Case Study on Nucor Corp
Incur Corporation: Competing Against Low-cost Steel Imports rhea Company, Incur Corporation, started its operation in nuclear instrument and electronics business in early asses to early asses. Facing bankruptcy, the board of directors opted for a new leadership and appointed Kenneth Iverson as president and CEO.
He concluded that to be able to avert bankruptcy is to exit the nuclear Instrument and electronics business and rebuild the company around its subsidiary, Vulcan, which is engaged in steel Joist business.
After its integration, it has expanded its operation in stalemating seeing opportunities on newly emerging technology to produce steel more cheaply. At the turn of the century, Incur was the second largest steel producer in the U. S and charging to overtake long time leader US steel. Nuncio’s sales exceeded 11 million tons, and revenues were nearly 4.
Under the leadership of Iverson, Incur was known for its aggressive pursuit of innovation and technical excellence, rigorous quality systems, strong emphasis on employee relations and workforce productivity, cost-conscious corporate culture and ability to achieve low cost per ton produced. In 2000, Daniel Diatomic has risen up to the ranks and was named President and CEO of Incur. During his time, Incur continued to pursue a rapid-growth strategy, expanding capacity via both acquisition and new plant construction and boosting tons sold. Incur ventured into steel in the late 1960.
Its products include fabricating steel Joist and Joist girders and were sold only to construction contractors. In the late asses, it expanded to steel decking and cold finished steel products. It was sold directly to large customers in the automotive, farm machinery, hydraulic, appliance and electric motor industries and to independent steel distributors. Aside from fabricating, it is also into basic stalemating by manufacturing steel bars. Using electric arc furnace technology, it has produced steel that only requires low labor and capital requirements.
Moreover, it entered into production of steel sheet.
In 2000, Incur embarked on a four-part growth strategy that involves the following: (1) new acquisition; (2) new plant construction; (3) continued plant upgrades; and, (4) cost reduction efforts and Joint dentures. These strategies have been very effective in terms of expanding its sources as well as conceptualization of new technology (using electric arc furnace as alternative to conventional furnace) and improvement of plant efficiency thru equipment upgrades.
The usage of the technology has allowed low investment cost for facilities and equipment that eliminated expensive steps in steel making. Also the use of scrap materials has lessened the purchase of ore for steel making. Furthermore, Joint ventures have given them option to Join global market of steel producers. However, Incur should be also wary on possible entrants that could offer owe cost steel which might be a reason for a loss of customers which in-turn loose potential income and worst cut Jobs.
Steel, being a commodity that is dictated by market demand, has been changing continually.
But being a low cost provider, it has resulted to numerous customers entering into non-concealable contracts. Organization and Management in Incur had a simple and streamlined structure to allow employees to innovate and make quick k decisions. The company was highly decentralized with most day-to-day operating decisions made by division or plant level managers and their staff. When someone is performing below expectations in achieving profitability and operating targets, Top management does not hesitate to replace a group or plant managers.
Compensation practice at Incur is a “pay for performance” scheme with an incentive compensation system that rewarded goal- oriented individuals and did not put a maximum on what they could earn.
Table 1 . Operating and Gross profit margin of Incur Corporation Table 2. Operating and Gross profit margin of Nuncio’s Competitors Nuncio’s financial status in stalemating industry is doing fairly well in comparison to its competitors. It is has been enjoying on steady growth while AK Steel, US Steel and Metal Steel is in gradual ass of its profits every year(as seen on graph).
Its growth is attributed to aggressive expansion by acquiring existing plans at a bargain prices that enabled them to increase its capacity even more.
Moreover, its wide variety of steel products ranging from Joist, girders, cold finished steel, metal building system, light-gauge steel framing, steel fasteners, flat-rolled sheet steel, wide flange and steel plates which has given the company a huge advantage over its rivals. At the moment, the company is doing relatively well to its chief competitors in the U. S. However, it should consider expanding outside the U.
S to be able to capture a wide market since the trend of using steel in the global setting is on upward trend and Incur should take this opportunity.
Likewise, the company should be always on a lookout on potential new entrants that sells low cost steels. Furthermore, the company should be more sensitive in its employees. Although incentives as well as compensation packages are attractive, the management should consider giving employees vacation leaves and limiting working hours so as not to risk the safety and health of an employee and foster family time.