Nucor Case Analysis

Topics: Management, Steel, Strategic management Pages: 5 (1223 words) Published: February 22, 2010
Nucor Corporation – Case Study and Recommendations on Strategy Nucor Corporation – Case Study and Recommendations on Strategy Introduction
Nucor Corporation: Competing against Low Cost Steel imports deals with leading steel manufacturer Nucor Corporation and trends in the steel industry affecting Nucor. Steel manufacturing is an old business, but is currently facing the fast changes associated with new technologies, the rise of globalization, and changes in cost and efficiency. To date, Nucor has maneuvered business cycles and market challenges to maintain a positive profit margin in every quarter since 1966 (Thompson, 2008). The company’s strategy of decentralized structure, focus on disruptive technology, unique employee engagement and emphasis on reducing costs has been key to this success. This case analysis will take into account the many successful aspects of Nucor’s historic business strategy against current economic and internal conditions and provide recommendations with respect to Nucor’s future.

SWOT Analysis
In making recommendations respecting the future direction for Nucor Corporation, it is important to understand both the internal and external operating environments of the company. A SWOT analysis enables conclusions to be made about the company’s current situation (Thompson, Strickland, Gamble, 2008). The SWOT analysis in Table 1 quickly portrays the environments Nucor operates within.

Table 1
|Strengths |Weaknesses | |Strong market position |Geographical concentration | |Increasing production capacity |Increasing expenses | |Strong technological focus |Recent leadership turnover | |Strong historical management direction from Iverson | | |Employee relationships | | |Opportunities |Threats | |HIsmelt technology |Cyclical nature of industry | |Joint Venture with CVRD |Consolidation in the global steel industry | |Inorganic growth opportunities |Overcapacity in the global steel industry | |Strong Asian steel consumption projected |Increasing raw material costs | |Iron / scrap replacement alternatives |International competition (lower price) | | |Easy substitution of products between sellers |

SWOT elements arise from the understanding the industries dominant economic features, as identified by Thompson, Strickland, and Gamble (2008). Through understanding the aspects of product innovation, vertical integration, market size and growth rate, and degree of product differentiation we are able to better assess the competing forces and thus identify the key SWOT elements: threats and weaknesses. Understanding these two components allows companies to fix weaknesses and defend against threats (Thompson, Strickland, Gamble, 2008). The desire to address weaknesses and threats is the primary driver for strategy change.

What Nucor Does Well
To date, as evident in the seven year financial and operating summary for Nucor presented by Thompson (2008), Nucor has deftly maneuvered competitive challenges to become one of the most profitable steel producers in the United States. Understanding Nucor’s key success factors in addressing past threats and weaknesses is important as they may be applied to the threats and...
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