Nucor in 2009

Topics: Profit, Mergers and acquisitions, Research and development Pages: 2 (336 words) Published: November 6, 2011
Nucor in 2009 Case summary

Nucor is one of the leading steel producers in the United States. The company was established as nuclear instrument and electronics manufacturer. Later it started steel production and gained new market share by expanding internationally. Despite worldwide economic crisis the company stayed profitable while its competitors went bankrupt. Strengths:

Highly motivated, innovative, productive and flexible employees. •Good financial results.
Strong relationships with customers.

Expanding through mergers and acquisitions.
Invest in research and development to get more efficient manufacturing technologies. •Increase its exports to other countries.

High production cost in comparison with Asian countries. •A lot of energy is required for production.
Company is dependant on raw materials suppliers.

Large competition.
Rising raw materials prices.
Threat of substitutes.

Problem: How can Nucor expand its market share, increase target market and stay competitive. Alternative 1: Invest more on advertising in order to improve the brand loyalty of the customers. Advantages: higher profits; products will become more popular; attracting new customers. Disadvantages: the benefits of this alternative are short-term. Alternative 2: Acquire some international companies. Advantages: increase in market share and production capacity; company will outperform not only its foreign competitors but also domestic steel companies. Disadvantages: diseconomies of scale if business becomes too large, which leads to higher unit costs. I recommend alternative 2. Company will improve its position in the global market and expand its market share. Nucor has financial ant technological capabilities to align its operations with acquired companies. Nucor has to decide which companies to acquire and discuss merging plans with those companies.

I recommend invest more in research and development to...
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