Essay About Less Construction And Steel Firms

Nucor Case
Steel industry since 1950        Major declineLess demand because there are substitues and less construction projectsForeign competition                There used to be “the big 8 steel firms” now theres only 2US steel, the biggest ones, was removed from the index in 2014 and has been cutting its employee since 1960So how good is Nucor? What could prevent effective control?         – Too decentralized        – Too little information from IS        – R&D is outsourced        – If bonuses need to be reduced, might hinder employee productivity        – Little debt→ little monitoring and disclipine from debt market        – No shares: no institutional investors to monitor- Internal monitoring: Same mgmt team for 30 year (mgmt. entrenchment) and Iverson is largest shareholder and directors have little independence                thus, there could be a serious problemCould these factors challenge nucor’s control?Porters Five Forces Substitute ProductsHigh: Because of alternatives to steel, the demand for steel has decreased. Barrier to entryHigh: market can only tolerate one mini millCompetition High: strong foreign competitionBuyer powerHigh: can buy from different countries or different substitutesSupplier powerLow:What are the Key Success Factors?Cost: since market determines price, they can only control margin by manageing costs. It keeps their customers loyalCapital: no debt→ less interest expenseFirst mover advantage: always first to adopt new technologyWhat are the Key Elements of MCS?