Nucor corporation

Nucor CorporationNORAINI BINTI BAZIT 1011198KHALIDAH BINTI YUSOP 1028960LILIES SULASTRI BINTI SUHARJODARMIS 1111400NOR FARAHI BINTI SAADON 1112012NUR ZARITH AKHMA BINTI TOHIRAZAMAN 1114214SITI AMIRAH BINTI MOHD ZIN 1114622NUR LIYANA BINTI MOHD HALDAR 1120726

Company backgroundNucor Corporation in 2012: using economic downturn as an opportunity to grow strongerQUESTION 1(A)What type of strategy has Nucor followed? Which of the 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? Explain.

Q1(a). What type of strategy has Nucor followed?Nucor implemented growth strategy which comprised of five parts:new acquisitionsnew plant constructioncontinued plant upgrades and cost reduction effortsinternational growth through joint ventures greater control over raw materials costs.Q1(a). the generic strategies discussed in Chapter 5 and employed by nucorNucor Corporation is employing Low-Cost Provider StrategyEmbed the cost-conscious corporate culture.Ongoing investment on plants to improve efficiency and at the same time keep costs per ton low compared to rivals. Aggressive investment on technology innovations which indirectly reduced operating expenses. Shift from outsourcing to produce its own raw materials.Q1(a). Is there any reason to believe that Nucor has achieved a sustainable competitive advantage over many of its steel industry rivals? Nucor has achieved sustainable competitive advantage since competitors were having problems in order to match with Nucors costs competitiveness.

*According to Thompson, Peteraf, Gamble and Strickland III (2014), success in sustaining the competitive edge depends on resources and capabilities that rivals have a hard time duplicating and for which there are no good substitute (p. 144). Q1(a).If so, what type of competitive advantage does Nucor enjoy? Explain.competitive advantage enjoyed by Nucor was cost-advantageNucor achieved cost-advantage because its cumulative costs of operation are lower than rivals.

Eg: By constructing its own plant, Nucor was able to produce sheet steel, costing $50 to $75 per ton where the market price was $400.

Question 1(b)Identify and explain the specific policies and operating practices that Nucor has employed to implement and execute its chosen strategy

Nucors policies & operating practicesNucors policies & operating practicesExample :Cost-saving Technologies

Product qualityUltra-Thin Gauge productsMinimized environmental impactGood Financial perspectiveProduction & DeliveryPerformance based compensationPay for performanceEmployees focused

Egalitarian benefitsSenior officers do not receive traditional perksMany of Nucors program (profit sharing, scholarship program, service award program)Compensation & Benefit SystemEmpower plant employeesCommunication philosophiesFocus on long-term successCare of our customersBeing the safest, highest quality, lowest cost, most productive & most profitable steel products company in the worldLow-cost cultureNucor has adopted a low-cost leadership strategy to be success by Optimizing existing operationPursue strategic acquisitionGrowth globally through joint ventureJoint venture would strengthen Nucors customer base, geographic coverage & lineup product offeringsOffshore Joint Venture2007Harris Steel Co.2007Magnatrax2008David J.Joseph Company2008Duferco S.A.2010 Mitsui&CoBackward integration of supply chainPlays an important role in reducing cost at each stage of its operation processAble to pursue low-cost strategy with respect to the construction, production & operationQuestion 2Perform a SWOT analysis for Nucor. What does a SWOT analysis reveal about Nucors situation? Does Nucor have any core or distinctive competencies? Explain

Q2. swot analysisSWOTANALYSISSTRENGTH1. Industry leader in innovation of lowest production cost.2. Excellence in management. (Employee Relation and HR)3. Nucor isthe only company which is certainly healthy. (Finance, Acquisition)4. Being a global leader in environmental performance.5. Risk taker. ( Downturn)6. Diversified product mixedWEAKNESS1. High dependence on US domestic market. (Supplier, Pricing)2. Limited diversification.OPPORTUNITY1. A 50-50 joint venture with Duferco Group.2. Entry in Asia- Europe market through joint venture.3. Vertical Integration with the plants to enable the low cost energy to produce steel products.THREAT1. Rising raw material & labor cost.2. Threat from Chinese & other foreign players entering US markets.3. Declining demand in US Real estate.Q2. Nucor situationCORE OR DISTINCTIVE COMPETENCY?

Question 3What is your assessment of Nucors financial performance the past several years?How strong is the companys financial position? Discuss.

20112010200920082007Net Earning (Loss)778.2143.1(293.6)1831.01471.9Net Margin (%)3.90.8-2.67.78.9ROA (%)3.90.8-2.67.78.9ROE (%)10.71.8-3.828.129.4ROI (%)5.31.0-2.313.215.0ROCE (%)123.4-2.526.631.0Profitability 20112010200920082007Current Ratio2.83.94.23.53.220112010200920082007Debt/Equity Ratio0.890.810.580.650.75Financial PositionStrong balance Sheet

Current assets exceed current liabilities

Favourable risk Conclusion Good strategy leads to good performance

Financially healthy

Evaluate opportunities to ensure that quality improvement would still help to keep low cost in the long run

Keep up with their social responsibility by setting up environment-friendly recycling plant that will be located at a relatively central location from all its plants

Form an alliance with the south Asian markets to gain exposure to international markets

Islamic perspectivesContinuous improvement

Surah Hashr (59:18)

O you who have believed, fear Allah. And let every soul look to what it has put forth for tomorrow and fear Allah. Indeed, Allah is Acquitainted with what you do.

Islamic Perspective