1. 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 five-force analysis to support your answer.
There has been a lot of pressure to the steel manufacturing companies due to the excess supply of steel products not only by the US producers but also through foreign steel that has been “dumped” in the US. Nucor had to make sure that Nucor cooperation survives the ferocious competition through various strategies that are analyzed through the Porter five forces analysis.
Rivalry among competing steel producers.
It is difficult for buyers to distinguish steel products from one steelmaker company to the other
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What driving forces do you see at work in this industry? Are they likely to impact the industry’s competitive structure favorably or unfavorably?
There is new and advanced technological innovation in the manufacturing of steel through electric arc furnace technology, the direct casting of carbon steel and thin slab casting that has made companies like Nucor to thrive. With the use of low-cost steel manufacturing technology, this move is likely to increase the competitive forces put up by the mini-mills which put producers such as Nucor at a favorable spot
3. 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?
Technological evolution in zones such as advanced computer systems, physical models, use of sensors and artificial intelligence have been incorporated in all stages of manufacturing, and this has not only reduced human labor but also ensures the production of steel is of higher quality, range of products and low
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However, Nucor is a low-cost steel producer who utilizes recycled steel and, there is a chance to succeed in this type of business. This is because with a low production cost the sales increase and so does the market share. Even so, international steel suppliers such as China who provide steel products at of a much lower cost in the US have to be regulated to gain a more significant market share.
Nucor should think about expanding in this line of business through the construction of new steel plants and new and strategic acquisitions of smaller and cash trapped steel mills at a bargain price and turn it into a competitive steel producer. For instance, many profits have been generated over the previous five years from the assets that Nucor built or acquired during the years 2001 to 2003
4. What type of strategy has Nucor followed? Which of the five generic strategies discussed in Chapter 5 is Nucor
BlueScope Steel Australia and New Zealand (BANZ) is a manufacturing company that produces a range of flat steel products for the Australian and New Zealand domestic market. BANZ was formed in July of 2011 which saw the amalgamation of company sections; Australia and New Zealand Steel Making Business (ANZSMB), LYSAGHT and Distribution Business. This amalgamation was followed by a major organisational restructure which ultimately led to the closing down of Number 6 Blast Furnace and resulted in around 800 job losses at the Port Kembla works and 200 job losses at the Western Port works in Victoria. The aim of this project is to outline the rationale for the restructure and to provide a strategic analysis of the impact of the restructure on BANZ’s current market position. This will be achieved by first analysing the economic climate pre-restructure and evaluating the managerial decisions that led to the restructure. It will then explore the current economic climate in relation to BANZ to determine whether these strategic managerial decisions were sound. Finally the report will outline BANZ future developments and determine if the company will continue to be competitive in the future.
Steel Corporations Forge Tyranny The 1960s marked a time of great change, turmoil, and innovation in American history. President John F. Kennedy worked hard to ensure the best for the citizens of the United States and that is why, when steel corporations raised their prices 3.5 percent in a time of economic distress, Kennedy responded with outrage. In his speech to the American people on April 11, 1962, President John F. Kennedy used a plethora of rhetorical strategies to persuade the American public to join his crusade against the greed of large steel companies. President Kennedy begins his address by immediately stating his opinion on the issue; that the actions of steel corporations “constitute a wholly unjustifiable and irresponsible defiance of public interest.”
Also, the competition between existing players in this industry is high. There are about 619,000 metal enterprises in the USA in 2005 (IBISWorld, 2007).There are many companies that produce different kinds of metal products in the market. Besides, the bargaining power of buyers is high because product difference for the buyers of the metal products is small. It is not easy to differentiate the quality of one metal product from another. In addition, the cost of switching for the buyers is low. The number of substitutes of metal products is also high thus the buyers have great bargaining power.
For decades, the steel industry has been one of the toughest markets on a global scale with most steel corporations ending up in bankruptcy. Foreign and domestic competitors, management issues, environmental issues, political agenda’s and technology have had much to do with the demise and more so of the success of the steel industry. The issues that this case focus on Nucor Corporation was of:
Hoerr, J. P. (1988). And the wolf finally came : the decline of the American steel industry. Pittsburgh, PA: University of Pittsburgh Press.
Industry Analysis – Nucor has established itself as a leader in the steel industry through efficiency and innovation.
The local response — divided, rarely ambivalent — is fascinating to the outside observer. Old and not so old men hang on to memories or fight old battles in bars, greasy spoons, and ethnic clubs. Others (perhaps most, though `most´ have died so it´s hard to say) escape to the hills and suburbs and pay little attention to the now dangerous towns in which they were raised unless a shopping mall, complete with the chain restaurants, turns their bad memories into nostalgia.The great steel cities of the past- places like Pittsburgh and Birmingham in the US and Sheffield in the UK- have all experienced the painful shock that occurs when the invisible hand of the market withdraws its support. What has happened since to people of these regions is both a reflection of the legacy of steel production and of the extreme social uncertainty created by its absence.
There are two reasons why a firm may perform well in an industry, either 1) the industry is attractive to any firm 2) the firm is better and outperforms it’s rivals. Porter’s theory therefore can be used to discover the markets that are attractive to firms or, in those which aren’t breaking down the five forces so a strategy for success can be developed. In general the firm with be more profitable if each of the forces is low, that is to say there is a low threat of new firms entering, if buyers and suppliers have little power over the firm, if there is a low threat from substitute products and if competitive rivalry is low.
Nucor Corporation was the largest manufacturer of steel and steel products in North America, with a production capacity of approximately 27 million tons. On an international scale, Nucor was ranked as the 14th-largest steel company in the world based on tons shipped in 2013. Amongst the five generic business strategies, Nucor is known as a low-cost producer, with a known competitive advantage of innovative steelmaking technology. The purpose of this paper is to perform a business analysis of Nucor Corporation by analyzing it using management tools such as SWOT, PESTEL, and Porter’s Five Forces (Thompson, Peteraf, Gamble, & Strickland III, 2014).
· The buying industry hinders the supplying industry in their development (e.g. reluctance to accept new releases of products),
In the early part of this century was a time when industry was booming with growth around the installation of major railroads. With this growth came the transatlantic cable, the telegraph, and a whole lot of steel. Steel would be needed in the construction of these new transportation systems and communications were now possible between businesses and industries. (Wren, 2005)
As recently as six years ago, while investors were still in thrall to a dotcom bubble that had yet to burst, steel was derided as one of the last bastions of the "old" economy. Many firms in the industry were state-owned or heavily protected by governments keen to preserve assets deemed vital to national interests. Globalization had left the steel business behind. It is a measure of the changes that have swept the business since the internet bubble popped that last week Arcelor, a company created through a 2001 merger of the top French, Spanish and Luxembourg steelmakers, made a hostile bid of C$4.
Threat of substitutes in market as best quality is not always a priority for some customers as they are price sensitive.
Reutter, Mark. Sparrows Point: Making Steel : the Rise and Ruin of American Industrial Might. New York: Summit Books, 1988. Print.
1. Intensity of rivalry among competitors- there is intense rivalry among the automobile industry. There is only a handful of companies in the world, and it is war to survive.