Nucor at a Crossroads

3122 WordsOct 22, 201313 Pages
Nucor at a Crossroads MGMT XXXX-XXX Nucor’s Historic Performance, Competitive Advantage, and Five Forces Analysis With roots dating back to 1904 in the automobile manufacturing industry, Nucor’s business strategy has morphed many times over the course of the past century in response to struggling sales and unrealized business strategies. Since F. Kenneth Iverson’s appointment as Nucor’s President in 1965, however, Nucor has performed very well. With a focus on efficiency, Nucor is committed to minimizing bureaucracy and maximizing performance and productivity via the utilization of an open-door/continuous improvement/ entrepreneurial culture, a compensation scheme premised on performance-based…show more content…
Threat of Substitutes — The threat of substitutes facing Nucor was moderate. On one hand, although demand for steel had declined in recent years as noted above, it was not predicted to decline further as of 1986. On the other hand, with the advent of materials such as aluminum, plastic, and composite materials, especially in automobile industry, the threat of substitutes in the market was on the rise. New Entrants — Notwithstanding that 36 companies were competing in the mini-mill industry, much of the market was controlled by the top five, the second of which was Nucor. With competition levels high in this industry and with costly barriers to entry (i.e., building a steel plant), the prospect of new entrants facing Nucor was relatively low. Degree of Rivalry — The degree of rivalry facing Nucor was high, not only in light of domestic competition, but particularly due to vigorous price-competition from abroad, and —as a general proposition — the relative lack of differentiation in the product itself. The key to Nucor’s relative prosperity in this industry was its competitive advantages over integrated steelmakers and other mini-mills: Technology — Nucor had a practice of constantly upgrading its facilities. Since the early 1970s, Nucor built or rebuilt at least one steelmaking or fabrication facility each year. This ensured that it was using the most current technological improvements, which thereby helped reduce its

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