Deberr

I. Executive Summary

The North American steel industry is in decline, for the first time two decades. Macro-environmental and industry forces have caused steel prices to drop while costs of production and labor wages are rising. Many companies have filed for bankruptcy and there is significant industry consolidation occurring, primarily in Europe and Asia; the threat of these huge conglomerates entering the US or other profitable markets is inevitable and in progress. The current industry climate provides financially-healthy companies an excellent opportunity to enter into a phase of acquisition. As “Greenfield growth” is only limited for large domestic steel producers, taking advantage of purchasing opportunities of bankrupt and undervalued companies seems to be a increasingly worthwhile activity.  

Thus far, Nucor has been a leader in the industry due to their organizational culture and management values. Nucor has also made switching costs for buyers high and they are a first mover in implementing new technology.

An analysis of the industry, its opportunities and threats, Nucor’s competitive capabilities, and Nucor’s strengths and weaknesses has led us to suggest the following recommendations. Each recommendation presents information about the current environment, its context, and how we recommend Nucor proceeds. Each also contains the tools needed to measure their success.

We recommend that Nucor:

1. Maintain current domestic business and functional level strategies

2. Return to lean management structure: The present management structure that Nucor has acquired is a weakness for the company. In addition, stock prices fell by ten percent in 1999 once the management configuration changed from its original design. With that, Nucor should restore its management back to its original composition. This will leave Nucor less susceptible to losing stakeholders’ interest in the company.

3. Implement strip casting technology in its...