Management and Steel Industry Essay

1. List and elaborate some strategic issues facing NUCOR.Key strategic issues challenging NUCOR include principle related to climate change, fluctuating cost and supply of beseech ore and scrap nerve, increasing amount of steel imports, production technology improvements and economic weakness. Changes in legislation could have severe meetings on the firms numerous production facilities and could be costly to become compliant. The fluctuations in both the cost and supply of iron ore and scrap steel directly impact the firms profitability because it is difficult to pass those costs on to the customers due to the price-driven level of competition in the steel assiduity.The rise of humbled cost steel imports increases the domestic U.S. supply which puts pressure on NUCOR. The firm must stay at the front of technical advances for the production and processing of steel in order to stay competitive. Common for many firms and industries, economic weakness is an issue that challenges N UCORs strategy because it can impact the demand for its reputable high quality steel products.2. What are the key elements of NUCORs low cost strategy? What factors have helped NUCOR achieve a low cost position?Key strategy elements for NUCORConservative financial strengthTeam-based culture and decentralized operations steep integrationDiversificationInnovation knowledge technology, speed of design processClose proximity to important customersFinancially stable employees higher than average wages and non-discretionary incentive programsEmployee em fountainmentHonesty and nakedness within the companyNo employee lay-offsFactors that have contributed to NUCORs low cost position Strong, long-term relationships with outback(a) parties for services such as research and development, purchasing recommendations, advertising, public relations, andlegal or environmental regulation compliance Stepping away from the steel industrys tradition of equalized freight and offering all customers the gross sales terms of price plus actual shipping costs Not offering customers volume discountsFleet of nearly 150 trucks for product deliveryVertical integration from joist manufacturing into steel productionSteel production utilizing mini-mill technologyHolding contrivestations responsible for identifying bottlenecks to increase efficiencySophisticated accountr program is used to compute accurate bidsImprovements in the melting and casting processes for steel production including continuous castersFlat organizational hierarchy3. Please apply Porters quint Forces model to the steel industry. While doing so, clearly identify who is behind each force and what the impact is of each force on the profitability of the industry (high/ average/low). At the end, also provide a summary of all the five forces and propose whether you think the steel industry is attractive or not.The talk terms power of buyers is high due to minimal product differentiation, low switching costs, excess ca pacity of steel production and large volume purchases. The threat of substitutes is medium because substitutes such as aluminum and plastic would not provide equivalent strength and durability but could still serve the same purpose as steel.The bargaining power of suppliers is low primarily due to the product being a commodity, high ratio of imported raw materials, and low switching costs.The threat of crude entrants is low due to the trend toward consolidation and high amount of capital required to establish production/processing facilities capable of achieving economies of scale.Rivalry is intense because the steel industry is mature with little differentiation among products and mergers both in the U.S. and across the globe creating giant companies with deep pockets.Generally speaking, I think the steel industry is unattractive primarily due to its maturity, significant capital requirements and intense price-based competition that ultimately lead to low profitability.4. What are NUCORs resources and capabilities?ResourcesTeam-based organizational cultureAlliances with outside parties for support servicesJoint ventures withPhysical locations of plants in proximity to key customersLoyal employees comprised of production workers, department heads, support and administrative staff, and senior attention progressive mini-mill technologyOwn fleet of nearly 150 trucks for distributionComputer program to generate bidsPlants, mills, equipment, and machineryReputationFinancial capitalCapabilitiesManagements philosophy and leadership skillsSuccessful quality control processFlat organizational hierarchy and incentive program that keeps the workforce cooperative and productiveAcquisition managementMultidivisional coordinationSpeed of design process5. Elaborate on some of the key lessons you have learnt from the case abbreviation.The most significant lesson I learned from this case analysis is that management style and culture can be key to being competitive. These re ally are the two things that will give NUCOR sustainable competitive wagesbecause they are the most difficult to find and imitate. Building such an impressive employee loyalty takes time and cannot be replicated easily. In addition, the minimization of the corporate bureaucracy is something that makes employees at all levels feel comfortable and as if they are part of a family. I think there are many companies, including the one I work for that could really benefit from adopting this management style.