Nucor Steel Case Study

Managerial Accounting ACC 502

Dr. Rivers

Donald J Sutcliffe III

9/4/2016

Nucor Corporation

Upon reading the case study, it is easy to ascertain after the fact, why Nucor Corporation has prospered through the years. Though there is a long list of possible answers given in the first question, I believe the genesis of their fortune is in large part to its unique competitive strategies and Chairman F. Kenneth Iverson’s vision in the multiple stakeholders’ approach; Capital, Product, and Factor markets.

* In the capital markets, debt was never allowed past 30% and shareholders enjoyed an overall 17% annual ROE across a 30-year span.

* In the product markets Iverson leveraged Nucor’s core competencies, building steel manufacturing facilities and operating them productively, towards the diverse low end (non-flat steel) product market needs of the time. This provided the necessary competitive niche to operate in the Steel industry SGA.

* In the factor market, Nucor sought out rural locations and paid above competitive wages to attract the best human capital. Raw materials were garnered from the open market in the form of repurposing scrap.

With these innovations Iverson was able to take a foundering steel company back from the brink of bankruptcy to continuous improvement and prosperity.

Nucor’s corporate structure relies heavily on each factory operating as its own business unit essentially giving each general manager a great measure of autonomy their operational direction and success. Perhaps another important aspect is the relative flatness of their corporate hierarchy:

Chairman/ Vice-Chairman/ President

Vice-President/ General Manager

Department Manager

Supervisor

The work environment is fostered to be one of acceptance and continuous improvement where its widely acknowledged that even experienced decision makers will be right only 60% of the time. The caveat being not, of course, to make the same mistakes over again....