Nucor In 2005

Strategic Profile and Case Analysis Purpose

Nucor in 2005 deals with a leading steel manufacturer, the steel industry, and the trends that face each. Steel manufacturing is an old business, but is currently facing the fast changes associated with new technologies and the rise of globalization. The cyclical economic effect in the industry has proved challenging for many steel businesses. Nucor has unequivocally maneuvered this business cycle to maintain a positive profit margin in every quarter since 1966. The company’s philosophy of decentralized structure in the 1960’s and 1970’s was imperative, but has since required change due to current international challenges.

Section I

Strategic Issue

This case analysis will take into account the many great aspects of Nucor’s historic business model, but will primarily focus on the need for a clear strategy to expand the industry internationally.

Section II

Situation Analysis

External Analysis: P.E.S.T. Analysis

Political Factors

State, federal and international agencies all heavily regulate businesses. These laws provide the basis for successful profit margins; but also challenge the ease to which these margins are gained. Many local laws are meant to support local businesses; a business must face the local protectionist laws of another business when trying to compete in foreign territory. In no greater circumstance than at the global level does this hold true. For Nucor Corporation, ever growing international competition requires addressing many different types of laws, mainly taxation.

In every country with a centralized government, taxation is unavoidable. Variations amongst countries’ laws provide favorable and unfavorable circumstances for a large company to do business in that country. Nucor is widely involved with tax policy in the United States as they pay federal, state, and local taxes. Each greatly affects their bottom line. Additionally, Nucor must understand the taxes of other countries in which they plan to implement contracts. Taxes do not always negatively impact a business, especially when they are protectionist. These types of taxes are implemented to protect the domestic industry. This is especially important when competition is high, and a push for cost leadership exists. Nucor, as with any large company that has a global presence, is subject to international trade agreements from the WTO, NAFTA, and the EU. A company must be capable of understanding the costs associated to all regulations and tariffs on importation and exportation; this is financially imperative especially as competition and globalization are required to maintain profits in the future.

Economic Factors

In 2000, Nucor’s Daniel Di Micco stated, “Our strategy will focus on becoming a ‘Market Leader’ in every product group and business in which we compete.