Internal Rate of Return and Slab Casting
N ucor
P reparation Questions
1. What have been the sources of Nucor’s competitive advantage so far (namely, up until 1986)? Do you think “business as usual” is likely to continue generating the same profits for Nucor? Why?
2. What are the technological risks associated with thin-slab casting? (What could go wrong and how bad would it be? You may find the spreadsheet posted with these preparation questions helpful here.)
3. What are the market risks associated with thin-slab casting? (What could go wrong and how bad would it be? You may also find the spreadsheet useful here.)
4. What are the financial risks associated with thin-slab casting? (What could go wrong and how bad would it be? Use the financial information in the case for guidance.)
5. If thin-slab casting works, do you think it is likely to generate a sustainable competitive advantage for Nucor?
6. Should Nucor commit to thin-slab casting?
C ase Analysis Question
M ake a recom m endation r egarding w hether Nucor should go forward with the t hin - slab casting project. In developing your recom m endation, you should a ddress s everal qu estions .
1 . F irst, what have been the foundations of Nucor’s com petitive advantage o ver the past decade? W h ich o f those (if any) are likely to help them s ucceed in the thin - slab casting venture?
2 . S econd, do you think that thin - slab casting will be a source of s ustainable com petitive advantage? In answering this, you m ust c onsider two things.
a . O ne, do you think thin - slab casting will be a profitable i nvestment? There is a spreadsheet available for download along w ith this project that will help you m ake a n a ss essm ent. This s preadsheet calculates the internal rate of return (IRR) of the new p roject using cash flow projections. The projections are based on a ssum ptions detailed in the notes below the m ain spr eadsheet.
O nce you download t he spreadsheet, you can exp erim ent with d ifferent
P reparation Questions
1. What have been the sources of Nucor’s competitive advantage so far (namely, up until 1986)? Do you think “business as usual” is likely to continue generating the same profits for Nucor? Why?
2. What are the technological risks associated with thin-slab casting? (What could go wrong and how bad would it be? You may find the spreadsheet posted with these preparation questions helpful here.)
3. What are the market risks associated with thin-slab casting? (What could go wrong and how bad would it be? You may also find the spreadsheet useful here.)
4. What are the financial risks associated with thin-slab casting? (What could go wrong and how bad would it be? Use the financial information in the case for guidance.)
5. If thin-slab casting works, do you think it is likely to generate a sustainable competitive advantage for Nucor?
6. Should Nucor commit to thin-slab casting?
C ase Analysis Question
M ake a recom m endation r egarding w hether Nucor should go forward with the t hin - slab casting project. In developing your recom m endation, you should a ddress s everal qu estions .
1 . F irst, what have been the foundations of Nucor’s com petitive advantage o ver the past decade? W h ich o f those (if any) are likely to help them s ucceed in the thin - slab casting venture?
2 . S econd, do you think that thin - slab casting will be a source of s ustainable com petitive advantage? In answering this, you m ust c onsider two things.
a . O ne, do you think thin - slab casting will be a profitable i nvestment? There is a spreadsheet available for download along w ith this project that will help you m ake a n a ss essm ent. This s preadsheet calculates the internal rate of return (IRR) of the new p roject using cash flow projections. The projections are based on a ssum ptions detailed in the notes below the m ain spr eadsheet.
O nce you download t he spreadsheet, you can exp erim ent with d ifferent