Nucor Strategic Analysis
TABLE OF CONTENTS
Industry Analysis 3
Competitive pressures in the industry 3
Industry Segmentation 4
Supply Chain 4
Potential growth 4
PROFIT POTENTIAL and Market Power 5
INDUSTRY overview 5
Competitor Analysis vs Nucors CompetItiveness 5
Company Position Analysis 9
Understanding Nucor VISION AND VALUES 9
Understanding Nucor Core Competencies 10
UNDERSTANDING NUCOR 'S COMPETITIVE ADVANTAGE based on resources 11 cURRENT ISSUES FACING THE COMPANY 13 pROPOSSED SOLUTIONS TO STAY ON TOP 14
RECOMMENDATIONS BASED ON CORE COMPETENCIES 16
Relation to practice 16
References 17
Appendices 18
INDUSTRY ANALYSIS
COMPETITIVE PRESSURES IN THE INDUSTRY
Michael Porter provides a framework that models an industry as being influenced by 5 forces. Based on Porters work Annexure 2 details the competitive forces in the industry, but it was adapted to include the economic forces and governmental influences.
COUNTRY: The stable demand in the US steel market combined with the high labour cost creates favourable conditions for foreigners. The continuous increasing production of European and Russian mills in a stagnant world steel market signals serious warning lights.
ECONOMY: The poor market conditions for steel producers are reflected in their deteriorating financial condition, and numerous bankruptcies. Many integrated mills still have unutilised capacity. The market concentration is increasing with new players brining more capacity on line
GOVERNMENT: The lack of protection is a high risk factor and makes the industry even more attractive to foreign producers.
SUPPLIERS: Scarp metal is not always readily available due to exports and this makes the suppliers powerful. The increasing demand lead to price volatility and suppliers increased the price up to 110% in last 4 years due.
BUYERS: Bargaining power is with the buyers due to oversupply and decreased demand in the domestic market. The buyers are Service centres, fabricators and automobile companies
Industry Analysis 3
Competitive pressures in the industry 3
Industry Segmentation 4
Supply Chain 4
Potential growth 4
PROFIT POTENTIAL and Market Power 5
INDUSTRY overview 5
Competitor Analysis vs Nucors CompetItiveness 5
Company Position Analysis 9
Understanding Nucor VISION AND VALUES 9
Understanding Nucor Core Competencies 10
UNDERSTANDING NUCOR 'S COMPETITIVE ADVANTAGE based on resources 11 cURRENT ISSUES FACING THE COMPANY 13 pROPOSSED SOLUTIONS TO STAY ON TOP 14
RECOMMENDATIONS BASED ON CORE COMPETENCIES 16
Relation to practice 16
References 17
Appendices 18
INDUSTRY ANALYSIS
COMPETITIVE PRESSURES IN THE INDUSTRY
Michael Porter provides a framework that models an industry as being influenced by 5 forces. Based on Porters work Annexure 2 details the competitive forces in the industry, but it was adapted to include the economic forces and governmental influences.
COUNTRY: The stable demand in the US steel market combined with the high labour cost creates favourable conditions for foreigners. The continuous increasing production of European and Russian mills in a stagnant world steel market signals serious warning lights.
ECONOMY: The poor market conditions for steel producers are reflected in their deteriorating financial condition, and numerous bankruptcies. Many integrated mills still have unutilised capacity. The market concentration is increasing with new players brining more capacity on line
GOVERNMENT: The lack of protection is a high risk factor and makes the industry even more attractive to foreign producers.
SUPPLIERS: Scarp metal is not always readily available due to exports and this makes the suppliers powerful. The increasing demand lead to price volatility and suppliers increased the price up to 110% in last 4 years due.
BUYERS: Bargaining power is with the buyers due to oversupply and decreased demand in the domestic market. The buyers are Service centres, fabricators and automobile companies
References: ENTRY BARRIERS: There are no significant barriers prohibiting new competitors to enter the steel production sector. Exit barriers are high and it keeps the companies competing even with low or negative returns on investment (Porter, 1979). The analysis of the company 's core competencies and understanding of capabilities will give direction where Nucor should confront rivals and where avoid confrontation (Porter, 1979). BUSINESS SYNERGY