corporation-analysis-1 - Johnson 1 Case Analysis 1 Nucor...

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Johnson 1 Case Analysis 1 Nucor Corporation Company and Industry Analysis Ben Johnson March 7, 2008 BUSA 499: Capstone Dr. Pham
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Johnson 2 Strategic Profile and Case Analysis Purpose Case 23: Nucor in 2005 deals with a leading steel manufacturer, the steel industry, and the trends that face each. Steel manufacturing is an old business, but is currently facing the fast changes associated with new technologies and the rise of globalization. The cyclical economic effect in the industry has proved challenging for many steel businesses. Nucor has unequivocally maneuvered this business cycle to maintain a positive profit margin in every quarter since 1966. The company’s philosophy of decentralized structure in the 1960’s and 1970’s was imperative, but has since required change due to current international challenges. 1 This case analysis will take into account the many great aspects of Nucor’s historic business model, but will primarily focus on the need for a clear strategy to expand internationally. Section I Situation Analysis External Analysis: P.E.S.T. Analysis Political Factors From state to federal to international, businesses are heavily regulated. These laws provide the basis for successful profit margins, but also challenge the ease to which these margins are gained. Many local laws are meant to support their local businesses; thus, a business must face the local protectionist laws of another business when trying to compete in a foreign territory. In no greater circumstance than at the global level does this hold true. For Nucor Corporation (Nucor), ever growing international competition requires addressing many different types of laws, mainly taxation. In every country with a centralized government, taxation is unavoidable. Variation amongst countries’ laws provides favorable and unfavorable circumstances for a large company to do business in that country. Nucor deals heavily with tax policy in the United States paying federal, state, and local taxes. Each heavily affects their bottom line. Additionally, Nucor must understand the taxes of other countries in which they plan to implement contracts. Taxes do not always negatively impact a business, especially when they are protectionist. In 2002, the Bush administration implemented a tariff on all imported steel to decrease foreign dumping. 2 Many multinational steel companies were selling their products at below market cost to undercut domestic competition. These types of taxes are implemented to protect the domestic industry. This is especially important when competition is high and a push for cost leadership exists. Nucor, as with any large company that has a global presence, is subject to international trade agreements from the WTO, NAFTA, and the EU. It is financially imperative for a company to understand the costs associated to all regulations and tariffs on importation and exportation, especially as competition and globalization is required to maintain profits in the future. 1
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corporation-analysis-1 - Johnson 1 Case Analysis 1 Nucor...

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