Nucor Corporation

Essay by miz21University, Master'sA-, April 2004

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1. Rivalry - Excess production worldwide is acting to strengthen rivalry. Jockeying for position among steel producers is active, resulting in strong rivalry. Rivalry is made stronger by the fact that buyers of steel have low switching costs.

Competition from substitutes - Rival steel makers were building new mini-mills to make flat-rolled sheet steel.

Threat of entry - Current market conditions in the steel industry are likely to be viewed as attractive by new companies contemplating getting into the steel business. Growing technological capability of mini-mill producers to expand into new product categories represents entry and this act as a source of competitive pressure.

Bargaining Power of suppliers - Seller supplier collaboration is fairly extensive and acts to moderate the otherwise strong bargaining power of suppliers. The price of scrap steel is a key input for mini-mills, and rising scrap prices affect their competitiveness to a great degree.

Bargaining Power of customers - Industry conditions are not ripe for customers, especially those who buy in large quantities to bargain hard for price discounts.

Seller-buyer collaboration is not a strong factor influencing competitive pressures.

Strength of competitive pressure is moderate making the industry relatively attractive from the standpoint of earning good long-term profits and returns on investment, provided on has low production costs and efficient operation

2. Driving forces at work in the industry to make it attractive: Product innovation, changes in cost and efficiency, changes in long-term industry growth rate, changes in who buys the product and how they use it, entry/exit of major firms.

Acting to make the industry less attractive: process innovation, marketing innovation, the big overhang of excess capacity, the sizable number of firms in bankruptcy and the potential for industry consolidation.

3. From Nucor's perspective what is attractive: product innovation, changes in cost and efficiency,