Any business exists due to the demand created by the consumers and the availability of resources, including raw materials that are meant to develop the products required. The demand for steel products has been on the increase for a long time. The paper will explore a case analysis of Nucor steel company. The discussion will be based on the various strategicissues of the company and their respective impacts. Additionally, the paper will examine the five forces by Porter and their impact in the steel industry. The elements of the low strategy adopted by the company will also be discussed. Further on, the resources and capabilities of Nucor will be discussed too. The paper will further evaluate the various lessons that I have been able to learn from this case analysis.

Strategic Issues Facing Nucor

Strategic issues are essential in determining the future operational undertakings in the organization.Nucor’s strategic issues includeefficiency and low-cost production, new technologies, expansion and upgrading of the firm’s production and the overall growth of the company. The realization of these endeavors by the company will increase its production, competitive advantage, and the anticipated returns. The use of new strategies in the production patterns would be essential to the various aspects of the firm. For instance, the use of new and efficient of production technologies will reduce the cost of production and hence higher returns. For instance, the use of disruptive and leapfrog technological innovations by Nucor were instrumental in bringing forth low cost and maintain an edge over the competitors.

The low-cost strategy will reduce the cost of production while maintaining the quality. With such, the customer base would be maintained, and the influence of competitors will be reduced. The incorporation of plant efficiency in the low-cost initiative has helped Nucor to modernize its operations and production facilities. In emphasizing this idea, the company’s CEO DiMicco compares climbing a mountain without a peak toportray the endless efforts by the company to embrace improvements in production. The strategy to engage in joint ventures would help the firm realize international recognition and growth. For instance, in 2008, the company engaged in a joint venture with Duferco Group to initiate the production of beams and other steel products in Italy and further distribute them to other regions of Europe. This action impacted positively to the company whereby the production capacity increased tremendously.

Nucor’s Low-Cost Strategy

. As such, there exist various factors that helped Nucor to achieve low cost in the production of steel products. The use of scrap metal substitutes in the production of steel products is one of the major elements of the low-cost initiative (346). The use of electric furnaces to make their products from the various scrap components of iron has enabled the company to realize this endeavor. The use of quality substitutes in the production has further helped to reduce the cost of production. The execution of the raw material strategy by partnering with The Rio Tinto Group in 2002 further helped to achieve the low cost in the production of steel products (Gamble et al. 347). The use of proven and quality technology in production has also enabled the company to reduce its production cost thereby prompting higher returns. The use of low-cost energy sources such as natural gas and also efficiency in the logistics has impacted positively to the company by reducing the cost of its operations (Gamble et al. 347).

Porter’s Five Forces

The Porter’s model can be substantively incorporated in the steel industry. The five forceswill be of great significance in the strategic management of the firm. The new entrants in the steel industry will increase the supply of the products hence stiff competition to Nucor. Increased supply of the products will reduce the profits realized by Nucor and other existing firms in the sector. The power of the suppliers and buyers will also have significant effects on the industry. However, the impacts of the two forces will be low or minimal because most of the products in the industry are used in production and manufacturing companies. The bargaining power of the buyers would reduce the prices charged for the products, but the impact on the profit will be low. On the other hand, bring forth an increase in the supply of inputs at low cost thereby the realization of higher profits by the companies. Additionally, suppliers may introduce low-cost substitutes that will impact to realization higher profits by Nucor and other companies due to the reduction in the cost of production. Increased levels of steel substitutes and competition will significantly reduce the amount of profits in the steel industry. I feel that the steel industry is attractiveare essential for realizing huge profits. Additionally, the bargaining powers of suppliers will ensure that the industry acquires cheap and reliable inputs hence huge future returns.

Resources and Capabilities

Nucor’s resources and capabilities have played a great role in maintaining its competitive advantage and improving its stake in the steel industry. Capabilities are embedded in the intangible resources of the company. The tangible resources of Nucor are numeral, and their impacts have been phenomenal. The use ofnewtechnologies in production, huge profits and access to cheaper and reliable raw materials signify the tangible resources of Nucor. On the other hand, one of the capabilities of the company is depicted by its ability to partner with other companies to increase its production capacity. Additionally, the huge asset base and the human resource aspects of the company have enabled it to realize higher returns from its production endeavors.

Lessons Learnt from the Case Analysis

From the case, I have been able to quantify and realize the various advantages that an organization is likely to realize if it embraces strategic planning and management in its operations. Further on, I have realized that low-cost production is a key ingredient in the realization of higher profits in any prospective firm. I have also learn that partnership and employment of new technologies in production are substantive in improving the performance of business firms.

Conclusion

In summary, the various strategic issues regarding cost and production practices by Nucor are vital in its performance in the steel industry. The five forces by Porter have profound effects on the steel industry. For instance, the bargaining power of the suppliers helps the firms to reduce the cost of production thereby prompting higher production levels and subsequently higher profits. The capabilities of the company are depicted by its partnership abilities and huge asset base. The low-cost strategy by Nucor is evidenced by the adoption of low-cost technologies and the ability to recycle some steel products. The capabilities further depict the intangible resources of the company. The ability of Nucor to use new and cost effective technologies depicts a tangible resource.

Works Cited

Gamble, John E., Arthur A. Thompson, and Margaret A. Peteraf. Essentials of Strategic Management: The Quest for Competitive Advantage. New York.McGraw-Hill/Irwin.2015.Print.