Case Analysis Nucor

JGBS |

A Report on “ Nucor on Cross Roads” 1986 Decision on CSP

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Submitted To: Prof. Shounak Roy Choudhary |

Neeraj Saxena

1/5/2011

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Introduction

Purpose of this report is to clearly define the future business strategy of Nucor’s business. And determine the commitment of adopting CSP as future technology. Nucor’s decision on CSP will depend on Porters 5 Force analysis. Nucor’s strength and business model will help in determining the decision.

Porter’s 5 Forces

Entry Barrier: as per data given in case, there are three types of steel entrepreneurs: Integrated plants, Minimills and Special steel producers. All three have different ways of steel production and segment. Intregrated Steel makers have always enjoyed price leadership. They required raw material of ore as their main input coast. They have always faced lot of competition from high imports and labour issues. As far as Minimills are concerned, to make entry into the segment was no so difficult but considering the facts produced in the case, growth in the product segment produced by Minimills were getting saturated. Nucor is low end product producers with input material as scrap. This scrap is recycled to make finished goods. This edge of Nucor, make them price controllers and thus don’t have to worry for any new entrants coming in the same market.

Buyer Power: In steel market product classification, brand identity and marketing are not treated as important factors. But factor which states the health of any steel company are:

a. Price

b. Quality

c. Dependability

Nucor takes the advantage of these factors, produce high quality steel with low prices.

Market for flat products was rising in US, approx. 52% as per exhibit 2. Thus considering the requirement and demand gap Nucor can benefit itself by entering the new segment by introducing CSP technology.

Supplier Power: Nucor uses scrap as main input material for producing their low end products. While they recycle this scrap...