Why Nucor has performed

so well in the past?

Focus on Core Business
Nucor adopted the strategy to focus on core business after Kev Iverson took Its
reins.
Its Managers believed in building steel plants economically and operating them
efficiently.

Nucor Culture
Flat management hierarchy for effective decision making and better
communication.
Decentralized management philosophy
Performance based compensation with emphasis on group performance
Efforts were made to eliminate status related difference among the employees as
everyone received the same Insurance coverage and holidays.
Encouraging employees to openness and risk taking.
.

Nucors customer service

A key differentiator
Buyer power was mildly unattractive.
Highly efficient labor force
Employees loyalty to the firm

Nucor started small plants closer to suppliers& customer

Reduction in transportation cost
Strategic selection of plant location i.e in rural areas with cheap support
facilities such as electricity

Investment in technological up gradation of plant

Dedicated workforce to monitor technological advancements worldwide

Effective Investment policies

Capital budgeting was done with a view to get 25% ROA for new plants.
Debt to capital ratio was restricted upto 30%

Nucor - Sustainable Competitive

Advantage

2-3 Year Head start

Less Total Construction Cost Needed
$10-$20 Million discount off
Steady State Operating Costs
Cash Rich- $185 Million & Short-term securities on hand
Current Price of Premium Scrap Low
Decrease U.S Labour Costs - Usage of technology
Increase in Market Penetration due to lower prices
(Lower end of Flat Sheet Market)

Strategic Decisions
Focused on two major competencies: building steel
manufacturing facilities economically and operating them
productively
Companys hallmarks were continuous innovation,
modern equipment, individualized customer service, and
a commitment to producing high-quality steel and steel
products at competitive prices
First in the industry to adopt a number of new products
and innovative processes, including thin-slab cast steel,
iron carbide, and the direct casting of stainless wires
Produced a greater variety of steel products than did any
other steel company

 Both low-end (non-flat) steel, such as reinforcing bar, high-end

(flat) steel, including motor lamination steel used in
dishwashers, washers, and dryers, as well as stainless steel
used in automotive catalytic converters and exhaust systems
Low-end steel products were distributed through steel service
centers.
High-end products were sold directly to original equipment
manufacturers, fabricators, or end-use customers.
Debt to total capital ratio was not allowed to exceed 30
percent
Did not believe in acquisitions or mergers, choosing instead to
commit to internally generated growth

Strategic positioning of steel

Industry

Value creation and Appropriation

Operational Decisions
Located its diverse facilities in rural areas
Established strong ties to its local communities and its work
force
Highly paid wages, attracted hard-working, dedicated
employees
Nucor selected from among competing locals, sitting its
operations in states with tax structures that encouraged
business growth and regulatory policies
Favored the companys commitment to remaining union-free.
Energy saving technology,plants with low pollution level and
environmental friendly production system

 Commercialized Castrip technology to produce flat rolled carbon and

SS in various gauges
reduced capital expenditure for equipment and produced saving on
operating expenses
Operations are highly automated which reduces no of employee
required per ton produced
Lean manufacturing system and employee empowerment allows them
to identify bottlenecks of production system
Owns major supplier of scrap metal including rail cars used for
transportation between various business entities located in different
location
Innovations in manufacturing techniques provides cost cutting and
these techniques constantly updated to reduce further cost and
increase capacity and speed

Tactical Decisions

Better employee relation and satisfaction

Strong financial health and management team
Quality of product, efficiency in productivity
Aggressive pursuit of innovation, technical excellance,
Low cost provider
Strong supplier relationship provides them easy acess to
lower cost raw material
Cost cutting through use of divisional managers
Decisions are made quickly without need tto wait for
decisions from headquarters