NUCOR CORPORATION

NORAINI BINTI BAZIT 1011198

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

COMPANY BACKGROUND
NUCOR CORPORATION IN 2012: USING
ECONOMIC DOWNTURN AS AN OPPORTUNITY
TO GROW STRONGER
2011 : 11
th
largest steel company in the World
Sales capacity 27 million tons
Revenues - $20 billion
2000 : 2
nd
largest steel company in the United
States
Sales capacity - 11 million tons annually
Revenues - $4.8 billion
1950 : Nuclear
Corporation of
America
1964 : new
CEO, F.
Kenneth
Iverson
1972 : Nucor
Corporation
1985 : 7
th

largest steel
company in
North America
QUESTION 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 acquisitions
new plant construction
continued plant upgrades and cost reduction
efforts
international growth through joint ventures
greater control over raw materials costs.
Q1(A). THE GENERIC STRATEGIES DISCUSSED IN
CHAPTER 5 AND EMPLOYED BY NUCOR
Nucor Corporation is employing
Low-Cost Provider Strategy
Embed 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-advantage
Nucor 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
PRACTICES
Aggressively pursue & implement cost-saving technologies
Employ incentive compensation that motivate above-average output
Empower plant employees
Create a low-cost culture
Offshore joint ventures
Backward integration of supply chain
NUCORS POLICIES & OPERATING
PRACTICES
EXAMPLE :COST-SAVING TECHNOLOGIES
Product
quality
Ultra-Thin
Gauge
products
Minimized
environmental
impact
Good
Financial
perspective
Productio
n &
Delivery
Performance based compensation
Pay for performance
Employees focused

Egalitarian benefits
Senior officers do not receive traditional perks
Many of Nucors program (profit sharing,
scholarship program, service award program)
COMPENSATION & BENEFIT SYSTEM
EMPOWER PLANT EMPLOYEES
Communication philosophies
Focus on long-term success
Care of our customers
Being the safest, highest quality,
lowest cost, most productive &
most profitable steel products
company in the world
LOW-COST CULTURE
Nucor has adopted a low-cost leadership
strategy to be success by
Optimizing existing operation
Pursue strategic acquisition
Growth globally through joint venture
Joint venture would strengthen Nucors
customer base, geographic coverage &
lineup product offerings
OFFSHORE JOINT VENTURE
2007
Harris
Steel Co.
2007
Magnatrax
2008
David
J.Joseph
Company
2008
Duferco
S.A.
2010
Mitsui&
Co
BACKWARD INTEGRATION OF
SUPPLY CHAIN
Plays an important role in reducing
cost at each stage of its operation
process
Able to pursue low-cost
strategy with respect to the
construction, production &
operation
QUESTION 2
Perform 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 ANALYSIS
SWOT ANALYSIS
STRENGTH 1. Industry leader in innovation of lowest production cost.
2. Excellence in management. (Employee Relation
and HR)
3. Nucor is the only company which is certainly
healthy. (Finance, Acquisition)
4. Being a global leader in environmental performance.
5. Risk taker. ( Downturn)
6. Diversified product mixed
WEAKNESS
1. High dependence on US domestic market.
(Supplier, Pricing)
2. Limited diversification.
OPPORTUNITY 1. 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.
THREAT 1. Rising raw material & labor cost.
2. Threat from Chinese & other
foreign players entering US
markets.
3. Declining demand in US Real
estate.
Q2. NUCOR SITUATION
NUCOR
SITUATION
they have
built a
strong
base in the
market
also
performs
better in
terms of
profit and
return
chances of
opportunity for
Nucor to develop
is highly
recommended
because Nucor
has proven their
ability in the past.
Nucor is a
leading
company in
the
production of
steels in the
industry
CORE OR DISTINCTIVE
COMPETENCY?
CORE
COMPETENCY
management also excellent as
they are improving it from time to
time
utilize the
threat as
their
opportunity
production
of steel did
make a
profit
QUESTION 3
What is your assessment of Nucors financial
performance the past several years?
How strong is the companys financial position?
Discuss.

1000
2800
4600
6400
8200
10000
11800
13600
15400
17200
19000
20800
22600
1970 1980 1990 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Nucors Net Sales (in million $)
Net Sales
-300
0
300
600
900
1200
1500
1800
2100
1970 1980 1990 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Nucors Net Earnings(in million $)
Net Earnings (Loss)
245
416
406
425
354 357 359
595
621
667
723
940
637
720
869
0
100
200
300
400
500
600
700
800
900
1000
1970 1980 1990 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Average Price per Ton ($) 1970-2011
Average Price per Ton
2011 2010 2009 2008 2007
Net Earning (Loss)
778.2 143.1 (293.6) 1831.0 1471.9
Net Margin (%)
3.9 0.8 -2.6 7.7 8.9
ROA (%)
3.9 0.8 -2.6 7.7 8.9
ROE (%)
10.7 1.8 -3.8 28.1 29.4
ROI (%)
5.3 1.0 -2.3 13.2 15.0
ROCE (%)
12 3.4 -2.5 26.6 31.0
Profitability
15
13.2
-2.3
1
5.3
29.4
28.1
-3.8
1.8
10.7
15
13.2
-2.3
1
5.3
31
26.6
-2.5
3.4
12
8.9
7.7
-2.6
0.8
3.9
-5
0
5
10
15
20
25
30
2007 2008 2009 2010 2011
Nucors Profitability Measure
ROA ROE ROI ROCE Net Margin
2011 2010 2009 2008 2007
Current Ratio 2.8 3.9 4.2 3.5 3.2
2011 2010 2009 2008 2007
Debt/Equity
Ratio
0.89 0.81 0.58 0.65 0.75
Financial Position
Strong 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 PERSPECTIVES
Continuous 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