Nucor Case Study analysis

Corporate Level Strategy According to the case, Nucor tends to rely on its strength as the lowest cost steel producer that is committed towards providing a quality product to its customers. Nucor has its operations divided between the steel and iron industry. In 1965, Nucor started focusing on running only two main lines of business, since they were the only divisions that the company was making profits in. These included steel joist plants making steel frames and steel mills that supplied to the joist plants. Over the years, it has made a large number of acquisitions for steel and iron producing plants and mills across the US. However, Nucor’s expansion has been mostly limited to being within America, instead of going overseas to compete globally. Nucor lead the market share for Joist Divisions due its low cost of production and a strong distribution channel having plants located in rural areas near the markets they served. The Steel Mill Division had similar achievements in terms of market share and low cost structure. But they also relied on research and development for new technologically advanced processes and manufacturing techniques. Nucor was the first steel company in the world to have built and used mini-mill technology for its production. In 1986, Nucor had a vertical forward integration when it started to manufacture steel fasteners, steel bearings and flat-rolled or sheet steel. Nucor’s success from being almost bankrupt in 1965 to being the largest steel company in US was highly dependent on its sophisticated stripped down characteristic organizational style. Their organizational structure and culture amongst employees was based on trust and equality. There were no additional or extra luxury facilities for the employees such as company jets, cars or country club memberships. Although, they managed to keep their employees close, happy and motivated. Nucor never made any lay offs even at the worst recessions within the economy and their workers were quite financially secure. However, even though this strategy was crucial for Nucor’s success for the next decade or two, the organization could not afford to stick to it without any changes because of the intense number of competitors entering the industry who had the opportunity to follow the same strategy as Nucor. Therefore, considering today’s world of Globalization where change is necessary for any organizational survival, it had become imperative for Nucor to consider a different approach towards its workforce. However, in 2000 Nucor increased its corporate level staff and added specialists for strategic planning and steel technology. Nucor for the first time in 2000 started sessions for strategic planning for developing technology for its competitive advantage, sustainable earnings and further acquisitions. These changes in the organizational structure and company strategy came about as a result of increased competition from major steel companies such as Arcelor Mittal and Steel Holding Corporation, for which the company needed to adapt to a different approach than it was following for years since establishment.

Business Level Strategy Nucor has an extremely low cost of production as its competitive strategy, aiming to provide a generic product to its customers for the lowest price possible. Prices in the steel industry tend to fluctuate at a high variability, as cost is the key differentiator to steel production. Nucor Steel is currently at the mature stage of business lifecycle enjoying market leadership as the largest steel producer in America. Nucor’s market leadership position has been dependent on its organizational structure and the need to research and develop new technological techniques and methods to achieve maximum productivity at the lowest possible cost. When Nucor started to grow significantly in its initial stages, it was mainly because its competitors failed to match Nucor’s cost structure which was its Unique Selling Point or the competitive

edge in the market. The company acquired a line of differentiated products like metal, but maintained their cost and organizational structure consistent. Nucor competes by using third party suppliers for materials that help keep raw material costs low and further invest in strategy and planning for the future in order to use new methods and techniques for consistency. Streamlining the management and production-line functions have resulted in a steady decrease in cost, and a steady increase in production per worker. Nucor has been able to slightly increase their prices while requiring less raw material per unit of finished product with its customer base unaffected. This ultimately leads to an increased margin, which indicates operational effectiveness. Due to the success of the company thus far, it is recommended that the company retain the businesslevel strategy and make very little, if any, changes to the functional level strategies going forward.

Structure and Control Systems Before Ken Iverson left the company, Nucor had a very decentralized organizational structure of hierarchy which lower level of vertical ranks. It made communication between managers, corporate level executives and workers easier and friendlier. Whereas, in 1998 the centralization of management started occurring, with a new level of Executive Vise Presidents being introduced over regions of several plants. However, this would most likely create a communication gap between the decisionmaking body and the workers. Hence, the issues that would occur due to all the changes in chain-of-command and reporting can be very harmful to the organizational culture that the company had previously built its success on. A revised structure of lean management would be a suitable recommendation to avoid such negative consequences. While it may have become vital for company to consider structural changes due to competition, the successful impact of these changes on the company’s workforce is highly uncertain. Nucor’s strategy to establish an internal ‘fit’ with its management and employees was most likely to lead to short-term growth as well as long-term success. Nucor was capable of establishing this fit with its management team due to their values and their original attainment of Ken Iverson. His management strategy was based on two primary goals for improving efficiency, and nurturing strong employee relationships. Iverson believed in employee fairness. With this he was able to uphold a cooperative and productive workforce by instilling values such as honesty, autonomy, trust, communication, self-motivation, and simplicity. Nucor reinforced short lines of communication, and also emphasized the importance of a decentralized management structure. Despite all of the changes that had been made, Nucor kept a fairly consistent corporate culture. The emphasis of each plant was its ability to be run as an independent business, with a strong focus on entrepreneurship. Also Nucor lived its motto of, “failure to take risk is failure.” Nucor took chances in technology, and in the basic structure of the company. These chances made significant contribution to Nucor’s overall success. At Nucor, each employee within a plant had greater knowledge and empowerment than any other individual in the plant. This individualistic approach was then integrated into teambased incentive programs, in order for everyone to continue to pull their own weight, and also to achieve high amounts of quality production at an efficient pace.

Nucor also ran the company with a no-nonsense approach. Their focus was on their rivals, their own possessions, wealth and ambitions. In that capacity, Nucor was able to generate a company culture full of teammates, whose main goal is to take care of its customers. Nucor should continue to protect those corporate cultural values that have existed since the creation of the company; because their culture is a key success factor for them in both domestic and global markets.

Recommendations All things considered, Nucor has assets and ability in the steel business, and has earned a certain level of edge that its competitors struggle to match. Nucor possesses huge brand confidence, and is the pioneer of the steel business at the time. In this manner, Nucor has supreme point of interest than others in the steel business. Impacts from the financial emergency and worldwide rivalry require Nucor to keep up its aggressive core interest. To accomplish its central goal, it is recommended for Nucor to keep up great long haul association with clients. In the meantime, Nucor needs to upgrade inward control environment and develop internal assessment and improvements.