1. List and elaborate some strategic issues facing NUCOR.
Key strategic issues challenging NUCOR include legislation related to climate change, fluctuating cost and supply of iron ore and scrap steel, increasing amount of steel imports, production technology improvements and economic weakness. Changes in legislation could have severe impacts on the firm’s numerous production facilities and could be costly to become compliant. The fluctuations in both the cost and supply of iron ore and scrap steel directly impact the firm’s profitability because it is difficult to pass those costs on to the customers due to the price-driven level of competition in the steel industry. The rise of low cost steel imports increases the domestic U.S. supply which puts pressure on NUCOR. The firm must stay at the front of technological advances for the production and processing of steel in order to stay competitive. Common for many firms and industries, economic weakness is an issue that challenges NUCOR’s strategy because it can impact the demand for its reputable high quality steel products.
2. What are the key elements of NUCOR’s low cost strategy? What factors have helped NUCOR achieve a low cost position?
Key strategy elements for NUCOR:
Conservative financial strength
Team-based culture and decentralized operations
Innovation – information technology, speed of design process Close proximity to important customers
Financially stable employees – higher than average wages and non-discretionary incentive programs Employee empowerment
Honesty and openness within the company
No employee lay-offs
Factors that have contributed to NUCOR’s low cost position: Strong, long-term relationships with outside parties for services such as research and development, purchasing recommendations, advertising, public relations, and legal or environmental regulation compliance Stepping away from the steel industry’s tradition of equalized...
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