Nucor - Report

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Nucor Steel Corporation, Company and SWOT Analysis.
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  Nucor Corporation What does a SWOT analysis reveal about Nucor’s situation? Does Nucor have any core or distinctive competencies? In the case of Nucor Corporation there are several factors that need to beaddressed while doing its SWOT analysis. Nucor steel is made up of approximately 21,000 employees and their main goal is to take care of their customer which is stated in their mission statement. Nucor has remained tobe an innovative company focusing on finding out and implementing newtechnologies to cut costs and become more productive.Nucor’s corporate directional strategy distinctively comprises growthconcentration strategies (enveloping vertical and horizontal). Ken Iversoninitially focused Nucor in the joist business before incorporating verticalgrowth through backward integration into steel mills as their core business toreduce supply costs; forward integration into miscellaneous steel productindustries e.g. fasteners, bolts and bearings; and strategic alliances in Nucor e.g. CVRD. Collaterally, Iverson expanded Nucor through various acquisitions(such as Sumitomo Corp and Auburn Steel) to fuel horizontal growth.   Strengths TechnologyInnovation and technology has been the integral strength for Nucor Co. Theyare always into searching for new mediums and technology in the productionside. The major benefit that they get from it is the amount of resources thatthey save and the improved efficiency levels.Continuing InnovationsThey also have plants with low pollution levels. The ability for Nucor to usethis to its advantage allows them to be more competitive with the market bysubstantially lowering their production cost. It also allows them to beenvironmentally friendly a huge worldwide concern these days. ContinuingInnovations allows Nucor to continue to hold its technological edge on thecompetition. Nucor is always moving and always improving its business cyclethrough the use of continuing innovation. Nucor is an industry leader when itcomes to innovation.Lean ManagementCorresponding to their lean business style, Nucor is constantly striving for improvement. A constant goal to reduce production cost is always a priorityand ultimately helps to lower costs of steel to buyers. Additionally, a focus ontreating employees well helps reduce employee turnover and increaseproductivity.Employee wages provide another example of Nucor’s respect for employees.Nucor’s employees are often paid up to three times the local averagemanufacturing wage. All in all, the high level of employee respect helpsNucor to employ workers that care about their job and thus work harder andare more productive then others in outside manufacturing firms.Joint Ventures and AcquisitionsThe very recent acquisition of the David J. Joseph Company, one of theleading scrap companies in US has allowed Nucor to basically own its primarysupplier of scrap metal along with 2,000+ rail cars for transportation betweenbusiness entities. It has essentially guaranteed Nucor an in house supplier. Weaknesses Location: Congregated itself in USA major weakness for Nucor is that it has congregated itself in US. All of the14 plants of Nucor are located within different states in US. The major problem that arises due to this is that Nucor cannot effectively cater tointernational markets as compared to its competitors who have plantsworldwide. Distribution and shipping costs are very high in the steel industryand shipping it to overseas countries is a lot difficult and expensive for Nucor.Nucor needs to re-position itself in the market to effectively compete with itscompetitors. Secondly, Nucor does not also gives deals on its quantitiespurchased.  US Real estate and Auto-marketNucor also does not give deals on quantities purchased. Nucor’s mostsignificant weakness lies with its domestic market. With the US market beingNucor’s primary customer base, Nucor is not able to offset losses becauseof a diversified location worldwide. This is the current large problem Nucor faces along with a few others that will be mentioned later in the threatssection. Nucor is currently in a Market where growth is declining significantly.Real Estate sales are down substantially because of the sub-prime mortgageproblem. Nucor has to also be concerned with the failing domestic autoindustry. The production of the big-three has substantially declined over thepast 5 years and is not close to rebounding anytime soon.Focus on CompetitorsThe case shows that Nucor have always focused on themselves which hasyet to cause detrimental ramifications. However, just like in the military,manufacturing companies have to pay attention to their competitors just asmuch, especially with the escalating threat from global competitors. Opportunities Hismelt TechnologyNucor has a significant opportunity to continue innovating with the HismeltTechnology or liquid iron project in Australia. If successful it could help giveNucor additional advantages to manufacturing and reduce pollution. This is asignificant project because it will allow for Nucor to continue spreading itsbrand name as an innovator in the industry. It will also allow them to offsetoperating cost.Rail Car NetworkNucor also has a possible opportunity with the 2,000+ rail cars acquired withthe purchase of DJJ Company. Nucor could use these cars to setup a moreeffective delivery system for Scrap metal and could also lease cars to movescrap to customers. ã The rise of the demand on steel products as the result of the disastroushurricane Katrina ã Vertical Integration with the nuclear plants to enable the low costenergy to produce steel products ã Expansion on the foreign markets ã Exploiting new technology in steel productions to lower the costs,modernization ã Horizontal integrations or acquisitions to improve market position ã New big construction projects - floating city, big bridges, new shipsconstructions  Threats Trade ThreatNucor faces significant threats through the global market and at home. In theglobal market the Chinese continue to dump steel. The competition withChinese steel makers hurts Nucor because there are very little governmentregulations in China. Plants in China are integrated mills with large scalepollution impacts on the environment.Domestic Market InvasionChinese officials do not regulate this to the extent US officials do. Chinesecompanies do not have to pay significant fines and conform to environmentalstandards like in the US. Many Chinese steel plants still burn coal for anenergy source to produce steel. These coal burning steel factories are causeabout 400,000 premature deaths a year.18 Particles of sulphur compounds,carbon and other by-products of coal combustion srcinating from China havebeen found in California, Oregon, and Washington.18 Even plants who useelectric power in china are directly linked to coal based power plant.Local CompetitorsOn the home front Nucor faces a threat from ThyssenKrupp AG, a Germancompany announcing plans to build a manufacturing plant in Alabama.19 Theplant is expected to open in 2010. ThyssenKrupp also made away with taxbreaks and a $400 million incentives package approved by the legistlature.18This is a serious threat to Nucor because of the invasion of the domesticmarket by the outside German company. Nucor itself has yet to leave the US.Environmental Laws ã Throughout Nucor’s existence they have had a few issues withenvironmental and political regulations. ã For example, in 1998, Nucor’s mill in Crawfordsville, Indiana, was citedfor alleged violations of federal and state clean-air rules. Specifically,the U.S. Environmental Protection Agency showed concerns about thestate’s decision to allow the company to start construction of the millbefore an environmental review was completed. ã Concerns about the approval of the facility built in Hertford Countyposed environmental threats as the plant was located on the banks of the Chowan, on one of the most sensitive stretches once home to thestate’s vibrant river-herring fishery. ã Nucor received criticism due to incentives that were given by the stateto build a mill in North Carolina. Many were upset about the $155million in tax breaks the state was giving Nucor, despite the promised300 jobs they were going to offer (Barnes and Tyler, 259-260). Theseregulations and concerns provide a threat to Nucor. A bad reputationis promoted and stakeholders become upset about the concerns. Porters 5 Forces Analysis An industry environment analysis through Porters five forces of competitionmodel helps to better outline the current state of the industry and representthe intensity of competition within it. The model is broken up into five parts—
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