Nucor Corporation Case Study

Discuss the trends in the steel industry and how it may impact Nucor's strategy

Regardless of demand growth in steel industry capacity still exceeds steel demand. There is now significant over-capacity in the global steel sector which is putting pressure on operators' profitability. This has been exacerbated by the European sovereign debt crisis which reduced confidence in the marketplace in the latter half of 2011 on global economic growth, putting a halt on investments into large-scale infrastructure projects in Europe, and reducing availability of capital for growth (Ernst & Young 2011). From the perspective of Nucor, this means that unless there is recovery in the construction and automotive industry it will be difficult to sustain a revenue growth and maintain corresponding profit levels. Nucor may be obligated to reduce costs, increase controls over its manufacturing strategy, and compete on the basis of price. The increasing competitive pressures on Nucor may require it to become less innovative, reduce duplication of efforts and reduce costs. Greater control over the units will be required to realize economies of scale and gain cost leadership. This is necessary so that Nucor can fight the cost battle and continue to increase its revenues. However the complexity of the issue is large as growth in steel industry capability is expected to continue at pace and political issues are preventing a rationalization of the sector because governments are under pressure to protect jobs and the sector. The timeframe for rationalization will be driven by the political agenda. With over-capacity being the most significant challenge in the sector today, there are further related challenges facing the sector (Investopedia 2011).

Discuss the organizational structure and management philosophy at Nucor

Unlike most companies which are made up of 8-10 management layers between the CEO and the employees, where Nucor had only four management layers which are...