to pass increases in costs onto the customers
Building state-of-the-art facilities in the most economical fashion possible
Offered the first ever the first-to-market with new steelmaking technologies
The ability to grow globally with joint ventures and the licensing of new technologies