Nucor Corporation Analysis

Topics: Steel, Birmingham, Alabama, Strategic management Pages: 10 (2923 words) Published: August 20, 2009
Nucor Corporation: Competing Against Low-Cost Steel Imports

Group E

Charisse Cohen
Valarie Lindsey
Teshaunte Lyons
Billy Ray Richardson


Dr. Raman Patel – Professor

August 17, 2009
Nucor Corporation: Competing Against Low-Cost Steel Imports
Written Analysis

Executive Summary

This report discusses the challenges that The Nucor Corporation faces during this era of social and economic climate change. Using Porter's Five Forces Analysis and Four Generic Strategies, we will assess the steel industry standards as it relates to the strategies implemented by the Nucor Corporation. We will also assess what Nucor’s strengths and weaknesses are, and if they will be able to continue their current undertakings in this exacting environment.

Nasdaq’s financial analysis shows that Nucor has managed to excel in the steel industry for the past five years. The financial indicators also show that Nucor has implemented a strategic course that has allowed them to both develop and execute the right strategy for their company.

Our team will analyze if Nucor is capitalizing on its key strengths and the source of Nucor’s manufacturing distinction as well as its organizational structure and the threats from competitors who may be able to capitalize on Nucor’s weaknesses.

Nucor Corporation: Competing Against Low-Cost Steel Imports
Written Analysis


What are the primary competitive forces impacting U.S. steel producers in general and the producers like Nucor that make new steel products via recycling scrap steel in particular? Please do a five-forces analysis to support your answer.

The possible competitive forces that could have a tremendous impact on the steel industry are the threat of new entrants, bargaining power of suppliers, bargaining power of buyers, level of rivalry, threat of substitutes. Of the aforementioned forces, the primary competitive forces impacting the U.S. steel producers in general are the threat of new entrants, the bargaining power of buyers, the level or rivalry.

The Five-Force Model of Competition


The threat of new entrants, from foreign steel producers, is the most prevalent force that has lead to the demise of 29 companies in the steel industry between October 2000 and October 2001. The foreign steel producers began importing their steel products here into the U.S. steel market at prices so low that 25% of steel companies filed bankruptcy and approximately ½ of the U.S. industry was predicted to have closed before the industry conditions could recover. Foreign steel producers priced their products so low their bargaining power was high because they had the lowest prices in the industry, and steel is a commodity. The U.S. steel companies had to lower their prices to compete with the extremely low prices, which was indicative of the loss of 47,000 jobs in the steel industry (Thompson, 2007). As demand for steel products outside the U.S. reached an all time low, commodity steel prices dropped to the lowest it had been since 1998. This resulted in a global surplus of steel products totaling to 1 billion tons annually, which was astronomical in number compared to the level of production which totaled to approximately 750-800 million tons annually during the years of 1998-2000. With that said, the threat of entrants into the U.S. steel market in 2002 decreased in part from the Busch administration imposing hefty tariffs of up to 30% to a select number of steel products. As production of steel products continued in the U.S., prices increased to 50% of the prices in 2000 (Thompson, 2007). Nucor was affected by these same forces, but not to the degree as experienced by the industry. Nucor had a growth strategy that included new acquisitions, new plant construction, and continued plant upgrades and costs reduction efforts, and joint ventures. Due to...
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