Please answer the case questions directly. 1000 words maximum.
1. Why has Nucor performed so well?
Nucor has performed very well because it has formulated a competitive strategy that is very effective and it has implemented that strategy.
(a Is Nucor's industry the answer?
Nucor's industry is not the answer. Had Nucor's industry been responsible for Nucor's success then other steel companies would have performed equally well. In fact the performance of Nucor is far superior to those of other companies in the industry.
b. Is it the "mini-mill" effect?
Yes, the mini mill effect has helped the company, they did not start with iron ore but converted scrap steel into finished steel using small-scale electric furnaces. .
c. Is it market power (scale economies)?
To an extent scale economies have helped Nucor, the market power comes from the ability of Nucor to control its costs. It has controlled its costs by purchasing scrap from the open market and its mini-mill approach has out competed integrated mills. Each mini-mill is a responsibility center and the general managers are responsible for these centers.
d. Is it a distribution channel advantage?
The distribution channels used by Nucor for its low end products are through steel service units. Almost half of the production of Nucor is through direct sales made to OEMs, fabricators and end-use-customers. The direct sales cut down distribution costs and give Nucor additional opportunities for profits.
e. Is it a raw material advantage?
Yes, there is raw material advantage. The strategy of using scrap from open market purchases meant that Nucor could keep its processes small, introduce the latest technology, keep cost low and meet the needs of tis customers.
f. Is it a technology advantage?
There is a technology advantage for Nucor. Nucor was first to adopt several innovative processes like the thin-slab cast steel, iron carbide and direct casting of stainless wire..
Nucor enjoyed special technological advantage when it used thin-slab casting technology developed by SMS Scholoemann-Siemag. The effect was that Nucor was able to enter the premium thin-slab casting market that earlier had been dominated by integrated steel plants.
g. Is it a location advantage?
Nucor took advantage of local communities in rural areas, and attracted hard working and dedicated employees. In ...
Nucor Corp is discussed in great detail in this solution.