Nucor Corp

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Case Study: Nucor Corp
I Statement of Problem
The strategic issues/problems for Nucor Corp include the following:
1 Increasing costs of raw materials
2 Entrance of foreign players into the United States steel market
3 Dumping of steel, particularly from China, into the United States market
4 Strict regulations of pollutants by EPA.
IIAnalysis
* Industry analysis
* Industry economic characteristics
The steel industry is in the United States is one that is cyclical and mature, in which corporations commonly post losses whenever the demand for steel drops. Increasing competition especially from foreign firms reduces costs of steel for consumers.
* Industry driving forces
There are a number of industry driving forces in the steel industry in the United States. These include the following: government policy changes and regulatory influences; change in efficiency and cost considering that reducing or growing differences in the costs amongst the key competitors may considerably alter the state of competition; and exit or entry of major companies. The other industry driving forces include marketing innovation; technology change and innovation in the manufacturing process; product innovation; changes in the long term growth rate of the industry; as well as increasing globalization. Others are steel technology and processes, as well as advances in materials technology.
* Key success factors of industry
In the steel industry, the key success factors include the following: automation; cost control; carefully chosen joint ventures; technology and processes; low cost locations; production; as well as order fulfillment and distribution.
* Industry competitive analysis
1 Five Forces of competition
* Bargaining power of Buyers: Weak/moderate
There is strong demand internationally particularly in China. The industry is typified by low switching costs and excess capacity. There are many low-volume buyers and a few high-volume customers. Nonetheless, there is increasing feedstock prices partly because of speculation. Due to the increase in domestic competition in the steel sector in the U.S, the choices for customers are increasing. There is low product differentiation and consumers who buy in bulk have strong negotiating power.
* Bargaining power of Suppliers: Moderate
There are few suppliers in this industry and there is scarcity of raw materials including recycled steel, coke, iron ore and steel shred. The supply of iron ore is concentrated and there are high prices of the iron ore raw material, although the prices can be negotiated. The supply of scrap steel, a key raw material, is fragmented and its prices are high. Cost strategy drives acquisitions, mergers and joint ventures between manufacturers and suppliers. Nearly all raw materials are imported.
* Threat of Substitutes: Moderate
In this industry, consumers have increased choi...