Nucor Corporation:

Competing against Low-Cost Steel Imports

We will cover..

Industry Highlights Rafi Uddin Sharik (14364014)

Company Highlights Shuvo Hasan(13264114)

Nilanjana Halder(14164011)

Analysis Arafat Rahman Chowdhury(14364047)

Faria Afroz(14264058)
Strategic Issues &
Recommendation
Industry Highlights
 Market Size: Large
The Market
Life Cycle Stage: Mature

Major Customers:

Automakers

Construction Industry

Appliance Manufacturers

Key Success Factors

Production Process Innovation Capability

Low-cost production ability

High capacity utilization

Trends Consumption of Steel by Region
700

602.8
600
546.7

496.2
500

432.8

400 382.7
353

300

200 177.6 174.6 176 185.2 176.8

173.2 164.2
161.6
145.6 145.9 143.5 149.7

100

0
2000 2001 2002 2003 2004 2005

EU Linear (EU) North America

Linear (North America) Asia Linear (Asia)
Factors
Factors Reason

Saturated local market

Economic
High energy prices

Social Increasing ecological awareness

Foreign government subsidies

Political
Local government regulations

High impact on efficiency

Technological
Innovations spread rapidly

Global Low-cost production abroad

Porters Model

Threat of Degree Reason

Rivalry Intense Overcapacity

High capital requirement

New Entrants Weak
Technology intensive

Substitutes Weak No clear substitutes

Suppliers Moderate Strong collaboration

Buyers Strong Buyers buy in bulk

Company Highlights
 Largest
Headquarters
Logbook in Charlotte,
Over the Years North
Carolina
$14.8 Billion
Involved in Revenue
Nuclear Most
Transforme
Instrument Profitable
Electronic d as Nucor
Steel
Business Producer in
NA.
CEO is Daniel
R DiMicco
190 1950s- 196 197 200 200
4 1960s 4 2 4 6

Largest
Founded by
New CEO Keneth Steel
Ransom Eli
Iverson Rebuilt it Company in
Olds
into a Steel Joist US
Business
Product Line

Cold finished products(steel ,bars, rods)

Decking products.
Structural steel
Steel decks
Metal building systems
Steel joists, girders
Metal building system
Light steel framing
Steel fasteners, etc.
 Vision
Mission & Vision

The safest, highest quality at lowest cost, most

productive
and most profitable

Mission

Take care of own customer

Objectives

Financial Objective Strategic Objective

Establish low-cost leadership

through-
To ensure increase in net
Technology and
profit
innovation
Effective & efficient
To achieve strong economic
management and low
position through-
cost production
Lowest price
Quality control
Large volume sale
Backward integration
Increase market share
Emphasis on employee
relations
Analysis
VRIN Test
Resource and Description V R I N Probable
capabilities Consequen
ce
Technological disruptive Yes Yes Yes Yes Sustainable
technologies Competitive
leapfrog technologies Advantage
Distribution Ensures low freight
Sustainable
Channel cost and on time
Yes Yes No Yes Competitive
delivery
Advantage
150 trucks
Employee and Talented group of well Sustainable
Productivity trained and well Yes Yes Yes No Competitive
experienced executives Advantage
Financial Sustainable
Constant growth return
Condition Yes No Yes Yes Competitive
and net income
Advantage
Location Sustainable
Located in rural areas,
Yes Yes No No Competitive
adjacent to market
Advantage
Value Chain Primary
Activities-

Support
Activities
Cost Drivers
Drivers Reason

Input Cost Cost saving technological improvement

Use of automated technology, thin-slab
Advanced Technology
casting technology, electric arc furnace
and Innovation
technology
Vertical Integration Backward integration to supply iron

Economies of Scale Produces in a large scale

Incentive system and Production incentive plan

culture No extra cost for perks

Capacity Utilization Just in time inventory mode

Financials Profitability
Increasing Profit
120.00%
Margin
Decreasing Cost
Increasing ROE
100.00% 95.70%
90.32% 90.22%
82.61%
80.24% 79.41%
80.00% 76.49%

60.00%

40.00% 38.70% 38.60%

33.90%

20.00%
14.20%
10.32% 11.92%
9.86%
6.54% 7.20%
5.20% 3.38%
2.61% 1.00% 2.70%
0.00%
2000 2001 2002 2003 2004 2005 2006

Net Profit Margin Linear (Net Profit Margin) COGS to Sales

Linear (COGS to Sales) Return on Equity Linear (Return on Equity)
Financials Sales per Employees(000s)
1400

1273

1200 1159
1107
Increasing Sales per
Employee
1000

800

619 637
600
531 528

400

200

0
2000 2001 2002 2003 2004 2005 2006

Sales per Employee Linear (Sales per Employee)

Financials

Increased profit margin and ROI gradually from 2002

to 2006

Made more net profit, investment return, assets, and

value of share in 2006 than 2005,2004,2003,2002.

Able to develop their business by crafting and

executing a low-cost leadership strategy.
Does the Current
Strategy Fit?
Test Reason Status

Considers strength
Strategic Fit Grab market opportunity
Fit
Test Did thorough analysis before strategy
implementation

Competitive Electric Arc Technology

Advantage Castrip Process Fit
Test Low Cost Provider

Performance High Return on asset

Fit
Test Did not rely much on external debt
SWOT Analysis
Weaknesses
Highly dependent on US
market
Inability to expand in
international market
Highly energy intensive
company
Absence of own R&D
Strengths
department
Declining market share
Increasing shipping cost
Innovation
Economies of scale
Strong industry position
Positive financial position
Highly motivated and
productive workforce
Diversified product line.
SWOT Analysis Opportunities

Emphasis on R&D to find cost

effective process.
Eco-friendly techniques.
Entry in international market
Political support in the Threats
enforcement of trade law
Rising raw material & labor
cost (Energy cost).
Increasing foreign competition
Excess supply of steel in global
market
Uncertain economic
environment
Demand declining in US real
state (post crisis)
Strategic Issues &
Recommendation
Issue 1

Strategic Issue Recommendation

From year 2001 to year

2006 they have invested
$1,472 on merger and
Invest more on upgrading new
acquisition
technology
Capacity is 15% more than
demand in local market
Issue 2 Strategic Issue Recommendation

Highly dependent on US
market
Global expansion
Low presence in high
growth market

2000 2001 2002 2003 2004 2005

Region
EEU(25 Countries) 177.6 174.6 173. 176.0 185. 176.8
2 2
Other European 60.8 64.1 63.0 71.8 75.6 80.1
countries

North America 161.6 145.6 145. 143.5 164. 149.7

9 2
Central & S. Africa 31.0 31.8 30.4 30.4 36.0 35.8
Africa 17.0 18.4 20.3 21.0 22.6 24.7
Middle East 21.7 25.5 27.9 33.3 33.7 38.2
Asia 353.0 382.7 432. 496.2 546. 602.8
8 7
Issue 3

Strategic Issue Recommendation

Increasing price of raw Aggressively research on

materials scrap alternative
Issue 4

Strategic Issue Recommendation

Usage of electricity for

production purposes and
gas for heating the work R&D for eco-friendly
area procedure of production and
supply
Contribute huge amount of
Co2 in the environment
 Thanks!
Any Questions?