Nucor
-295275-371475Nucor Corporation
Competing against Low-Cost Steel Imports
110000110000Nucor Corporation
Competing against Low-Cost Steel Imports
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.
As mentioned in the case the main problem is the excess of steel in the steel market. Right now foreign steel is being dumped in the US. This results that supply exceeds demand which results off course in decreases of profit for many steel companies. This gives a lot of pressure to the companies and most of them are not able to survive the pressure and go bankrupt. Nucor adapted their strategy and made sure that they were able to survive the fierce competition. They did this by focusing on 2 main lines of business:- Production of Steel from recycled scrapped metals - Joist productionThe focus strategy made sure that Nucor Corporation became one of the biggest steel companies in the US. Looking at the five-forces of Porter the following can be concluded: Competitive forces is HIGH! When we look at the global competition the biggest rivalry is between the US industry and China’s steel industry. China is producing at a lower cost than the US and Europe. When we look at the economies of scale China is able to get more benefit over rivals. Trends of acquisition and merger is increasing for economies of scale to be able to compete with the competitor. Threat of new entrants is MODERATE! There are many reasons why the threat of new entrants is moderate. First of all you need large capital to enter the market and be able to compete with competitors that are good at producing economies of scale. Second point is the low switching costs for buyers of steel and not to forget the government rules and regulations that are imposed. This all increases the threat also because of the low
Competing against Low-Cost Steel Imports
110000110000Nucor Corporation
Competing against Low-Cost Steel Imports
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.
As mentioned in the case the main problem is the excess of steel in the steel market. Right now foreign steel is being dumped in the US. This results that supply exceeds demand which results off course in decreases of profit for many steel companies. This gives a lot of pressure to the companies and most of them are not able to survive the pressure and go bankrupt. Nucor adapted their strategy and made sure that they were able to survive the fierce competition. They did this by focusing on 2 main lines of business:- Production of Steel from recycled scrapped metals - Joist productionThe focus strategy made sure that Nucor Corporation became one of the biggest steel companies in the US. Looking at the five-forces of Porter the following can be concluded: Competitive forces is HIGH! When we look at the global competition the biggest rivalry is between the US industry and China’s steel industry. China is producing at a lower cost than the US and Europe. When we look at the economies of scale China is able to get more benefit over rivals. Trends of acquisition and merger is increasing for economies of scale to be able to compete with the competitor. Threat of new entrants is MODERATE! There are many reasons why the threat of new entrants is moderate. First of all you need large capital to enter the market and be able to compete with competitors that are good at producing economies of scale. Second point is the low switching costs for buyers of steel and not to forget the government rules and regulations that are imposed. This all increases the threat also because of the low