Company: Nucor Potential Recommendations -Identify and describe 2 potential/poss

Question

Company: Nucor

Potential Recommendations

-Identify and describe 2 potential/possible recommendation that the corporation could pursue. Explain the pro’s, and con’s, for each.

Strategic Recommendation

-What is your strategic recommendation for the corporation (Select 1 of the 2 from the potential recommendations)? Provide a cost benefits analysis and explain why you selected this recommendation.

-From your knowledge of the firm, identify a major strategic change the firm should seriously consider. You must develop and make a strategic recommendation. It should be well-explained.

-Describe what the goal of the initiative is for the organization. Make sure that you also describe the specific risks related to your recommendation(s).

Explanation / Answer

Ans:

Nucor is a steel producing corporation and it is 2nd largest steel producer in United States. It drives most of the revenues from domestic sales. Nucor has been a leader in the steel industry. It is swift in adopting the new technology. Nucor is successful in the domestic market and it is able to maintain profitable operations through its cost reduction strategies. The strategy may not work consistently as there is stiff competition in the steel industry and company may not able to sustain the same level of profits solely on the basis of cost reduction. The steel industry has faced the challenges of global competition, slowdown in demand and failure of several steel companies. Based on the cyclical nature of the steel industry, competitive analysis and business analysis of Nucor the following strategies are recommended:

1. Nucor requires exploring new markets where it can sell its products on higher margin. It should focus on global expansion and increase the exports instead of remaining dependent on the domestic business. This would help the company to diversify the revenue streams and improve the margins. This would also help in reducing the market concentration risk and help the company to sustain its business during the economic slowdown in a particular economy. It can focus on emerging economies like India and China. The risk involved is high initial costs involved in developing new markets and secondly there are policy related issues. Government may change the policy and it can have an adverse impact on company’s business. Therefore, diversification in different economies would help in overcoming the impact of political risk.

2. Nucor should also focus on improving operational efficiencies through lean structure, adoption of innovative technologies and developing efficient inventory management systems. Further to reduce the operating costs it can have its own transport system. To further strengthen its production capabilities it can acquire loss making domestic steel companies at attractive valuations and by implementing the right strategies utilize the assets in generating more profits.

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