SYNOPSIS
For much of its century long history, Nucor Corporation and its predecessors displayed turbulent performance. Several attempts at strategic and leadership realignment proved unsuccessful, and in 1965, the company faced insolvency. Since that time, however, the company has rallied around its steel operations to become the largest steel producer in the United States, with $4.3 billion in net annual sales. This case examines Nucor's development from an unprofitable conglomerate to a highly efficient enterprise. Specific focus on the evolution of the activity system underlying the organization lays the groundwork for systematic analysis of why some companies succeed while others fail.
ISSUES
For decades, the steel industry has been one of the toughest markets on a global scale with most steel corporations ending up in bankruptcy. Foreign and domestic competitors, management issues, environmental issues, political agenda’s and technology have had much to do with the demise and more so of the success of the steel industry. The issues that this case focus on Nucor Corporation was of:
• How to change a failure company to a winning company?
• How to stay competitive and pursue growth in a troubled steel industry?
• How to become a Successful leader?
ANALYSIS
Nucor is the largest steel manufacturer in the United States. It remains a profitable company despite being in one of the most cyclical industries in the economy. Nucor enjoys this success for several reasons, employee relations, quality, productivity, and aggressive pursuit of innovation and technical excellence. Nucor’s strategy is that of a low cost provider, they know they are selling a commodity and understand their competitive edge in the industry is lowering prices through innovation and productivity. The company operates primarily in two business areas, steel mills and steel products.
Nucor managed to turn profits around in 1966 by focusing their business where it was making profit. Careful investments in new technology allowed it to gain market share in other areas while staying ahead of the competition. Nucor recognized the importance of keeping costs down. They identified the costs of supplies as an area to target for increasing profits. They established their own interest in steel mills in order to reduce the supply cost part of their products through backwards integration. According to Management practices emphasize autonomy and focus on results. This is seen throughout the company. Incentive programs are disbursed accordingly, and even top management is not afforded normal corporate luxuries.
Nucor Corporation was the largest manufacturer of steel and steel products in North America, with a production capacity of approximately 27 million tons. On an international scale, Nucor was ranked as the 14th-largest steel company in the world based on tons shipped in 2013. Amongst the five generic business strategies, Nucor is known as a low-cost producer, with a known competitive advantage of innovative steelmaking technology. The purpose of this paper is to perform a business analysis of Nucor Corporation by analyzing it using management tools such as SWOT, PESTEL, and Porter’s Five Forces (Thompson, Peteraf, Gamble, & Strickland III, 2014).
Steel Corporations Forge Tyranny The 1960s marked a time of great change, turmoil, and innovation in American history. President John F. Kennedy worked hard to ensure the best for the citizens of the United States and that is why, when steel corporations raised their prices 3.5 percent in a time of economic distress, Kennedy responded with outrage. In his speech to the American people on April 11, 1962, President John F. Kennedy used a plethora of rhetorical strategies to persuade the American public to join his crusade against the greed of large steel companies. President Kennedy begins his address by immediately stating his opinion on the issue; that the actions of steel corporations “constitute a wholly unjustifiable and irresponsible defiance of public interest.”
During the early 1960’s, the United States was emerging from a recession. Many people were struggling, but some big businesses were taking advantage of the economic distress. On April 11th, 1962, President John F. Kennedy held a news conference to talk about such big businesses, namely, steel companies. President Kennedy criticized these companies for increasing the price of steel by 3.5 percent. By appealing compellingly to logos, effectively to pathos, and rivetingly to ethos, President John F. Kennedy argues that the price increase of steel during the hard times by large companies has been a blatant disregard for their public responsibilities during an emerging recession.
At the July Association of the United States Army (AUSA) Conference, LTG Ostrowski, the Army Acquisition Executive Lead, conveyed the Army’s need for future network solutions. It was also shared in the FY16 Presidential Budget that the Army has several budget requests for Communications systems and upgrades totally over $1.2B (Keller, J. , 2015). This is an opportunity for the Comms BU to expand its customer base in the U.S. Army market place. Northrop Grumman was ranked in the Top 5 of Aerospace and Defense Companies in Forbes America’s Best Employers list (2017). They were ranked over larger companies such as Boeing, Lockheed Martin and Raytheon. Their commitment to their employees, diversity, their customer and even the environment drives their culture. Northrop Grumman’s competitive advantage is leveraging the technology already developed and tested for the services (Air Force and Navy). Their experience with the Army is via services work where our people have gained the expertise to be the right people for working with the Missile Defense Agency. After analyzing both the internal and external environment of Northrop, their competitors and the analysis of their financial position, Northrop has developed a sustainable competitive advantage. They have done this through the use of product differentiation. The value they receive, the knowledge they gain and patents they own by acquiring other companies expands their portfolio to offer products and services not comparable to their competitors. Their respective strategic position establishes a value to their customers that is differentiated amongst their competitors, allowing them to offer a higher premium for their products and
Also, the competition between existing players in this industry is high. There are about 619,000 metal enterprises in the USA in 2005 (IBISWorld, 2007).There are many companies that produce different kinds of metal products in the market. Besides, the bargaining power of buyers is high because product difference for the buyers of the metal products is small. It is not easy to differentiate the quality of one metal product from another. In addition, the cost of switching for the buyers is low. The number of substitutes of metal products is also high thus the buyers have great bargaining power.
When Jim Kilts showed up at Gillette in 2001, the first outsider to run the Boston-based company in more than 70 years, he found a business with great brands losing market share. Its acquisitions of Duracell and Braun were not delivering. Sales and earnings were flat, the company had missed its earnings estimates for 15 straight quarters, the stock had plummeted, and Wall Street had lost patience. Yet two-thirds of the top managers were getting top ratings. People were being rewarded for effort; performance, under Mr. Kilts regime, became the new measure.
Harvard Business School case 274-116. Cooper Industries, Inc. Retrieved on August 31, 2008, from University of Phoenix, Resource, FIN/545 web site: https://mycampus.phoenix.edu/secure/resource/resource
Nucor Corporation is constantly faced with obstacles and competition to overcome. This steel-making company whose name was formally adopted in 1972, has since been on a journey to join the ranks of the worlds leading steel companies. Although this is a highly profitable industry with a U.S. market of $94.9 billion, it is highly competitive and presents many bariers to entry. Three elements of competition in this particular industry include, 1.) Technology 2) Changes in cost and efficiencies and 3) globalization
Industry Analysis – Nucor has established itself as a leader in the steel industry through efficiency and innovation.
Yargar, Alyssa.? ?Carnegie?s Business Success.?? Forging a Future:? Pittsburgh and the Question of Progress.? The Steel Industry.? (2000):? n. pag.? Online.? Internet.? 1 Dec. 2000.? Available http://webpub.alleg.edu/employee/m/mmaniate/pittprogress/yargar.html.
U.S. Environmental Protection Agency. (1995). Profile of the Iron and Steel Industry. Office of Enforcement and Compliance Assurance. Washingto, DC: Office of Compliance. Retrieved February 07, 2014, from http://nepis.epa.gov/Exe/ZyNET.exe
Miles and Snow’s typology is centered on four types of businesses; each with its own strategy. These business types are those of prospectors, defenders, analyzers, and reactors. A prospector tends to be a firm which often introduces new products to the market (p.196). These businesses can be described as risk takers, typically being some of the first firms to introduce a new product to the market. Prospectors are flexible and meet industry changes head-on by rising to challenges and creating new and improved
This paper will first discuss the development of the steel industry. Next, it will examine steel, and in the impact it had on the transportation industry. Finally, it will discuss systematic management practices of this time and how they gave birth to the scientific approach that is still in use today.
The emergence of the steel industry occurred in the late 19th Century when the cities of the United States were growing at a dramatic rate. This time period was devoted to the expansion of many industries, including the steel industry. Numerous immigrants were also arriving in America from all over the world at this time. The new industrial expansion and its accompanying population growth thoroughly changed America as it contributed to its urbanization. The beginning of America’s steel industry commenced when Andrew Carnegie was given the seemingly impossible task of constructing a bridge to cross the Mississippi River. The steel industry, even though having many flaws, was the most prominent in America’s development and significantly contributed to it’s urbanization. The steel industry greatly advanced America’s urbanization through its expansion of railroads which led to a wider exportation of goods and impacted vertical integration, other industries,
Reutter, Mark. Sparrows Point: Making Steel : the Rise and Ruin of American Industrial Might. New York: Summit Books, 1988. Print.