Analysis of Nucor Corporation and recommendations to Dan DiMicco, CEO. Introduction In the contemporary environment of global recession and highly competitive business dynamics, Nucor Corporation faces huge challenges from myriad quarters. The escalating cost of raw material and low cost production of steel in emerging economy like China are major factors that are adversely impacting US steel producers in general…
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Nucor’s mission to take care of their customer has been realized through quality products manufactured within the broader parameter of sustainable business practices. Hence, ethically considered decision making and promoting environment conservation at all levels of operations have been its hallmark that has helped it to meet the challenges of time. Analysis of Nucor’s business practice therefore would not only give insight into its success but also help identify factors and issues which would help it maintain the competitive advantage within the industry. Nucor’s business strategy for competitive advantage The major factors of current competitive advantage have been its ability to exploit its internal competencies like strong team work and innovative approach of managerial leadership towards production and research. There is strong trust and mutual respect between the management and workforce that is based on uniform code of benefits spread across the hierarchy of management and employees. The shared goals and collective decisions encourage empowered decisions resulting in optimal performance. The entrepreneurial leadership of its managers has significantly influenced its operational efficiency. Byrnes (2003) believes that product flow can increase earnings while raising customer service levels. Hence, Nucor’s use of mini steel factory is its key element of competitive advantage because it not only reduces pollution but also significantly cuts the operating costs by using scrap material, giving nearly 25% return on equity. It also uses considerably less energy than traditional steel factories. Its use of recycles goods has greatly contributed towards environment conservation and highlight is sustainable business practices that have enabled it to produce goods at competitive costs. Its acquisition of David J Joseph Co., a metal scrap supplier, has been a highly beneficial. It not only provides it with raw material but has also come with 2000+ railcars which can significantly boost its transportation logistics. This could facilitate competitive advantage in the recessive environment. Its ability to be innovative is another key element of its competitive advantage. The ongoing experiment of liquid steel could be a major breakthrough for the industry and could become its major strength in staying ahead of its global competitors Area of threats and weakness The major threat comes from the import of low cost steel from emerging economies like China where the lack of regulations help the indigenous firms to export steel at low cost to developed countries. The company has also not made any initiative to expand across the globe and this could adversely impact its business prospects, especially as the globalization and technology has made businesses more competitive. Nucor is quite rigid in its principles and does not give discounts to bulk buyers. This could threatened its market scope in the contemporary environment of cut throat business Recommendations Many scholars have affirmed that major imperatives of the corporate world have fundamentally relied on improvement initiatives of business processes (Laraia et al., 1999). Thus, Nucor must make efforts to exploit the global financial downtrend and take advantage of weak
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