THE NATURE OF MANAGEMENT THE NATURE OF MANAGEMENT CONTROLCONTROLSYSTEMS SYSTEMS

&&Case study -Nucor Corporation Case study -Nucor Corporation

PRESENTED BY:PRESENTED BY: NAME NAME ROLL NOROLL NO NAMRATA 58NAMRATA 58 KIRTI 80KIRTI 80 SONALI 02 SONALI 02 NILEKHA 70NILEKHA 70 SUNMIT 98SUNMIT 98 PAWAN 13PAWAN 13 VARUN 43VARUN 43 ATUL 35ATUL 35

Basic ConceptsBasic Concepts

1-What is Control?1-What is Control?- Elements of - Elements of

Control…..Control…..

2-What is 2-What is Management?Management?

3-Explain about 3-Explain about Systems?Systems?

Boundaries of ManagementBoundaries of ManagementControlControl

1-Management Control Activities?

-Planning -Co-ordinating-Deciding and Influencing-Communicating and Evaluating

2-What is Goal Congruence?

3-Explain Strategy Formulation?

Task ControlTask Control

What is Task Control?What is Task Control?Distinctions between Task and Management Distinctions between Task and Management ControlControlImpact of Internet on Management ControlImpact of Internet on Management Control

-Instant access-Instant access -Multi-targeted communication-Multi-targeted communication -Costless communication-Costless communication -Ability to display images-Ability to display images

Nucor CorporationNucor Corporation

Founded in 1904 – by Ransom Eli OldsFounded in 1904 – by Ransom Eli Olds

Started as a motor car manufacturer under the name “REO”Started as a motor car manufacturer under the name “REO”

In 1950 & early 1960,became Nuclear Corporation of AmericaIn 1950 & early 1960,became Nuclear Corporation of America

1962-Iversion joined Nuclear Corp. Of America as vice 1962-Iversion joined Nuclear Corp. Of America as vice

president & three years later appointed as presidentpresident & three years later appointed as president

1965-suffered several money-losing years, bankruptcy1965-suffered several money-losing years, bankruptcy

1972-changed name to Nucor Corporation1972-changed name to Nucor Corporation

1998-became second largest steel company1998-became second largest steel company

StrategyStrategyFocused on two major competenciesFocused on two major competencies

-building steel manufacturing facility economically-building steel manufacturing facility economically -operating them productively-operating them productively

First in its industry to adopt a number of new products & First in its industry to adopt a number of new products & innovative processesinnovative processes

Produced variety of steel products.Produced variety of steel products.

Customer segmentsCustomer segments

Did not believe in acquisition or mergersDid not believe in acquisition or mergers

No plans to diversify No plans to diversify

Organization structureOrganization structure

Decentralized, Flat structureDecentralized, Flat structure

Chairman /vice-chairman / president

Supervisor Department

manager Vice-president/ plant general manager

HUMAN RESOURCE POLICIESHUMAN RESOURCE POLICIES

• Selective in recruiting employees and was able to choose from a Selective in recruiting employees and was able to choose from a large applicant pool.large applicant pool.

• Employee relations at Nucor were based on four principles.Employee relations at Nucor were based on four principles.

• Key aspect of Nucor’s relationship with its workers was its Key aspect of Nucor’s relationship with its workers was its commitment not to layoff employees in periods when business was commitment not to layoff employees in periods when business was down.down.

• Nucor listens to its employees through monthly crew Nucor listens to its employees through monthly crew meetings ,annual dinners, and employee surveys. meetings ,annual dinners, and employee surveys.

NUCOR COMPENSATION NUCOR COMPENSATION

• Production Incentive Plan.Production Incentive Plan.

• Department Manager Incentive Plan.Department Manager Incentive Plan.

• Non – Production and Non-Department Manager Non – Production and Non-Department Manager Incentive Plan.Incentive Plan.

• Senior Officers Incentive Plan.Senior Officers Incentive Plan.

Information systemInformation system

• Weekly data sent to headquarters on the six operations related Weekly data sent to headquarters on the six operations related variables: bids ,orders, production, backlog, inventory, variables: bids ,orders, production, backlog, inventory, shipments.shipments.

• Iverson’s observation:”we don’t look over the shoulders of Iverson’s observation:”we don’t look over the shoulders of general managers doesn’t mean not paying attention and no general managers doesn’t mean not paying attention and no delegation.”delegation.”

• Detailed performance data oneach plant distributed to all plant Detailed performance data oneach plant distributed to all plant managers.managers.

BenefitsBenefits• Nucor took an egalitarian approach towards employee Nucor took an egalitarian approach towards employee

benefits.benefits.

• Co. maintained profit sharing plan for employees Co. maintained profit sharing plan for employees

• It had monthly stock purchase plan featuring 10%Nucor It had monthly stock purchase plan featuring 10%Nucor matching contribution.matching contribution.

• For Emp 5shares of Nucor’s common stockFor Emp 5shares of Nucor’s common stock

• Company’s commitment to educationCompany’s commitment to education

TechnologyTechnology• Teams composed of managers, engineers, machine operators Teams composed of managers, engineers, machine operators

decided what tech to use.decided what tech to use.• Nucor adopted “mini-mill” concept .Nucor adopted “mini-mill” concept .• They converted scrap steel to finished steel using small scale They converted scrap steel to finished steel using small scale

furnaces.furnaces.• Nucor’s investment in the Crawfordsville plant represented 5 times Nucor’s investment in the Crawfordsville plant represented 5 times

co. earning.co. earning.• Nucor's philosophy was to build ,rebuild at least one mill a yr .Nucor's philosophy was to build ,rebuild at least one mill a yr .• In 1991 President Bush awarded Iverson the National Medal of In 1991 President Bush awarded Iverson the National Medal of

Technology, America’s highest award for technological achievement.Technology, America’s highest award for technological achievement.• Iverson said ,“Business is like a flower : you either grow or die”Iverson said ,“Business is like a flower : you either grow or die”

Why has Nucor performed so well?

Nucor used plant location and growth to its advantageUnique organizational structureAlways acknowledged the importance for employee relations and satisfaction in the work placeCompetitive advantage and a unique strategy

What are the most important aspects of Nucor’s overall approach to organization and control that help explain why this company is so successful?

Recycling steel in efficient mini-mills is the secret of Nucor’s successLocation has also played a part in Nucor’s successStrategy has been one of the biggest factors of success for Nucor

Would you like to work for Would you like to work for Nucor?Nucor?

Yes because it not only take care of Yes because it not only take care of employees but also take care of employees but also take care of employees family.employees family.Nucor provides various benefits plan of Nucor provides various benefits plan of employees.employees.Nucor provides Nucor provides performance based performance based compensationcompensation

Why have competitors not been to imitate Why have competitors not been to imitate Nucor's performance so far?Nucor's performance so far?

Adopted the technological advancement.Adopted the technological advancement.Manufacturing facilities economically and Manufacturing facilities economically and operating them productively.operating them productively.Nucor has effective HR policies.Nucor has effective HR policies.

Sale 1997 Return on equity 1993-97

Debt/capital % 1997

5-year sales growth

Profit margin% 1997

Nucor $4.1 18% 7% 23% 8%

Texas industries

1.0 12 22 12 8

National steel

3.1 7 27 6 7

Usx-us steel

6.8 10 21 7 6

Bethlehem steel

4.7 Deficit 28 3 Deficit

Ltv 4.3 11 18 3 1

Northwestern steel

0.6 2 71 7 Deficit

Thank youThank you