Nucor case

Résumé du document

Throughout its history, the company has developed several capabilities that result in a competitive advantage. However, they need to focus on some of them which are essential to their development and put aside others. Firstly, the management structure is a big asset to be kept because they have a specific organization - decentralized decision making process, good transmission of information, little hierarchy - that enables them to outperform their competitors. Secondly, they have developed an attractive HR policy. Through empowerment, production related incentives, equalitarian treatment and high level training, Nucor has succeeded in committing its employees, and becoming one of the best workplaces in the steel industry, where strikes are frequent. It enabled Nucor to be on the one hand the second most productive steel company in the world, and on the other hand a reliable supplier. Lastly, as the rivalry in the steel industry is very high among the competitors, technological leadership is a crucial factor if one doesn't want to be technologically left behind.

Extraits

[...] Do both projects This is an ambitious and risky strategy, but due to the toughness of the sector, it is the only way to create a new competitive advantage for the future. The main drawback is the high cost of this strategy ($485 millions invested over few years). This is the strategy we decided to choose. III. Recommendations We decided to invest in the thin slab casting project and keep the joint venture for the following reasons. Reason technological leadership The thin slab casting is the future of the steel industry. Therefore, Nucor needs to be the first to implement this technology. [...]

[...] This would also cause Nucor to be a follower in the thin slab casting technology. 2nd strategy: invest in the Thin Slab Casting Investment in thin slab casting and stop the joint venture In this strategy, Nucor would stop the joint venture because the target is a niche market with small revenues and perspectives of growth. Thus, it would enable Nucor to focus all its resources on the thin slab casting project. However, stopping the joint venture would imply huge penalty fees to be paid, and would strongly damage the reliability image of the company in its industrial environment. [...]

[...] Nucor case I. Identify the key issues SWOT In a declining industry, to remain on top, Nucor needs to strengthen its capabilities, find out new segments and anticipate the changes in substitutes and technologies. Focus on the internal capabilities Throughout its history, the company has developed several capabilities that result in a competitive advantage. However, they need to focus on some of them which are essential to their development and put aside others. First, the management structure is a big asset to be kept because they have a specific organization - decentralized decision making process, good transmission of information, little hierarchy - that enables them to outperform their competitors. [...]

[...] Substitutes: change from scrap to iron ore? As scrap is the main raw material used, and Nucor anticipates an increase in the price of premium scrap, they need to find new inputs to lower their costs, for example direct iron ore. Also, as substitutes such as aluminum or plastics are emerging, Nucor needs to improve their inputs. This big shift will also deeply modify the facilities and the operation process, which results in new investments. II. Mobilize strategic choices 1st strategy: not investing in the thin slab casting In this strategy, we decide not to invest in the thin slab casting, to keep the Hazelett caster and the joint venture with Yamato Kogyo. [...]

[...] The technological risks are the obsolescence in 10 to 12 years, the fact that they can only keep the technological leadership during 2 years, and the uncertainties about the quality and the functioning of the plant. As far as S.M.S. is concerned, the supplier can sell the technology to any other competitors and the firm can't keep the technological improvements secret. Lastly, Nucor has to be aware of the increasing price in the raw material (scrap) and anticipate the upcoming substitutes (iron ore). IV. [...]