NUCOR IN 2012:

ING ECONOMIC DOWNTURNS AS

OPPORTUNITY TO GROW STRONGER

PRESENTED BY GROUP 4

PRESENTATION ORDER

1
3
5
7
9
11

Nguyn Trung Hiu

L nh Minh

Nguyn Th Trm Anh

Nguyn Huy Hong

Nguyn Th Kiu Khanh
Trng Th Thin Trang
Trn M Linh
Nguyn Thnh Minh
on Hng Giang
V Hng Phong
V Duy Minh

6
8
10

 Nucor Corp was the largest

manufacturer of steel
Nucor is pursuing a low-cost
leadership strategy
Nucor is facing some major
issues
Rivals production capacity
increases
Foreign steelmakers
Domestic competitors

Recommendation
Keep business strategy
Change vertical and horizontal
integration

EXECUTIVE
SUMMARY

1950s - Nuclear Corporation of America

1960s Was a maker of nuclear instruments and
electronics products
1964

1968

1972

Present

Engaged in the steel joist business

Integrated backward into steelmaking
Reasons:
- Benefits of supplying its own steel requirements
for producing steel joists
- Opportunities to capitalize on newly emerging
technologies to produce steel more cheaply
Adopted the name Nucor Corporation
Is one of the largest steel producers and the largest
steel scrap recycler in North America

COMPANY
OVERVIEW

Operation: series of low-cost, highly productive steel mini mills utilizing:

Scrap

Technology: Electric Arc Furnaces

Metallic Raw Materials

COMPANY
OVERVIEW

 3 main segments:

COMPANY
OVERVIEW

1
3
5
QUESTIONS

7
9

What are the primary competitive forces

impacting U.S.
steel producers in general and the producers
like Nucor
that make new steel products via recycling
scrap steel in particular? Please do a fiveforces analysis to support your answer.
How attractive are the prospects for future
profitability of U.S. steelmakers? Should
Nucor consider expanding in this type of
industry environment? Why or why not?

2
4

What are the specific policies and operating

practices that Nucor has employed to
implement and execute its chosen strategy?

What does a SWOT analysis reveal about

Nucors situation? Does Nucor have any core
or distinctive competencies?

8
10

What issues does Nucor management need to address?

What driving forces do you see at work

in this industry? Are they likely to
impact the industrys competitive
structure favorably or unfavorably?
What type of strategy has Nucor
followed? Which of the five generic
strategies discussed in Chapter 5 is
Nucor employing? Is there any reason
to believe that Nucor has achieved a
sustainable competitive advantage
over many of its steel industry rivals?
If so, what type of competitive
advantage does Nucor enjoy?
What specific factors account for why
Nucor has been so successful over the
past several decades? Do these factors
have more to do with great strategy,
great strategy execution, or great
leadership?
What is your assessment of Nucors
financial
performance
the
past
several years? How strong is the
companys financial condition?
What recommendations would you
make to Dan Di Micco?

What are the primary

competitive
forces
impacting
U.S.
steel
producers in general and
the producers like Nucor
that
make
new
steel
products via recycling scrap
steel in particular? Please
do a five-forces analysis to

QUESTION

Substitutes for
Steel
Competitive pressures coming from the market attempts
of outsiders to win buyers
over to their products
Rivalry
among
Competing
Producers
Competitive
of Steel
Suppli Competitive
pressures
pressures
Competitive
ers
Buyers
stemming
stemming
pressures
of Steel
to the
from
from
created by
Product
Steel
buyer
supplier
the jockeying
s
Indust
bargaining
bargaining
of rival sellers
and supplier ry
and supplier for better
seller collaboration
seller collaboration
market
position and
competitive
advantage
Competitive pressures coming from
the threat of entry of new rivals

Threat of New
Entrants into the

What driving forces do you

see at work in this industry?
Are they likely to impact the
industrys
competitive
structure
favorably
or
unfavorably?

QUESTION

Technological change and

manufacturing process innovation
Changes in cost and efficiency
Industry consolidation
Regulatory policies/ government
legislation

How attractive are the

prospects for future
profitability of U.S.
steelmakers? Should Nucor
consider expanding in this
type of industry

QUESTION

The demand for steel in the industrialized world:

- Essential material in most industries ( eg: Constructing,
Auto Mobile, Space Conquering, Weapons, etc)

- A foreseeable future that steel becomes a non-substitute

material.

Low-cost and efficient production

High
LowProducing
Demand
Price
Mass
High
price

Produci
ng
Reducti
on

Low
demand

Should Nucor consider expanding its capacity ?

Take
advantage of
a low-cost
producer.

The status of
a secure and
potent
domestic
company

Ye
s

Experience in
operating
plants
efficiently and
profitably

However, in a saturated market like the US steel

market, the domestic expansion should be viewed
cautiously besides the international expansion.

QUESTION

What type of strategy has Nucor

followed? Which of the five generic
strategies discussed in Chapter 5 is
Nucor employing? Is there any
reason to believe that Nucor has
achieved a sustainable competitive
advantage over many of its steel
industry rivals? If so, what type of
competitive advantage does Nucor

QUESTION

What are the specific policies and

operating practices that Nucor
has employed to implement and
execute its chosen strategy?

Strategy and Corresponding Policies,

Practices
New acquisitions: the aggressively pursue
and implement cost-saving techniques.

Commercialization of new technologies

and new plants construction: The
companys
pursuit
of
innovative
technologies to enable low costs and
Nucors profitable entry into new market
segments.

The drive for plant efficiency and low

cost production: The companys low-cost
culture
and
cost-conscious
operating
practices.

Raw material and shifting production

from lower-end steel productions to
value-added
production:
Backward
integration of supply chain

Low-cost
provider
strategy :
striving to
achieve
lower
overall
costs than
rivals, on
comparabl
e products
that
attract a
broad
spectrum

+Purchase existing plant capacity

=> buy at bargain prices, operate
at comparable cost
+ Make ongoing capital
investment => improve efficiency
and production costs
+ Backward-integrate into the
production of 6,000,000 to
7,000,000 tons per year of high
quality scrap substitutes =>
achieve greater control over costs
of all types of metallic inputs

According
to
Thompson,
Peteraf,
Gamble
and
Strickland
III(2014),
successin
sustaining
the
competitive edge depends on
resources
and
capabilities
that rivals have a hard time
duplicating and for which
there are no good substitute
Nucor
has
achieved
a
sustainable
competitive
advantage over many of its
steel industry rivals.
- Nucor has been an early and
aggressive investor in 2 types
of
steel-making

Competitive advantage
Strategic facilities
Technological innovation
Price strategy
Large applicant pool to
hire from

What specific factors account for

why Nucor has been so successful
over the past several decades? Do
these factors have more to do with
great strategy, great strategy
execution, or great leadership?

QUESTION

What does a SWOT analysis reveal

about Nucors situation? Does
Nucor have any
core
or
distinctive competencies?

QUESTION

WEAKNESS
1. Location
2. US real estate and Auto market
3. Focus on competitor

STRENGTH

1. Techonology
2. Continuing innovation
3. Lean management
4. Joint Ventures and Acquisitions
SWOT
OPPORTUNITY
1. Hismelt technology
2. Rail car network
3. Vertical Integration with the
nuclear plants
4. Expansion on the foreign markets
5. New big construction projects

THREAT
1. Trade Threat
2. Domestic Market Invasion
3. Local competitors
4. Environmental Laws

What is your assessment of

Nucors financial performance the
past several years? How strong
is the companys financial
condition?

QUESTION

 CAGR in tons sold to outside

customers 1970-2011:
16.42%
CAGR in net sales 1970-2011:
21.26%
CAGR in earnings before
taxes 1970-2011: 22.44%
CAGR in net earnings 19702011: 23.57%

Ratio
Sale revenues
Operating income
(EBIT)
Net income
Operating margin
Current ratio
Return on common
equity
Return
on
total
assets
Profit margin
Basic
earning
power

2011
2010
2009
2008
$20,023.6 $15,844.6 $11,190.3 $23,663.3
0
0
0
0
$1,251.80 $267.10

($414.00)

$3,104.40

$861.00
6%
2.8

$206.30
2%
3.9

($237.20)
-4%
4.2

$2,144.90
13%
3.5

12%

3%

-3%

42%

6%

1%

-2%

15%

11%

9%

4%

3%

0.09

0.02

-0.03

0.15

QUESTION

What issues does Nucor

management need to address?

QUESTION

10

What recommendations would

you make to Dan Di Micco?

ISSU
ES

RECOMMENDATION
S

Mounting
competitive
pressures in the
market for sheet
steel in US
Continue to seek
out profitable
opportunities to
expand the
companys
production
capacity.

Threats from
foreign
steelmakers

Threats from
domestic
competitors

Continue to be
aggressive in
seeking out and
implementing
ways to lower the
companys cost
of making steel
products
persuade the U.S.
government to
protect U.S. steel
companies from
dumping and
other unfair
competitive
practices

Continue to
aggressively
pursue a low-cost
leadership
strategy
Expanding into
the markets of
foreign countries
needs to be
pursued
cautiously.

URRENT SITUATION

AT NUCOR

2013 LARGEST EVENTS

In 2013: John J.Ferriola named as new CEO
On December 24, 2013: Louisiana DRI
plant ONLINE

FIRST HALF OF 2014

On January 28, 2014: Nucor Reports Results
for Fourth Quarter and Year Ended 2013
On February 18, 2014: Nucor Announces
164th Consecutive Cash Dividend
On April 24, 2014: Nucor Reports Results
for First Quarter of 2014
On May 9, 2014: Nucor Promotes Chad
Utermark to Executive Vice President
On June 5, 2014: Nucor Announces 165th
Consecutive Cash Dividend

CONCLUSION

ANALYSI
S OF
FIVEFORCE
MODEL

ANALYSI
S OF
INDUST
RY

ANALYSIS
OF
STRATEG
Y,
POLICES
AND
PRACTICE
S

ANALYSI
S OF
SWOT

ANALYSI
S OF
FINANCI
AL
PERFOR
MANCE

ISSUES
TO BE
ADDRES
SED

RECOM
MENDAT
IONS

NUCOR IN 2012:
THANK YOU FOR LISTENING!

PRESENTED BY GROUP 4