The Steel Industry
1. Discuss the trends in the steel industry and how it may impact Nucor’s strategy
According to Economy Watch, it has been stated, “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 the scenario started to change after the countries like Japan and China came to the fore” (Economy Watch, 2010). This is one of the major trends that Nucor was realizing when it came to the Steel industry around the world. Steel was becoming a vastly used product in every developed nation around the continent. This would have a great impact on companies who did and did not produce steel from their beginnings. Nucor began to produce steel after the new CEO was installed. Kenneth Iverson was appointed as the new CEO from a similar position he held with a company known as Vulcor, which happened to dabble in the steel industry before hand. Iverson realized he had great “ opportunities to capitalize on newly emerging technologies to produce steel more cheaply” (Thompson, Strickland, & Gamble, 2010) with his new company at his control. The steel industry was starting to evolve and there was a great chance that Iverson could get it to work with Nucor. “Nucor embarked on a four part growth strategy that involved new acquisitions, new plant construction, continued plant upgrades and cost reduction efforts, and joint efforts” (Thompson, Strickland, & Gamble, 2010). Nucor thought it would make smart business sense if they were to purchase other operation plants that were already capable of production that only needed to be minimally upgraded. According to Crafting & Executing Strategy, Nucor had over eleven separate acquisitions that help increase the different products they would be able to provide to the market as well as broadening their locations across the continental United States. The second part of their strategy was to capitalize on new plant construction that included the top of the line technological advancements in their new facilities. For example, Nucor had developed a new technology in one if their plants in Crawfordsville called “Castrip”, they were able to implement it into their own facility and made it available to the commercial industry across the world. “Nucor had exclusive rights to Castrip technology in the United States and Brazil” (Thompson, Strickland, & Gamble, 2010). This gave them the right to make money off of other companies who used this methodology of producing the specialized carbon steel product in these areas. Another area of their strategy that they were particularly focused on was implementing low cost production methods throughout their vast facility operations. Along with the intent to continue low cost implementation, “Nucor management also stressed continual improvement in product quality and cost at each one of its production facilities” (Thompson, Strickland, & Gamble, 2010). This part of their overall company strategy is to produce a high quality at a low price. When these two arts work together they are a very successful combination. By increasing the quality of the products accompanied with the cost cutting methods they are able to produce these items at a lower cost, which in turn the consumer sees the cost difference on their invoice. “The fourth component of Nucor’s strategy was to grow globally with joint ventures and the licensing of new technologies” (Thompson, Strickland, & Gamble, 2010). Nucor was really able to take advantage of the joint ventures by teaming up with different companies to enter into new markets like Australia. They were also able to put technologies together to help develop even more advanced technologies for the future. 2. Discuss the...
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