Nucor the Steel Industry Assessment

Pages: 4 (1230 words)  ·  Bibliography Sources: 4  ·  File: .docx  ·  Level: Master's  ·  Topic: Business - Management

Nucor

The steel industry is faced with a number of trends. Most prominent of these is that Asian steel makers have doubled their production in the past several years, while producers elsewhere have only seen incremental increases. As a consequence, there is overcapacity in steel production in many areas, and this has depressed steel prices on the world market. As a function of not only the depressed prices but also of the commodity nature of the product, the steel industry is moving towards models such as the micromill model that allow steel firms to make use of innovative technology in order to reduce production costs. The final trend, ongoing for a few decades, is towards commoditization. Steel companies have a difficult time deriving differentiation in their products, a trend that compels them to eschew branding for cost-cutting as a success strategy.

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Nucor has not responded directly to the first concern, but has responded directly to the second one. The company has actively sought to become a leading innovator in the steel business, and has achieved that position in the United States, for example with its Castrip technology. Nucor must continue to respond to the global environment by pushing for greater cost-cutting measures in order to compete with overseas producers. The firm can push for more government protectionist action to defend against overseas dumping, but beyond that it must address the issue of depressed prices through its own cost-cutting measures and the institutionalization of a continuous improvement process (2008 Nucor Annual Report). As such, Nucor's strategy thus far has been successful, but the company needs to be more aggressive about technological innovation. In addition, Nucor may find itself having to adopt more holistic cost reduction strategies, such as making shifts in the corporate culture, in order to continue to compete in the global marketplace.

Assessment on Nucor the Steel Industry Is Faced With Assignment

The organizational structure at Nucor has been developed largely around products. The history of this is that Nucor has made a number of different acquisitions in order to build out its product base, but many of these companies have retaining a fair degree of autonomy. As such, the Nucor organizational structure is based around its many subsidiaries with an overarching superstructure of Nucor corporate. In addition, Nucor's organizational structure is relatively flat for a firm its size (No author, 2003). With the subsidiary companies, the inclination would be for the company to build many layers of management, but that has not been the case. The flat structure benefits Nucor because it allows the company to make decisions quickly

The management philosophy at Nucor is more progressive than at most steel firms. In a mature industry that deals in commodities, the expectation is that management will be relatively conservative, but this is not the case at Nucor. The company has long emphasized informality, frugality, and innovation as keys to success. The CEO emphasizes frugality on his business trips, for example. The flat organizational structure emphasizes informality. Castrip and other innovations are evidence of an orientation towards continuous learning and continuous improvement of operations. Management at Nucor understands that they are in a globally competitive industry and want to empower their workers and their subsidiaries to succeed in that difficult environment.

The organizational structure and management philosophy tie to Nucor's strategy because they represent the infrastructure that supports the development of the specific tactics that have lead to Nucor's success. For example, it was the culture of innovation that lead to the implementation of Castrip and the relatively flat structure allows developments of one subsidiary to be subsequently transmitted throughout the rest of the organization. The management philosophy of keeping costs down is also reflected in strategy as the low cost mindset permeates throughout… [END OF PREVIEW] . . . READ MORE

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