1. Strategic Issue or Problem Statement Problem Statement Right now Nucors main problem is an excess of steel in the market.

Foreign steel is being dumped in US, the market is flooded and supply exceeds demand. This decreases the steel companies profits and puts pressure on them, forcing some of them into bankruptcy. 2. Explanation of #1 Nucor faces a problem with excess capacity of steel production on a global scale. The high capacity has created a price war for steel, as well as steel dumping into the U.S. market which has diminished profit over the last couple of decades. Another problem they face is lack of innovation of technology. In order for Nucor to maintain, and continue to post profits in the future they must identify areas to increase technology to lower production costs and increase throughput. 3. Three Reasonable Alternatives:

Strategic Option: A International Expansion - Joint venture with steel companies in India Advantages: Use countrys resources and raw materials, The risk arises of US market cyclical characteristics can be overcome by spreading the risk into larger market base and the excessive capacity can be allocated abroad It could be less risky than open a plant in that country. Nucor has the choice to outsource the research and development of the technology to its partner. Disadvantages:

Might have disagreements with the companies in India Technological advances in different country cannot be done in short time and it involves enormous investments.

It could be risky and expensive at first Maintain special locations in which the steel company can use to store the old metals and scraps

Strategic Option: B.- Technology Investment Invest in new technology and Research and Development on different isotopes of iron (FE) to discover steel with better properties and preferably to produce using less capital and human resources to increase productivity and thus drive the price down. Advantages: Accepted licensing, patent for 5 or 10 year - for these years just Nucor Corporation will be the only one company in the world the produce that steel Nucor Corporation could sell the patent to the different company in India, for example, in order to generate fast profit Infinite possibilities how to implement the new discovery to produce the new metal to fit and improve upon the human living and working conditions. Would create competitive advantage for Nucor on many levels

Disadvantages: Extremely high costs of new technology, May not achieve desired results, Could be slow as a process

Could be difficult to implement in old mills

Alternative C Domestic Expansion Acquisition of steel mini-mills in more states Advantages: Reduce the final products cost, as using own raw materials Open more jobs on the local level, Competitiveness staying ahead of domestic rivals Fast results

Disadvantages: Mini mills competitors were increasing dramatically and advancing rapidly in technical sophistication, Technological advances cannot be done in short time and it involves enormous investments, Hiring additional employees, Finding locations to place the mini-mills

4. Strategic Choice Option A Joint venture with steel companies in India 5. Explanation of Strategic choice

Nucor needs to find cheaper global suppliers and make joint-ventures with them to ensure the availability of raw materials which will be included in suppliers balance sheet rather than Nucors balance sheet. It will help Nucor to maintain low inventory. With such high capacity in the market, the Nucor Corporation will have a difficult time selling steel at their current prices. Nucor has been in a joint venture with suppliers since the 1980s. When this relationship was initially created they were able to grow at such a vast rate due to cheap supplies.
3

Including steel companies from India will decrease the cost of the final products. To Joint Venture in India is going to be reasonable for Nucor because that countrys supply of eucalyptus trees that could be used for fuel. In order for Nucor Corp. to reduce their production costs, they must find a way to decrease the cost of their raw material.

Alternative A better than B - Alternative A is better than alternative B, because to keep the low cost is the number one priority for the company to survive against the dumping steel prices imported in the US. Joint venture with global suppliers (very reasonable in India) will be more beneficial for Nucor Corporation instead of investment in new technology because India can use its own resources and hence the final product will cost less. Once, the company supplies its raw materials with lower prices than the final product will be more competitive. Implementing an Alternative B will be very costly for the company and is more risky because in case Nucor did not discover that steel with better properties, that would lead to failure and loss for the whole company.

Alternative A better than C Alternative C to open mini mills in more states Nucor Company needs more funds. For example, to open one mill the company spends $200 million. Nucor already acquired 29 steel companies in the United States. Although these new facilities have a greater capacity, their operational cost remains high. In order for the Nucor Corporation to be more competitive and reduce the final steel products price, the better choice will be to joint venture with steel companies in India. There are also a lot of natural resources as well as eucalyptus trees which can be used as fuel. Due to the fact that the mini- mills competitors were increasing dramatically and advancing rapidly in technical sophistication, to joint venture in different country will be less risky and more saver option.

Nucor Mission Statement Nucor Corporation is made up of approximately 20,000 teammates whose goal is to "Take Care of Our Customers." We are accomplishing this by being the safest, highest quality, lowest cost, most productive and most profitable steel and steel products company in the world. We are committed to doing this while being cultural and environmental stewards in our communities where we live and work. We are succeeding by working together. (Nucor.com) If Nucor continues on with such high capacities in the market, they will ultimately have a difficult time selling steel at their current prices. Strategic Option A involves investigating Nucors current joint venture suppliers and determining whether it is possible to find cheaper suppliers in India. Doing so is critical because decreasing raw material cost is the most important factor in reducing their production costs. Nucor has been in a joint venture with suppliers for the past few decades, and they were able to grow rapidly initially because of the cheap raw material cost, hence cheap production costs. In order expand on an international scale, and especially go to India will be more beneficial to the emerging regions of the world; Nucor must take advantage of that and execute mergers, acquisitions and joint-ventures global partners. India is the second fastest growing Asian economy after China. Due to its growing infrastructure and relatively stable macro economic future, India proves to be the best location for the next phase of Nucors growth. Joint venture will be acceptable under the conditions that the joining company is subservient in strategic and tactical decision making and that Nucor has control over the reinvestment of earning from the venture.

A worthwhile financial objective is to further increase their profit margins in steel products that they specialize in, such as the joist business and steel decking. These areas, and similar niche products, will allow them the capital needed to develop future technology on a global scale. Instead of purchasing the equipment from other countries, Nucor needs to be the leader. They can profit from their own new developments.
5

The financial culture that Nucor Corporation instills is focused in long term health of the organization. For example, debt is avoided, start-up costs are not capitalized but rather are expensed in the current period, and depreciation and write-offs lean towards the detriment of short-term earnings.

Strategic objectives should include positive measures to enter new markets with their successful no-frills business model. This plan must be tempered with keeping a focus on their core business so as not to stray to far from what their expertise is founded on. Despite having a population on par with China's, India only produces about 1/10th of the steel. Currently producing about 55.2 million tonnes anually, India would need to produce about 300 million more tonnes annually to achieve the normal per-capita steel consumption of most industrialized countries. Although its relatively low production, the Indian steel market has grown rapidly over the last 20 years. Therefore, with expansion internationally, Nucor Corporation will take advantage of low production cost and at the same time be closer to the growing markets.

6. Implementation of Choice Building a capable organization:

o Organizational Structure Decentralized system Four management layers:

Chairman/Vice Chairman/President Vice President/Plant General Manager/ Department Manager Supervisor

The company's success comes from its more than 12,000 employees. Nucor seeks to hire and retain highly talented and productive people. Nucor has a simple, streamlined organizational structure to allow employees to innovate and make quick decisions. The company is highly decentralized, with most day-to-day operating decisions made by the division general managers and their staff. Corporate staff was kept to a minimum. Their policy, to keep corporate staff to the minimum, it will be following in the future with one exception, to the Vice President responsibilities will be added the functions of International Business Executives. That strategy in human resources is reasonable in terms of keeping the same organizational structure. Iverson believed that the managers closest to the action should be given the responsibility to develop plans to allow the plants, and the firm, to adapt to any changes in the environment. To the plant-level managers will have the authority to make and implement the decisions necessary to make these adaptations. Each plant manager will give a brief monthly report to headquarters and received a report comparing the divisions' performance. Major expenditures and changes will be make to Analyze steelmaker companies outside US and initiate a plan to acquire or build joint-ventures. The top managers must accurately assess the cost and benefit of each possible acquisition which will involve considerations of transaction cost and knowledge transfer. Corporate managers must determine how to direct and operate their firm beyond its original boundaries. Using the knowledge of acquired firm managers who have different organizational and industry experiences might be challenging and difficult for corporate managers, but it will broaden corporate knowledge about running business outside US.

o Core Competencies: Building steel manufacturing facilities economically and operating them productively. Benchmarked organizational style and empowering division managers.

1st company to introduce computer inventory management systems and engineering process.

Sophisticated in purchasing, sales and management and beat competition by its design effort. o Organizational Structure Chart

Chairman

Vice chairman

President

Vice president

Plant General

Manager

Department Manager

Supervisor

Professionals

Employees

Budget (in millions) Item 1. 2. 3. 4. 5. 6. Sales Cost of Product sold Administrative costs Interest Expense New Equipment Transportation expenses Total Profit $ 2, 418.43 $3,096.76 $4, 111.39 2007 $16, 226.43 10, 500.00 603.5 4.5 1, 200.00 1 500.00 2008 $19, 471.72 11, 200.20 714.56 10.2 2, 250.00 2,200.00 2009 $24, 339.65 12,500.30 815.36 12.6 3,500.00 3,400.00

Nucors Policies and Practices:

Aggressively pursue and implement cost-saving technologies Employ incentive compensation that motivate above-average output Empower plant employees Create a low-cost culture Offshore joint ventures Benchmarking

In their development, Nucor Corporation benchmarked three main processes: 1) Fastener steel segment from GKN plc, UK

Fasteners include hardware such as hex and structural bolts and socket cap screws, and are used extensively in an array of applications, including construction, machine tools, farm implements, and military applications. After a year of studying the fastener market and available technology, Nucor built a new fastener plant in Saint Joe, Indiana. Productivity was substantially higher than comparable US plants, and a second fastener plant came on-line in 1995. The fastener plants receive most of their steel from the Nucor Steel division. With a production capacity of 115,000 tons -- up substantially from 50,000 tons in 1991 -- Nucor has the capacity to supply nearly 20 percent of this market. 2) Second Benchmarking Process open integrated mini mills and produce thick steel slabs from Bethlehem Steel, Pennsylvania

To produce 10 inch thick steel slabs, Nucor Company, needed to roll sheet steel in a minimill, but their small electric arc furnaces simply did not have the same capability as the blast furnace used by an integrated mill.

3) Third benchmarking process, Nucor used thin-slab casting technology developed by SMS Schloemann- Siemag, a West German company. Staff engineers from over one hundred steel companies visited SMS to explore this technology, but Nucor adopted the process first, obtaining the rights from SMS by signing a nonexclusive contract with an additional technology flow-back clause. Designing Support system Use of mini-mill technology Backward integration Modernizing the existing plants Technology management

10

 Reward System Nucor's employees were paid according to their productivity. Employees were given certain production goals, and their pay depended on realizing these goals. Though the hourly wages at Nucor were only $9 per hour compared to the industry average of $18 per hour, yet, Nucor employees earned more than their counterparts in the industry due to the company's reward system which linked pay with productivity. According to analysts, Nucor's incentive plans not only encouraged the employees to perform well at individual level but also encouraged them to excel at the team level as the incentive plans took the performance of the teams into consideration. A non-unionized employment system gave Nucor the ability to have a very flexible workforce. An employee could work on various parts of the assembly line which would not be possible with a strict union based workforce with specific job descriptions. All employees within the firm have same fringe benefits and only one group of insurance. The compensation is directly linked to performance of the employee. The benchmarks for each specific job decided the bonus for the workforce. If the task was completed 30% earlier than expected than the workforce would receive a 30% bonus. Almost all of Nucors employees salaries were 75% of the industries norm but bonuses often could reach up to 90%. This was not only a unique way of Nucor differentiating how they managed their company but it was widely praised from inside the company. Typical production workers earn $8 or $9 in base pay plus an additional $16 per hour in production bonuses and averaged $60,000 in 1996 making them the highest paid employees in the industry. Since Nucor locates their plants in rural locations, employee salaries are well above the norm for any specific area, making Nucor jobs highly desirable. Nucor also offers several other benefits to help motivate and retain employees. Some other incentives that Nucor employees can enjoy are participating in the company's monthly stock investment plan. Nucor will match up to 10% of the contribution. Nucor's Service Award Plan

11

grants employees common stock in five-share increments for each five years of continuous service. The company has also disbursed special $500 bonuses (four times in the last 20 years) in exceptionally good years. They also provide four years worth of college tuition support (up to $2,000/year) for each child of each employee.

Culture Nucor is a company whose strong organic approach to their organizational culture has made them successful. Their short lines of communication have been a major factor in the positive achievements made by the company. Nucor has gone through many changes in their organizational culture since the creation of the Reo Truck Company in 1897. The company has gone from a decentralized informal method of organization to todays more structured system. Despite all the changes, the company continually kept a fairly consistent corporate culture. The single approach towards employee benefits, welfare, compensation, group performance based incentives, job rotation to ensure all employees know all work and an approachable, communicative, transparent management helped making a unique organization culture of motivated, productive and innovative workforce at Nucor. Employees were never laid off and they were none unionized. Nucor provided its employees job security and they earned more than a unionized worker and their salaries were more than 85% of the people of state where they worked. Employees kept informed on performance of company, charts put all over showing returns on assets, bonus pay offs. Although later in 21st century with Nucor acquiring new firms and entering strategic alliances, had a trouble adjusting some of the new firms to their culture of non unionized because so many firms in U.S are non unionized. A key ingredient in any effective corporate culture is people. Nucor differs dramatically from their competitors. The new culture at Nucor, us versus them clearly implies management and

12

workers united against competitors. Comments such as those by one melt-shop supervisor who described a sense of personal responsibility not only for his own job but also for the firm. He described his position at Nucor as being much like running his own company. The former CEO of company, Ken Iverson explained that Nucors success is being based on a technology used and organizational culture. Leadership

According to the case study, Nucor was forced to use low cost leadership strategy due to the price competitiveness among the competitors and standardized nature of the product. Firms use inventory management system to reduce operations and inbound logistics cost. Nucor plants were linked electronically to each other production schedule, has far fewer production steps, far less capital investment where each plant operate in just-in-time inventory mode resulting in reducing the operation costs and inbound logistic cost of the company. Furthermore, in order to ensure and control on time delivery Nucors Vulcraft facility manages a fleet of trucks for efficient outbound logistic. As a leader Ken Iverson had brilliant philosophy in the still industry: worker productivity. Worker productivity is measured by the number of labor hours per ton. During the seventies and eighties, Nucor achieved worker productivity of four labor hours per ton compared with the national average of eight per ton. Even foreign competitors were capable of just six labor hours per ton. Ironically, Nucor was widely known in the industry as one of the highest paying steel employers. It seemed that that the worker incentives, and the non-unionized nature of the workforce were a great strategic fit for Nucor. For years, Nucors leader, Iverson, was well aware that the companys strengths lay in the construction and operation of steel products plants and continued to leverage these skills, while divesting the companys final non-steel related assets. Now, the new leader, DiMicco follows the same concepts established by his predecessor as continue to drive company to success.

13

7. Standards to measure the Implementation The implementation process will be measured through a matrix

2007 ROE (per share) Net Income Sales 17.75 1,471.95 $16,226.43 (10%)

2008 20.22 1, 830.99 $19,471.72 (20%)

2009 25.25 1, 950.40 $24,339.65 (25%)

8. Time Line

Expectations

2007

2008

2009

Designing Support System

Designing the Reward System

Changing the Organizational Structure

Benchmarking

Increasing Organizations capability

14

Policies and Procedures

Information & technology

Measuring Implementation Process

ROI

Net Income

Sales

Customer Satisfaction

Market Share

Expand Product Line

9. Conclusion on the implementation

Competitive advantage
15

The steel industry has an extremely high competitive nature. Within the U.S. there are a few major steel competitors. Outside of the country, foreign competitors are prevalent. Nucors number one competitor within the U.S. economy is U.S. Steel, and their main foreign competitor is the worlds largest steel producer Arcelor Mittal.

The Nucors Corporation competitive advantages are: Building steel manufacturing facilities economically and operating them competitively Continuous innovation, modern equipment, individualized customer service and producing at competitive prices. Mini-Mills Large applicant pool to hire from because they are seen as an attractive place to work, allows them to be very selective for who they hire Have a willingness to take risks.

Sustainable for three years -

o New Initiatives to Sustain Growth

Nucor should further leverage its sustainable competitive advantage by expanding more aggressively, taking the following steps:

To build an additional iron carbide plant to increase the availability of low-cost raw materials.

To carry out market research to ascertain:

16

Expand product line and downstream steel business (e.g. steel for building, bridges, highways, roof decking, flooring);

Video Conference one day per week between Nucors managers and steel companys managers from India and other Joint Ventures companies abroad in order awareness of the whole process

Competitors current strategies, weaknesses and strengths; Joint Venture with steel companies abroad

Add an employee stock ownership program to further reinforce employees sense of ownership and loyalty.

Buying ownership rights in innovative new technologies Technology Advances

Opportunities: Acquiring high-cost producers and making them more efficient Nucor should continue to be the low-cost, quality provider by using all its strengths. It should continue to be the technological leader by quickly identifying and adopting new technologies. Problems: Dumping of steel into US market. Rising raw material costs.

17

References: 1. Dr. R. Haug, Strategic Management, Nucor Corporation: Competing against low cost steel Imports A.A. Thompson p.323-346 2. www. Nucor.com 3. www.wikiinvest.com 4. Nucor Corporation, Annual Report, 2006, 2007 and 2009 year

18