Nucor at Crossroads

Q1. Iverson?  Whether to go for CSP plant developed by SMS or sustain with Hazelett thin-slab caster??  Potential benefits of CSP  Cost reduction  Increase in efficiency  Consent of the project team  Nucor will gain maximum share of low end flat sheet business  SMS is highly confident on CSP that it will improve on company’s own developmental effort. .  Discount of $10-$20 million on immediate purchase. What is bothering Mr.

 They are quick follower in adapting to technology  Flat roll products presumed steelmaking expertise somewhat different from that required for non-flat product  Financial and managerial resource constraints  Joint venture with Yamato is already agreed upon .Q1. What is bothering Mr. Iverson?  Constraints of using CSP plant  Expensive  Difficulty in operating  It is still in embryonic stage  Technological leapfrogging  First mover advantage wouldn’t sustain for long.

 “Nucor Culture”. What are the strengths & weaknesses of Nucor?  Strengths  Strong market position with 2.  Employee’s loyalty to the firm.Q2.  Decentralized management philosophy  Performance based compensation  Egalitarian benefits  Customer service and quality  Highly efficient labour force.1 million tones of production capacity. .

Q2. What are the strengths & weaknesses of Nucor?  Nucor’s customer service-A key differentiator  Buyer power was mildly unattractive.  Nucor started small plants closer to suppliers & customer  Reduction in transportation cost  Cheap support facilities-Electricity  Employee centric policies .

 No dedicated R&D team.  No long-term strategic vision of plan.  Presence only in the US market.Q2. What are the strengths & weaknesses of Nucor?  Weaknesses  Decentralized profit center  Decisions being taken at the division level will lead to divisions competing against each other. .

 Supplier’s power is low.  Integrated steelmakers are reluctant to adopt new technology  Import’s share is low in flat sheet segment.  Opportunities for joint ventures. .  Exit of Integrated steel makers from buying scraps.  52% of total steel consumption is in flat sheet segment.Q3. What are the opportunities & threats in US steel market?  Opportunities  Most steel companies in the US are in major cities and much higher operating costs.

What are the opportunities & threats in US steel market?  Threats  Heavy competition in the industry with excess capacity  Only experienced players can enter and sustain in the market. aluminium.  Raw material availability  Change in technology .Q3. advanced composites industry taking over market share of steel in future.  Import of steel  Threat of substitutes  Demand for steel stagnated  Plastic.

 Sign the deal with SMS  It’ll help in grabbing flat sheet segment.Q4.21 million tons.(Exhibit-2)  Integrated US steel makers produce 16.(Exhibit-11) .  Sustainable first mover advantage.If you were Mr.  Less import & more opportunities. Iverson.  Motivated team willing to work on this technology.8 million tons. what will you decide? Please justify.  Flat steel market of 36 million tons for next year because they are expecting same demand as last year.  It’ll increase overall efficiency. (Exhibit-5)  Nucor can enjoy same economy of scale by producing .

Thank You.!! ..

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