Strategic Planning for Competitive Edge at Nucor Steel

 

The Strategic Planning Approach of Nucor Steel

Assessment 2 – Case Study Development, Strategic Plan

MASTER OF BUSINESS ADMINISTRATION

Word Count- 2209

Name of the Student

Name of the Teacher

Executive Summary

The present study entails a detailed investigation of the issues faced by Nucor Steel to propose a strategic plan for the company. However, the aim of the study is to understand the effectiveness of different strategic options variables for Nucor steel to mitigate the issues related to the performance. Moreover, the report represented that global oversupply created a competitive environment for the company, where the Covid-19 pandemic created an additional threat. The financial performance impacted due to the pandemic. In such a situation, Nucor steel has options to create social and environmental values to engage society in the business operation. The self-assessment approach enabled the firm to understand the competitiveness of the market. Further investigation identified these strategies would be helpful for brand development and stakeholder engagement. Similarly, the sustainable operation would also be ensured with the performance of the firm. The involvement of the management would create an opportunity for the firm to understand the cultural status of the firm. Inclusion of the cultural identity and focus on financial performance, cost-cutting would help for risk mitigation related to the strategic implementation process. Based on the evidence, the company was recommended.

• To implement business intelligence
• To collaborate with the digital marketing firm
• To ensure less carbon footprint in operation.

Table of Contents

Introduction 3

Background 3

Purpose 3

Scope 3

Identification of Main Issues 3

Possible Alternative Competitive Strategy and Strategic Planning 6

Impact of that Strategic Planning and the Consequent in the role of Manager 8

Impact of Strategic Planning 8

Consequent Role of Managers 9

Conclusion 9

Recommendations for Future Action 10

References 11

 

Introduction

Background

Nucor Steel is a giant in the steel production industry from North Carolina, Charlotte. It is the biggest recycler of scrap materials from North America. Presently, the company has an operational production unit in 23 locations, with an operating income of US$835 million (2020) (Nucor.com.2021). Behind the strong operational status, the company has dealt with numerous issues as the falling steel prices have imposed a threat on the operational strategy. Topalian, the CEO of Nucor, has expressed to pay dividends in spite of the cloudy predicament of the US economy (Nucor.com.2021). The company has faced many issues in terms of production management as global oversupply, and slow growth in the US have created issues to consider about the strategic plan for the company.

Purpose

The present report has aimed to understand the issues related to the Nucor Corporation to understand the impact of strategic planning and discussion on the alternatives. In addition to this, the report also has objectives to understand the long-term and short-term alternatives available for Nucor.

Scope

Firstly, the identification of issues has been included as the report has a scope to discuss strategic planning for an organisation. Further research on the available opportunities has identified the advantages and disadvantages related to the strategic planning process and the consequences of the strategic planning on the managers. Analysing the significance of the study, recommendations for improvement in future performance have been selected to be attached at the end of the report.

Identification of Main Issues

In recent times Nucor has faced three major challenges in terms of market operation.

• Global Oversupply: Imported steel products to the US market have been subsidised by the government of the exporting countries. Consequently, the imported products could be availed at lower prices compared to the price range offered by Nucor and other US steel companies (Gregg Brewer, 2017). China has moved to the overproduction of steel, which has imposed a threat of oversupply on Nucor and its peers.
• Delay in Plant Construction: Improvement of productivity of the company, new plants have been proposed at Brandenburg, Kentucky and Gallatin. The impact of Covid-19 has offered the first-quarter income of $20.3 million, which could be equal to the 7% of the diluted share (Downey, 2020). Lack of income has imposed a threat on the company to stop the construction of a $1.7 billion plate mill as well as a $650 million sheet mill. Suspension of the production and expansion due to the financial loss of the firm has been observed as a major issue (Nucor.com.2021).
• Issues in the Financial Performance: Pandemic situation has impacted the sales performance and export volume of the company. However, the sales volume of Nucor has decreased by 23% in the second quarter of 2020 as the net sales amount was $4.33 billion, wherein in the second quarter, the company has a net sales volume of $5.62 billion. Declination in financial strength has impacted the production facility (Clifford, 2020).

Graph 1 Performance of Nucor

(Source: Nucor.com.2021)

• Market Issues due to Covid-19: The residential construction industry has been stopped due to the pandemic period. The closure of the automotive, gas and oil industry has offered a hard hit to the production of the Nucor corporation, along with the effect of the downturn in the construction sector. Sheet metal and engineered bar mills sections of Nucor steel have been impacted by the hard hit of the Covid-19 pandemic.

Graph 2 Sales performance of Nucor

(Source: Nucor.com.2021)

Oppositely, the long bar and construction products have been kept at the operational state, as the non-residential construction has not been shut down due to the pandemic situation (Toto, 2021). Capital inflexibility at the pandemic time has impacted the production, and Topilen has said that the continuation of the production during this lean time is a challenging job for the company (Clifford, 2020).

Possible Alternative Competitive Strategy and Strategic Planning

Svensson et al. (2018) have reviewed that the performance of an organisation has been improved with the implementation of the strategic triple bottom line approach. The triple bottom line approach has offered a scope to understand the contrast between the economic, social and environmental complexes for the strategic decision-making approach.

Global Oversupply

Long term strategy: Wood et al. (2019) mention that the global oversupply issues that have created competition in the market can be evaluated with the cost controlling approach. The total quality management approach of an organisation has influenced quality over quantity to build a strong brand value. The competition can be mitigated related to over-supply through the strategic brand management approach using the total quality management process.

Short term Strategy:Trzuskawska-Grzesińska (2017) opines that the focus on the supply chain management, by implementing control towers in the supply chain management system, utilising the automation process would be effective for controlling oversupply.

In another way, Kruszyński&Pawłowski (2020) opine that intelligent automation in the supply chain has enabled us to understand the product distribution of the competitors, to adopt changes in the supply chain modification.

Graph 3 Quarterly revenue

(Source: Nucor.com.2021)

Delay in Construction

Long term Strategy: Dyck& Silvestre (2018) reviews that sustainable business operation in this new industrial revolution phase could be ensured with socio-ecological value creation. The focus of the firm on the social opportunities as well as on the technological capabilities would be beneficial to mitigate the financial challenges. Tate &Bals (2018) opine that the social resource-based view has created an opportunity for a firm to understand the cost-effective strategy for business expansion. In order to get a strong engagement of the society for the long-term business operation, the triple bottom line approach could be utilised for the maximisation of financial value capture.

Short term strategy: Glassman, Potoski&Callery (2017) offer an insight into the short term solution to the issue faced by the firm. Consequently, the company has an option to improve its top-line growth strategy by adopting the customer-insight driven marketing process. Howell et al. (2018) reviews that engaging stakeholders to the firm through the creation of social impact could be impactful for the company to continue the production.

Financial performance

Long term strategy: productivity and performance could be improved with the introduction of a new business segment after strong market analysis. A product that would have a strong and long-lasting impact on the customer would be helpful for the market revamp. Yang & Zhang (2018) mention that customer-oriented marketing and product development have become impactful for long-term customer engagement and the improvement of financial performance.

Short term strategy: Declination in the sales performance can be revamped with the short

Covid-19 issues. Yost, Kizildag&Ridderstaat (2021) mention that the flexibility to the inflow of the money would be achieved by offering liquidity to the financial strength of the company. Yang & Zhang (2018) further mention that focus on the marketing channels and the promotional process would be beneficial for the company to revamp the lost market performance.

Market Issues due to Covid-19 :

Long term Strategy: Zhu et al. (2020) comment on their literature that, Covid-19 pandemic has introduced the available shortcoming in a system. However, for the long term sustainability of Nucor, the focus on the existing weakness has been required for the further strengthening of those weaknesses. Demand forecasting and process automation are two important aspects for corporations to sustain in the post-pandemic market, as the media usage rate and the customer behaviour and market pulse have been changed. Ljung&Capadrutt (2020) clearly state Internet of Things and cloud computing process in the supply chain automation would mitigate the higher risks in the supply chain. Consequently, these implementations would ensure end-to-end visibility for the automated supply chain management.

Short Term Strategy:Zhao et al. (2017) explore that highly unstable situations and recession periods have created an opportunity for self-assessment of the companies. However, for the quick response to adverse situations like the corona pandemic, the identification of the strategic advantages through a strategic position approach. Consequently, the optimal distinctiveness with the competitors has created value for the firm to mitigate the challenges related to the adverse situation (Zhao et al., 2017).

Impact of that Strategic Planning and the Consequent role of Manager

Impact of Strategic Planning

ArcelorMittal and Aurubis are two of the major competitors of the Nucor Corporation (Downey, J. 2020). The strategic planning process adopted by the company would be effective for the performance improvement of the company as follows, compared to the competitors-

• Brand value building: Strategic planning process has created customer satisfaction. Focus on the quality development approach would be beneficial for customer satisfaction and would result in the increased customer involvement with the firm. George, Walker & Monster (2019) comment on the positive impact of strategic planning and mentions that customer satisfaction could be increased for the brand value creation.
• Competitive Characteristics: The self-assessment approach to understand the optimal distinctiveness has created a scope to understand the competitive nature of the market to work for the further development of the products portfolio (Zhao et al., 2017).
• Stakeholders Engagement:Nucor has left no stone unturned for the stakeholders’ satisfaction as the company has promised to offer dividends in spite of the sales decline to continue the trend of the continuous value proposition. Customer insight-driven market assessment and marketing process would be beneficial for the company to ensure the stakeholders’ engagement to the firm (George, Walker & Monster, 2019).
• Sustainable Operation of the Brand: Social-economic value creation strategy for the financial performance improvement and to revamp after the Covid-19 would be helpful for the company to show the sustainable operational approach in the market performance. By delivering values to society and adding social engagement to the business, the company would be able to earn social reliance over the brand for performance improvement (Svensson et al., 2018).
• Crisis management and Risk Mitigation: Self-assessment and offering liquidity to the fund of the company would enhance the more capacity to the firm to deal with the uncertainties of the market. Al-Khrabsheh (2018) believes that focusing on the weakness and implementation of automation processes would be beneficial for the firm to tackle the crisis in a better way. A crisis mitigation approach would help the company to understand the risks related to the operation of Nucor for better risk mitigation.

Consequent Role of Managers

Ameen et al. (2018) consider the strategic management approach as a form of organisational changes. Hence, the management would have equal importance in strategic alignment, likewise the scenario of the change implementation.

• Managers would be accounted for the inclusion of the strategic advantages into the organisational culture and code of conduct for the better management of the firm (Norton, 2017).
• The recent hit of the pandemic has created an issue over the financial performance of Nucor. In order to tackle the financial changes and hardships, the approach of the management would be focussed on the cost controlling strategy for the firm (UlMusawir et al., 2017).
• Automation in the business performance has been projected for the improvement in market performance. That can be achieved with an effective promotional approach. Managers would be responsible for understanding the need for promotional approaches in terms of brand value creation (UlMusawir et al., 2017).
• Monitoring the risks and possibilities related to the available options for the company, the management of Nucor would be responsible for the selection of ideal employees for performance management (Svensson et al., 2018).

Conclusion

The external environment has created an impact on business performance. However, the balance between the internal strength, cost of the business management with the external demand can excel the performance of an organisation. The present report has considered focusing on the internal strength and issues of Nucor steel to identify the strategic plan for the company. Proper inclusion of the management team for the performance management would be beneficial for Nucor to keep a balance between the external environment and internal environment for transparency in the business operation. Strategic plans to combat issues have identified that the inclusion of social issues would be beneficial for Nucor to excel in their post-pandemic performance. Automation and technological strength would create advantages for Nucor.

Recommendations for Future Action

An overall analysis of the issues and strategies for improvement would help suggest a few recommendations for Nucor for improved market performance.

• Implementation of Business intelligence in the market analysis section of the company to understand the present situation of the market more precisely. Halim & Halim (2019) mentions that the implementation of business intelligence would be beneficial for the marketing strategy selection in challenging times.
• Media usage habits have been changed in the pandemic period, which has changed the customer behaviour and market trend. Channels of marketing have also been modified after the pandemic. Hence, the collaboration with a digital marketing firm would be beneficial for the company to build a strong brand value (Kruszyński &Pawłowski, 2020).
• Olatunji et al. (2019) opine in their literature that focusing on the minimisation of carbon footprint would be effective for global corporations to improve their supply chain management. The efficiency of the supply chain would enable it to achieve great market share in the competitive environment. For the sake of sustainability, Nucor could focus on the minimisation of carbon footprint to make its brand environmentally sustainable (Olatunji et al., 2019).

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