Strategic Case Memo

Case summary: Nucor in 2009

Symptoms

Nucor is a company specializing in steel joist plants, steel frames for buildings, steel mills, and scrap metal processing. Nucor has shown a special knack for starting up new facilities with minimal costs. They also have improved the steel-making process by eliminating wasteful procedures, thereby again reducing costs. Nucor Corporation has many different competencies that allow them to hold a strong position in the steel industry. Nucor’s corporate directional strategy distinctively comprises growth concentration strategies (enveloping vertical and horizontal). Nucor initially was focused in the joist business before incorporating vertical growth through backward integration into steel mills as their core business to reduce supply costs; forward integration into miscellaneous steel product industries e.g. fasteners, bolts and bearings; and strategic alliances in Nucor. Nucor expanded through various acquisitions to fuel horizontal growth. Nucor recognized the importance of keeping costs down. Management practices emphasize autonomy and focus on results. This is seen throughout the company. Incentive programs are disbursed accordingly, and even top management is not afforded normal corporate luxuries. Bonuses are given for exceeding the productivity standards. A major weakness for Nucor is its geographic concentration in the United States. The United States steel industry is very mature and has to look internationally for profits and growth.

The company had a marvelous industry position and positive financial results for the past 40 years, but as with any company in a mature industry, times are always changing. Nucor reported its first loss ever as a severe recession sapped demand for the metal. Like other steel companies, Nucor has been hit particularly hard by a shrinking economy, which has undermined demand for the metal in major markets such as construction and automobile.

Problem definition

How to survive...