CASE-1

COMPANY OVERVIEW

1950-60 Nuclear Instrument & Electronics Business

1964 Bankruptcy Appointment of new CEO: K. Iverson

1966 Expansion of Steel Joist Business

1968 Backward Integration into Steel Making

1972 Adopted the name Nucor Corporation

1985 Became the 7th largest Steel Manufacturer in North America

2000 New CEO & President D. DiMicco

2005 Became the 2nd largest Steel Manufactures in North America

2006 Surpassed US Steel in terms of Sales Revenue & Output

2006 - Largest Steel Producer in North America & 3rd largest in the world

ORGANIZATIONAL STRUCTURE

Chairman

Plant Manager

Department Manager

Supervisor

Fixed / Hourly Workers

PORTER’S FIVE FORCES ANALYSIS

Bargaining Power of Buyers

Bargaining Power of Suppliers

Threat of Substitutes

Threat of New

Entrants

Internal Rivalry

BARGAINING POWER OF BUYERS

• Increasing Competition in the Domestic market increased the options for Buyers

• Low Product Differentiation

• Buyers Buying in large scale posses strong negotiating power

• Switching Cost is low

BARGAINING POWER OF SUPPLIERS

• Few Suppliers• Scarcity of Raw Materials• Most of the Raw Materials are imported

THREAT OF SUBSTITUTES• No Primary Substitutes• Secondary Substitutes: Aluminum, Plastic and

wood

THREAT OF NEW ENTRANTS

• Huge Capital Requirement• Low access to Raw Materials• Lack of Product Differentiation

INTERNAL RIVALRY• Domestic Market – more than 20 players• Intense Rivalry – Price Wars• No Competitive Advantage

• High Productivity

• Low Cost Leader in North America

• Technological Innovation

Strengths

• Market Price dependent on Demand-Supply

• Too Much dependence on US Economy

Weaknesses

• Expansion of Operations

• Innovative Joint Ventures

• Patent Technologies

Opportunities

• Foreign Imports

• Increasing Energy Prices & Labor Costs

• Environmental Issues

Threats

SWOT

PRODUCT LINE

Structural Steel Structural Carbon Angles Alloy Steel

Steel Bars Steel Wires Wide Frame Beams Steel Sheets

RECENT PRODUCT PRICESPeriod Steel Sheet Steel Bars Structural

SteelSteel Plates

2014 (in $) (in $) (in $) (in $)Q1 1350 1028 1210 1526

Q2 1218 998 1148 1416

Q3 1046 992 1122 1250

Q4 1166 1082 1268 1368

2013 (in $) (in $) (in $) (in $)Q1 1188 1086 1298 1396

Q2 1250 1134 1162 1526

Q3 1346 1202 1406 1492

Q4 1248 1152 1454 1464

STRATEGIES ADOPTED BY NUCOR

Managerial Strategy (K. Iverson)

Growth Strategies (D. DiMicco)

Operational Strategies (D. DiMicco)

HR Strategies (D. Aycock)

Marketing & Sales Strategies (J. Correnti)

Financial Strategies (D. DiMicco)

MANAGERIAL STRATEGY

Low Cost Leadership Strategy

GROWTH STRATEGIES

New Acquisitions

Continuous Plant

Upgradation & New Plant Construction

Low Cost Production

Joint Ventures

OPERATIONAL STRATEGY

Fewer Production

Steps

Less Labor

JIT

Major Incentive Plans

Production Incentive Plan

Dept. Manager

Incentive Plan

Professional & Clerical

Bonus Plan

Senior Officers

Incentive Plan

Other Incentive Plans

Profit Sharing

ESOPs

Fringe Benefits

401(k) Plan

Medical & Dental Plans

Scholarships

Service Awards

HR INCENTIVE STRATEGIES

MARKETING & SALES STRATEGY

Sales to Proximity

Customers Contract Selling Cross Media

Story

Getting Employees Involved in Marketing

Collaborating With Influences

Marketing Partnerships

FINANCIAL STRATEGIES

1 Price Hedging

2Licensing of Technology

3 Cost Minimization

CRITICAL SUCCESS FACTORS

Low Cost Production Capability

Process Innovation Capability

Flexibility on Work Force

Strong Industrial

Collaboration

Better Technology

High Profit Margin

Leader in Environmental Performance

Increased market Share

CURRENT STATUS OF NUCOR

NET WORTH (in Billions $)

Year Nucor US Steel

2015 778 645

2014 538 521

2013 424 467

2012 628 368

2011 443 656

2010 367 559

2009 389 382

2008 297 427

2007 133 262

2006 486 345

2005 398 323

2004 221 142

RATIO ANALYSIS2014 2013 2012 2011 2010

Nucor (EPS) $4.96 $5.99 $7.99 $5.64 $3.14

USS (EPS) $7.44 $18.04 $10.42 $7.99 $4.86

Nucor (ROE) 29.4% 28.1% 13.45% 7.23% 4.22%

USS (ROE) 15.9% 23.1% 11.46% 5.03% 3.70%

CONCLUSION

• Nucor has a consistent activity system

• Nucor has shown great commitment towards its strategies by strengthening around its core elements

• Nucor has extraordinary strong relationships with workers and its customers

• Nucor never shied away from taking Risks

RECOMMENDATIONS

• Reduce impact of Cyclical Demand

• Determine Products to be Eliminated

• Expand Global presence through M&A in Europe and Asia

THANK YOU !!

Case-2

EMERGING GIANTSBuilding World Class Companies in

Emerging Markets

INTRODUCTIONWhat are Emerging Economies ?

Emerging economies/markets are countries that are restructuring their economies along market oriented lines and offer a wealth of opportunities in trade, technology transfers and FDIEmerging Market Economies - “BRIC” Economies

TRADITIONAL VIEW ON EMERGING GIANTS

What are Emerging Giants ?

An Emerging Giant must satisfy the following criteria:-

• It must be able to create value for its customers or producers of factor inputs by providing a product/service in the face of global competition.

• It must be able to generate adequate returns to its investors so that it can continue to attract the capital necessary to expand and grow.

• The company must be able to attain a critical size in terms of employees or assets, indicating that its business model is scalable and sustainable.

Point of Difference Multinationals Emerging Companies

Goodwill

Access to Capital

Ideal Physical Domestic Infrastructure

Access to desired Talent Pool

Reliable Suppliers & Distributors

Access to Leading-Edge Technology

Stable Domestic Market Demand

Experienced Management & Leadership

Contribution towards GDP High Low

Product Maturity & Innovation High Low

Is it even possible to achieve Competitive Advantage against Multinationals ??

# Reason 1

Multinationals are faced with some of the same Intuitional Voids that Emerging Market

Companies have to contend with

Example - IKEA

# Reason 2

Multinationals are often reluctant, to tailor their products and processes to each country that

they operate in

Example – McDonald’s & KFC

# Reason 3

Due to Globalization, Emerging Market Companies are increasingly able to access

advanced markets institutions to offset some of the advantages multinationals have

Example – Tata Motors

# Reason 4

Emerging Market Companies have attempted to cope with local Intuitional Voids by developing their own internal organizational mechanisms

Example - Samsung

Generic Business Opportunities For Emerging Market Business To Build Competitive Advantage !!

# Generic Opportunity 1

The emerging companies capitalize on their unique knowledge of the local product markets

Uniqueness may arise out of two reasons:• Unique local taste & customer’s need

• Unique local market infrastructure

They look towards other similar geographical markets while planning to go global

Cont…

The emerging companies focus on niche opportunities, allowing them to stretch their

capabilities

Example – Nokia (Finland) Haier Group (China)

# Generic Opportunity 2

The emerging companies capitalize on their superior ability to identify and manage local

talent & local supply chain to serve either local or global customers

Businesses built around this ideology are globally right from their inception as they are a

part of the global value chain

Cont…These businesses expand their global footprint

in three ways:1. They look for customers in wider set of

advanced markets and try to serve them using their home country factor market base

2. As their home country factor markets begins saturating, they start looking for similar factor market opportunities in other markets

Cont…

3. They try to go up the value chain

Examples – Infosys (India) Le & Fung (Hong Kong)

Inventec (Taiwan)

# Generic Opportunities 3

Creating private sector businesses/market institutions to fill local intuitional voids in the

market infrastructure

Cont…

These institutions can be classified into two:

1. Involves market institutions that facilitate information flow in the market

Subset 1- Enhances the credibility of claims made by producer of goods/services

Subset 2 - Analyzes information & provides recommendations to market participants

Cont…

2. Involves market institutions creating forums where buyers and sellers can transact with each other directly

Examples – Agora (Poland) Emerge Logistics (China)

Advantages to EMCs in developing such Market Institutions

• Many of the Market Institutions are highly Human Capital intensive

• Many of the Market Institutions are highly Information intensive

• Government interventions

Advantages to be derived from these Opportunities !!

• Preparing a launchpad for going global

• Segregating “Global Piece”/ “Local Piece”

Accessing International Specialized Intermediaries to Circumvent Local Institutional

Voids

Examples – South African Breweries (S.A.) Cemex (Mexico)

Ispat Steel (South East Aisa)

Is Going Global Better ?? • Affirmative !!• However, there are world class companies

that do not indulge in global operationsExample – Tata Group (India) Petrobras (Brazil)

• Depends upon the business model adopted by the company

CONCLUSION

Thank You !!