-295275-371475Nucor Corporation Competing against Low-Cost Steel Imports 110000110000Nucor Corporation Competing against Low-Cost Steel Imports 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 support your answer. As mentioned in the case the main problem is the excess of steel in the steel market. Right now foreign steel is being dumped in the US. This results that supply exceeds demand which results off course in decreases of profit for many steel companies. This gives a lot of pressure to the companies and most of them are not able to survive the pressure and …show more content…
The reasons are the following: Because of globalization all the markets are open and easier to enter for companies all over the world. This increases the entrance of foreign competitors like Chine, Italy, South Korea etc. Another factor are the energy and raw material costs that effect the profit of a company. Not to forget that the economy itself is really unstable. Last but not least the government regulation and laws that can increase the prices of the products as well. We believe that they should expand. Nucor is self-reliant and has a good strategy which made the company the second largest producer in the US. They should expand to global market to be able to increase their market share. They can go to markets such as Russia, China or Brazil, since they are dumping into the US market. However they should evaluate the Porter five forces before making any decisions since these markets are really competitive. 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? The core strategy of Nucor is that of cost leadership via the use of technology. Through innovation and the use of high quality technology to process their steel, Nucor was able to achieve this cost advantage.
For the Northrop Grumman Corporation it is vital to keep the competitive advantage as well as reinforce their market position within the industry. This is part of the organization?s overall business strategies; it focuses on how the organization acts and approaches their products success for each of their product lines. Since the Northrop Grumman Corporation consists of four diverse areas of products and services, each one has its own strategy, theses diverse areas include Aerospace Systems, Electronic Systems, Information Systems and Technical Services. (Thompson, 2016-2017).
The challenges faced by Nucleon, Inc. present more of an issue with how to take full advantage of an opportunity in front of them, rather than a problem that poses a threat to the company. As a company in its early stages, only putting out its first product, it is critical that it is done in a manner that allows the budding firm to grow. The main issue here is determining the most effective means by which they are to manufacture and market their first product, CRP-1. Doing so requires in-depth evaluation of three strategic options, all with their own benefits and potential risks. The problem statement, therefore, is as follows:
The prospects for future profitability of the U.S. steel makers are very unattractive. Unless America can successfully combat China’s enormously, inexpensive, production ability, I do not see any American steel company surviving. China just has too big of a production ability and has the workforce to do it cheaply. Nucor will have to expand in this industry in the United States to survive. If the WTO
3/ What is your recommendation regarding Nucleon’s long-term manufacturing strategy? What should this company look like in 10 years (e.g. an R&D boutique, an R&D boutique with pilot scale manufacturing capabilities, or an integrated manufacturing enterprise)?
In light of the surplus steel products in the U.S., Nucor along with other steel producers had to lower their prices in order to compete with the extremely low priced foreign steel that flooded the U.S. market. Nucor was not adversely affected by the price change; in fact they were able to maintain their financial health (Thompson, 2007).
Even in spite of the economic recession in 1991, Nucor still appeared to be one of the fastest growing steel companies in America, even considering the spending levels regarding disposable income among Americans. This is especially true since September 11, attacks, because economic levels in America have tended to exhibit a slight disability. After the attacks on 9-11 markets, as well as the overall financial climate of the United States took on immediate hits. Yet, after President Bush’s tax cuts made in 2002, the country rebounded from a mild recession which dated back to the Clinton administration and has since sought to recover. The steel industry worldwide was mired in one of its most unprofitable periods ever when 9-11 hit. The recovery from the recession, as well as an attempt to pull through current financial hard times due to the war in Iraq have added extra strains on Americans and their ability to spend, which in turn affects the steel industry.
Over the years Nucor emerged as a market leader in the American steel producing industry due to its sustainable growth strategies and incorporation of sophisticated technologies that enables the company to grow exponential and become a market leader by offering high quality steel products at lower costs. The company backed its growth strategies by massive integration in the American market. However, this growth strategy proved to be predominant in capturing the American market thus ignoring the potential competitive threats that could come from foreign steel producers. This included both steel producers integrating with American minimills and foreign producers who used America as a lucrative export market and dumped their products.
Nucor has been facing many industry challenges including the overall development of the industry. They are competing with foreign firms on cost and efficiency. Nucor has a low cost strategy because as they say their product is not necessarily very attractive. It does not have attractive or unique selling features other than its cost. The commodity of steel is in a very competitive market. Nucor understands that innovation and productivity are going to be key factors to keep their buyers satisfied with their prices. Nucor is facing many challenges with a growing world market and many of their competitors merging in order to create stronger more dominate
If the labor market is no concern to you then maybe the environment is. Many foreign countries have little to no regulations on their manufacturing facilities to protect the environment. The drawback of this makes it difficult for American companies to compete. Paying fines or accumulating additional costs to meet energy standards is not cost effective. This can affect the
A great competitive advantage in the industry will be to have an integrated enterprise that is capable of R&D and large scale commercial manufacturing. In this context, Nucleon’s long term strategic goal should be to gain this competitive advantage by continuing to leverage its existing R&D competencies along with acquiring in-house manufacturing
Nucor has created a company that is both internally and externally fit to the environment. The firm responds well to the driving forces of the industry and has opted to take a low-cost strategy with the relentless pursuit of innovation and strong employee productivity in order to combat the issues of the steel industry. In 2000, Nucor decided to expand its operations by acquiring new firms and new factories while continuing with its low-cost operations. The competitive strategy of Nucor has helped it become one of the leading manufacturers of steel and steel products in the United States.
The second alternative will allow Nucleon to have a manufacturing strategy with less risk since this option requires no capital investments on Nucleon’s part. Compared to the first alternative, the contract-manufacturing fee is less ($4.8 M) and companies supplying contract-manufacturing services will provide facilities and
Next, Nucor have to implement 5 new strategies to make it more global which are playing big in major markets, standardizing the core product, concentrating value-adding activities in a few countries, adopting a uniform market positioning and marketing mix and integrating competitive strategy across countries. Then Nucor shall plan the company human resource by implementing strategies like centralization of global authority, domestic/international split and mixture between the local and current manager.
U.S. Steel and other steel companies for decades, relied on the tried and true strategies of vertical integration and price control (Hoerr, 1988). In the 1960’s, foreign competition from developing countries like South Korea, Taiwan and Brazil entered the market "with low material and labor costs, modern equipment, and the support of government policies" (Hoerr, 1988, p. 99). Because of lower costs and concern over supply created by constant threat of strike, many
Porter however believes that it is important to go beyond the traditional factors of production in that the most important factors were not inherited but were created from within. For competitive advantage to be successful a company must focus and specialise in an industry’s particular needs. Once this is achieved it must continue to work tirelessly to upgrade these needs. We learn from the article that through upgrading and innovations that factors which may at first seem to be a disadvantage can be converted into an advantage. An Example of this was shown to us with the steel producers in Brescia Italy. Disadvantages included: locations in Northern Lombardy meant high logistic costs and with inadequate transport system proved costly as well as high energy cost, high capital costs and no local raw materials. They established technologically advanced minimills that required small investment, use less energy and permit producers to locate to sources of scrap and end-use customers. As a result factors that were a disadvantage were converted into a competitive