Nucor had once been considered the fastest-growing steel company in America that was unstoppable. In the twenty- first century Nucor is being challenged by a changing industry where there is a worldwide decrease in demand for steel and steel related products, increasing competition, especially from foreign competitors, in a maturing market and environmental concerns about alleged violations of federal and state clean air rules.
In response Nucor's management has embarked on a growth strategy in the course of a shakeup of the management structure through the adding of outside directors to the board as well as a centralization of the organisation's procedures. Nucor hopes that this growth strategy will have a positive impact on the future profitability and help realize its goal of becoming the largest steel maker in the United States.
Porter's Five Forces.
Rivalry in the industry.
The industry is not only fragmented but the boundaries of its various sub-parts are vague and overlapping. Steel products are marketed principally through in-house sales forces. The principal competitive factors are price and service. .
The company is not the strongest, but it can defend itself from stronger rivals and capitalize on the vulnerabilities of weaker rivals. Nucor has better cost management skills than other U.S firms. Nucor consistently improves its technological capabilities. Nucor's employees are paid for performance, making them very productive. .
Threats of Substitute.
Nucor vs. integrated mills, other mini-mill, foreign mills, and specialty mills.
Nucor's success as a low-cost provider could not be accomplished without utilizing the cost reduction capabilities in every element of their value chain; this is the biggest difference between Nucor and its rivals. .
Nucor's rivals, for the most part, still use traditional integrated steel mills, which inefficiently use a single large scale plant to perform all of the steel making functions.