Nucor Corporation overview and business analysis

Nucor Corporation

Steel industry is one of the oldest industries and has been the backbone of many industries. In the 19th century, advent of steam engines, cotton gins and mechanized farming led to the strength and growth of steel industry. Between 1875 and 1920, the production of American steel increased to 60 million tons. In 1900s, the annual growth of the U.S. steel industry was 7.0%. Following the post World War II, the American steel industry experienced a new impetus where there was high demand for steel because of the post-war construction and ever expanding economy. Apart from the domestic demand, global demand also contributed to the growth of the steel industry in the United States. However, with advent of new technology, the demand for the U.S. steel experienced a tremendous decline and this has had impact on the strategic growth of Nucor Corporation.

Nucor Corporation is one of the biggest steel makers in the United States with $12.7 billion annual net sales. Its history started in the 1960s, and not until 1970s that Nucor became the full fledge steel company. In the 1970s, there was an emergence of new technology called "minimills" where several companies utilized the recycle scrap steel to make new steel. The minimills entered several geographical markets with costs advantages. With the costs advantages enjoyed by the minimills sector, Nucor forages into steel using minimills strategy. Nucor enjoys rapid growth when the company ventures into steel, and over the years, Nucor Corporation has become a benchmark in the U.S. steel industry. However, with the advent of new technology and global competitions, the U.S. steel industry experiences market decline. Advent of the new technology and cyclical economic impact has affected the steel industry and these factors have had impact on the Nucor strategic growth. For example, overall demand for the U.S. steel is less than 1.5% and Nucor is having a limited market share. Typically, the significant shares of Nucor markets come from U.S.. Moreover, Nucor has weak international market aggression because of the low cost steel from the overseas competitors, and Nucor could not afford to export steel because it is not costs effective. These factors have affected the Nucor strategic growth. (Boyd, & Gove, 2000).

2.

Unlike most of the Fortune 1000 companies that have between 8 and 10 layers management structures. Nucor Corporation maintains four layers management structures from the CEO to employees. As being revealed in Fig 1, the four layer management structure is as follows:

Chairman

Directors

Department Managers

Supervisors

Fig 1: Nucor Organizational Structure

To enhance flexibility, Nucor maintains streamlined organizational structure and minimal bureaucracy. Nucor's management belief is based on the support for the overall management. The overall management philosophy is to:

Hire and retain highly skilled and productive employee.

Put the employee in a streamlined structure to allow innovation within the organization.

Pay high wages to produce excellent results.

Nucor maintains egalitarian principle by providing benefits to the employees as well as ensuring that employees are paid according to their productivities.

3.

There are HRM issues related to the strategic implementation of Nucor Corporation. Some of the HRM issues are as follows:

First, there is a limitation on the senior officer's incentive plan. Based on the company policy, Nucor maintains that the senior officers would only receive their base payments if Nucor performs under expectation.

Moreover, senior officers are being paid less than other industry executives, and supervisors are paid the same bonus as other lower level employees. The identified HRM issues could have impact on the Nucor strategic growth. Nucor should implement the following recommendations to address these issues:

First, Nucor should pay its senior officers based on the industrial rate. If Nucor does not implement the recommendation, the skilled and talented employees may cross to other companies, and this may affect the company strategic growth.

Moreover, bonus being paid to the supervisor should be above the other lower employees. Supervisors contribute to the smooth operations of the company plants. Supervisor will share larger blame if there is a failure in production process. Thus, the bonus paid to the supervisors should be higher than the lower employees.

4.

Diversification occurs when a firm decides to increase its line of business. Firm could implement related or unrelated diversification. Related diversification occurs when a firm invests in the similar products. Unrelated diversification occurs when a firm enters into unrelated industries and markets. The major objective of diversification is to expand the line of business. (Lopes, 2005).