NUCOR CORPORATION

Presented By:Preet Tiwari (M-13-52)Neelam Valvi (M-13-53)Nachiket Waghmare (M-13-54)Shraddha Wavekar (M-13-55)Gaurav Yadnik (M-13-56)

INTRODUCTION Nucor started as a auto manufacturing company than later converted itself into the Nuclear and Electronics business in 1950s and early 1960sAfter the firm suffered several money losing years Ken Iverson took charge as the president After Iverson took charge he consolidated company on two businesses viz making steel from recycled scrap metal and fabricating steel joists for use in non residential construction ContIn 1972 the firm changed its name to Nucor corporation By 1998 it became Americas second largest steel maker and also was in Fortune 500 companyNucors sales during Iversons tenure grew at an annual compound rate of about17% per annumIn the corresponding years both Nucor CEO John Correnti and Iverson were named steel maker of the year

Operations of NucorNucor located its diverse facilities in rural areas across the United States It established strong ties to its local communities and its workforce Nucor selected operations in states with tax structures that encouraged business growth

ContNucors top management favoured the companys commitment to remaining union free. Nucor and its subsidiaries consisted of nine businesses, with 25 plants.

StrategiesContinuous Innovation Usage of modern equipmentIndividualized customer serviceUsage of scrap metalNo acquisitions and mergersUsage of low debt in total capitalNo diversificationOrganization StructureDecentralized systemFour management layers:

Chairman/Vice chairman/PresidentVice President/Plant General ManagerDepartment ManagerSupervisor

ContAutonomy to the General Manager in decision makingNucors board of directors had only six membersThe decision making was done by the individual plants General Manager and they were not liable for the Headquarters to respond to the problemsThere were a total of 6800 employees working in the company

Significance of Human Behaviour Patterns In Management Control System

Nucor Recruitment SystemObjective : To recruit people with: Right mindsetExcellent Communication skillsAbility to work without supervisionHighly Motivated Goal-Reliance and Self-Reliance Very selective10Internal FactorsNucors USP Its CultureFlat hierarchyTrust and TeamworkMinimal Management InterferenceManagers have dinner with all employees with open forum for discussion on how to improve and increase innovation, allows employees to ask questions and managers to provide feedbackAll managers, including CEO, wear same colour hard hat at work (Green)

It includes culture, rules and regulation , management style, perception and communication

4 levels of mangtBonus is given in groups (20-40 workers)General plant manager has all powers related to that particular plant , day to day decisions are taken quickly and lines of communication were open to employees , problems are solved without delay

11Nucors Mantra for SuccessReward SystemPay directly linked with ProductivityBonuses were tied to attendance and quality standards.Bonuses were pegged with work group Scholarship of $1000 to each child of an employee Scholarships for higher educationEven if u r 5 min late u ll lose ur bonusCost 1.3 mil per year 13Nucor PrinciplesEmployees will have the opportunity to earn according to their productivityEmployees should feel confident that if they do their jobs properly, they will have a job tomorrow job security, reduce work week instead of fire or lay off employeesEmployees have the right to be treated fairlyEmployees must have an avenue of appeal when they believe they are being treated unfairly grievance process

14Compensation Four compensation plans:Product incentive planDepartment manager incentive planNon-production and non-department manager incentive planSenior officer incentive plan Information systems Each plant has to submit a snapshot of the plants basic operations on a weekly and monthly basis Managers do not have to submit voluminous reports instead they need to submit the actual and budgeted figuresThe plant General managers met as a group with head quarters management three times a year to review each plants performance Benefits Profit sharingScholarship programmesStock purchase planCommitment of providing equal status On the job training Job referrals through existing employees

Technology Use of mini-mill technology.Backward integration.Modernizing the existing plants.Technology management.

Nucors overall approach towards organization and control has paid rich dividend in the growth of the companyTheir ability to be a successful first mover in the adaption of new technology is remarkableAlthough the company has done well for the last 25 years but still with the prevailing market conditions they need to think about diversification and mergers & acquisitions QuestionsWhy has Nucor performed so well?Nucor used plant location and growth to its advantage

Unique organizational structure

Always acknowledged the importance foremployee relations and satisfaction in the work place

Competitive advantage and a unique strategy

What are the most important aspects ofNucors overall approach to organization and control that help explain why this company is so successful?

Recycling steel in efficient mini-mills is the secret of Nucors success

Location has also played a part in Nucors success

Strategy has been one of the biggest factors of success for Nucor

Why have competitors not been to imitate Nucor's performance so far? Nucor's performance so far?

Adopted the technological advancement.Manufacturing facilities economically and operating them productively. Nucor has effective HR policies. Nucor has effective HR policies.What are deep changes Nucor need to undergo to survive & prosper in 21st century?Follow differentiation strategyNucor has taken many steps to produce innovative products and improve their process development. Nucor has product R&D activities and manufacturing activities, which will help them to follow differentiation strategy. Mergers and joint venturesNucor should do more mergers and joint ventures to increase their production capacity and reduce the cost of production.

Acquisition of foreign plants The home market of steel products is not attractive because of the recession, unstable political conditions and some other problems. So if Nucor acquire plants in foreign countries where there is demand for steel products than they will be able to sell more of their products and earn profit.

Forward integrationBefore forming the Nucor steel company, they were engaged in manufacturing motor cars. So now Nucor can again start up their own car manufacturing company instead of supplying the automakers raw materials.

Technological advancementNucor can use advanced metallurgical practices, sophisticated process control sensors, state of the art computer controls, and the latest refinements in continuous casting and rolling mill technology.

Fulfilling environmental standardsNucor was not that much concerned about environmental consequences which they are causing. Most of the stakeholders are not happy with its environmental practices because some of its plants are polluting the air. So Nucor need to become more environment conscious as the whole world is giving emphasis on environmental protection.

NUCOR CORPORATIONPart (B)Shift in Management BoardKen Iverson was forced into retirementJohn Correnti was voted out of powerDavid Aycock was made Chairman,Chief Executive,President.Board wanted a Fundamental change in Nucors strategy which Iverson and Correnti resisted.

Which Industry Trends Led The Board To Re-consider Strategy?

Steel demand Limited scope to acquire market share.Many companies had replicated mini-mills idea.Low cost steel imports had made major inroads in US by 1999.How To Sustain Historically High Growth Rates?Pursuing AcquisitionsExpanding into global marketsBuilding blast furnacesDiversifying into non-steel areasAdding new organizational layersChanging the composition of Board.Questions?Do you agree that Nucor must undergo a deep change to survive and prosper in the twenty-first century? How do you evaluate the specific shifts in strategy?

2. Can Nucor preserve its unique culture and control systems under its new strategic direction?

3. Would you like to work for Nucor under David Aycock ?INDIVIDUAL QUESTIONSQue(Roll No 52) : - Transfer Pricing is not an accounting tool comment with an illustration.

Que (Roll No 53) :-Discuss and illustrate differences and similarities betweena) Strategy Formulation and Management ControlCharacteristicsStrategy Formulation Management Controla) Focus of planOn one aspect at a timeOn entire organisationb) ComplexitiesMany variables hence complexLess complexc) Nature of informationTailor-made for the issue, more external and predictive, less accurate.Integrated, more internal and historical, more accurate.d) StructureUnstructured and irregular, each problem being differentRhythmic, definite pattern, set proceduree) Communication of informationRelatively simpleRelatively difficultf) Purpose of estimatesShow expected resultsLead to desired resultg) Persons involvedStaff and top managementLine and top managementh) No. of persons involvedSmallLargei) Mental activityCreative, analyticalAdministrative, persuasivej) Planning and controlPlanning dominant but some controlEmphasis on both planning and controlk) Time horizonTends to be longTends to be shortl) End resultPolicies and precedentsAction within policies laidm) Appraisal of job doneExtremely difficultLess difficultb) Management Control and Task Control

CharacteristicsTask ControlManagement controla)Focus of planSingle task or transactionOn entire organisationb)Nature of informationTailor-made to operation, specific, often non- financial, real time Integrated, more internal and historical, more accuratec) Persons involvedSupervisorsLine and top managementd) Mental activityFollow directives or none as in case of machines or set objectives Administrative, persuasivee) Time horizonDay to dayTends to be shortf) Type of costEngineered- Existence of objective standard against which actuals can be compared makes control easier.Discretionary- Control is more difficult due to subjective consideration.Que (Roll No 54) :- What is the concept of free cash flow as applied to organization. Explain process of computation?

Que(Roll No 56):-Describe differences in budgeting perspective of engineered and discretionary expense center.

Expense centers

Engineered expense centers

Discretionary expense center

Differences in budgeting perspective of engineered and discretionary expense center

- Budget preparation - Incremental budgeting - Zero based review - Cost variability

Thank You..