Strength ( I ) – Alone Management Philosophy. One of Nucor cardinal strength lies in its alone direction doctrine that is focused on conveying out the best in their people. Nucor empowers their people by leting them to do determination in the work they do. Workers besides have their rewards pegged to their productiveness and as a consequence, received far higher rewards than the norm in the provinces which they work in. Nucor avoided puting off their workers every bit much as possible and seek option means to command labour cost and these steps have helped to further trueness among its people. It is no admiration that Nucor possess one of the most productive work forces in the industry this direction doctrine of theirs remain one of their cardinal strength.
Strength ( two ) – Cost control In a merchandise market with small room for distinction, Nucor expertness in maintaining cost depression is of a great advantage. Get downing out as a joist maker, it went down the value concatenation in order to obtain its natural stuffs cheaply and was subsequently so successful in fabricating steel that most of its steel production were sold externally. Nucor maintain itself abreast of the latest technological progresss and follow them in order to continually maintain merchandise cost low. Their cost of bring forthing every ton of steel is significantly lower than their domestic rivals. This expertness will function them good in the germinating steel industry.
Strength ( three ) – Invention. The last of Nucor ‘s cardinal strength is that it is advanced and invariably adjusts itself to remain in front of alterations in the industry. They stood at the head of the mini factory engineering which revolutionized the industry and new engineering is invariably studied to guarantee that the company stays in front of the technological race. Old patterns established in so the industry is invariably challenged. The experience of the organisation in invention will be a cardinal strength in an industry in passage.
Weakness ( I ) – Exposure to fluctuation in monetary value of bit steel. The chief natural stuff in the fabrication of steel in the mini-mills is scrap steel. The rapid acceptance of the twin shell arc furnace engineering by the industry is quickly cut downing the handiness of bit steel to Nucor. As a consequence, monetary values surged and this threatens the profitableness of Nucor. Their exposure to fluctuation in the monetary value of bit steel presents a major failing in their concern theoretical account.
Weakness ( three ) – Lack of market variegation. There is a deficiency of market variegation as it derives most of its gross from the US. This exposes them to the fluctuation in the US economic system as demand for steel will diminish when the economic system slacken and they would non hold alternate avenue to deduce their gross.
Opportunities ( I ) – Expansion through acquisition of neglecting steel shapers. The onslaught of inexpensive steel imports is driving many inefficient US steel shapers into bankruptcy. This represents an chance for Nucor to spread out through acquisition. This will assist Nucor to increase its market portion and besides bask further cost advantages through addition economic systems of graduated table.
Opportunities ( two ) – Political support in the enforcement of trade jurisprudence. One of the chief grounds in the lessening in net income border of Nucor is due to the dumping of inexpensive foreign steel by its foreign rivals. After neglecting to enforce duties on them, the Bush disposal was so still seeking ways to restrict dumping through legal agencies. These trade Torahs against dumping, if successfully enforced, will assist to protect the net income border of Nucor in the US market.
Menaces ( I ) – Increase foreign competition in its local markets. Steel monetary values in the provinces have been battered by the addition competition from imports. The deceleration of demand in China in the terminal of 2004 threatens to intensify this job as China becomes a net exporter of steel. These developments are rapidly gnawing the market portion and net income border of Nucor in the US. In add-on, planetary steel shapers are consolidating and bettering their cost construction through improves economic systems of graduated table. Mittal Steel in peculiar, has entered the US markets with its acquisition of ISG.
Menaces ( two ) – Technological promotion. Technological promotion in steel devising poses a menace to the low cost scheme of Nucor. The development of a new engineering by Posco Steelworks is able to cut down production cost by 1/5 and cut harmful emanations by 90 % . These engineerings may supply a competitory advantage to its rivals and endanger the cost leading place of Nucor.
Menaces ( three ) – Aging babe boomers. – Aging babe boomers in the US represent a menace to Nucor as it may cut down the pool of workers available to Nucor and increase its labour cost. Working in the mill is frequently an unattractive option for the younger coevals. The ability to hold a changeless supply of new workers as their experience workers ages post a menace to the long term hereafter of Nucor as it may gnaw their cost place relative to their foreign rivals.
Strategic Option
Among the four strategic options generated by the Ansoff theoretical account, merely two options stood out as feasible options. The developments of new merchandise for either the local or international markets may non be feasible options. Although they provide chances for possible merchandise variegation, it requires the development of a new nucleus competence. In add-on, it may besides deviate attending from the immediate market force per unit areas that Nucor was confronting in viing in its local market.
Recommendation
In the concluding analysis, I will urge that the house pursue the scheme of Market Development in the Ansoff Matrix by spread outing into the international markets. Nucor can use their strength in commanding cost in the international market and strive for a cost leading place, as what they have achieved in the domestic market. Further justifications are as follows.
Impregnation of local market – The local market has become saturated and has become less attractive for Nucor to run in. In a merchandise market with small room for distinction, extra capacity is likely to take to farther monetary value competition and the handiness of inexpensive foreign steel will deject gross revenues and net income borders further. Even if Nucor do accomplish further cost advantages though technological invention, the dumping of steel by their foreign rivals will gnaw the cost advantages that they may temporarily bask. Although the Bush disposal has been seeking to implement international trade Torahs against dumping, it will merely supply impermanent protection for the domestic steel shapers and the world is that the rapid gait of globalisation will do the US steel market progressively competitory.
Spreading of hazard through market variegation – As antecedently mentioned, one of the failing of Nucor is that is extremely dependent on the US economic system due to the deficiency of market variegation. Traveling overseas will assist to extenuate this hazard and supply them with a more balanced market portfolio.
Entree to labour – Expanding overseas is likely to give them better entree to labour and therefore cut down labour cost associated in the production of steel. As aforesaid, Nucor faces a menace of deficit of labour due to the ripening of the babe boomer coevals as bluish collar work rarely attracts the younger coevals. They are improbable to confront such jobs in developing states and their alone direction doctrine of presenting really attractive inducements and HR policies to actuate workers are likely to be good received by the people.
Strategy execution
I recommend that Nucor expand by geting a steel shaper with significance presence in India. This is due to its propinquity to Middle East, the centre of a building roar due to gain from oil gross revenues. This has led to a immense demand in steel. Direct investing in ME is avoided due to the political complexness of puting in this part and besides the higher cost of labour relative to India. Nucor should go on to leverage on its strength cost control in its international enlargement and addition advantage over its rival based on cost. The new engineering in fabricating steel, the Finex method, should be studied and implemented so that their exposure to monetary value of bit steel can be reduced.
