Nucor Case Analysis

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Individual Case Analysis

BUS490 Comprehensive Examination

Nucor Steel Corporation

Written by: Lukas Kubilius

Professors: Bonnie J. Straight Julian J. Prewitt

Lithuania Christian College
2 March 2005

Overview of situation

Nucor Corporation with 24 plants/divisions and 8,000 employees, operated in nine states recycling more than 10 million tons of scrap steel annually. Producing carboy and alloy steel in bars, beams, sheet, and plate; steel joists and joist girders; steel deck; cold finished steel; steel fasteners; and metal building systems, the corporation was known as the most modern and efficient, having streamlined organizational structure,
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More attention to own business than to competitors is their strategy. South magazine observed that Nucor is “stripped down, no nonsense” organization. It keeps maintaining low cost and efficiency, which is the key to making profit in steel industry, by keeping the employee force at the level it should be, empowering them, being totally honest, involving them in decision making process, and using effective incentive compensation system.

Nucor’s ten year goals are:
• Achieving average annual earnings growth of 10%-15%.
• Exceeding return on capital
• Maintaining minimum 14% return on equity.
• Delivering 8%-10% return on sales.
• Becoming market leaders of every product group and business where they compete.
Key Issues and Problems

 Growth in troubled steel industry. How to sustain Nucor’s earnings growth in the industry, which has many marginal competitors and production overcapacity.
 Market position. How to protect and establish Nucor’s market position.
 Organizational structure. Need for expanding size of executive management team and adding new corporate layers in the corporation.
 Human Resource Management. Need for reanalyzing employee wages and bonus system.

Finances

A typical Gross profit margin depending on the industry may be 25 to 30%. Nucor’s Gross profit margin ratio indicates that industry is intense and cost of goods is one of the main of factor in profitability. After examining the five year

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