Nucor There Are Several Trends Assessment

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The second HRM issue is that of training. The steel industry being characterized by mature firms, often supported by government, can breed complacency. Nucor needs to ensure that management at its acquisitions and joint ventures has a high level of training in the systems and techniques that Nucor uses to drive its innovation. This training needs to be diffused throughout the organization. This increases risk, however, in the joint ventures because Nucor's management systems are a source of competition advantage and they are disseminating those systems to firms with whom they compete on the global market.

The third HRM issue that may arise is that of compensation. It is difficult to attract top talent in low-cost mature industries because sometimes the pay is not as high due to cost control measures -- particularly at Nucor where perks are few -- and because steel is simply not a sexy industry. Developing compensation packages that attract and retain top talent to steel towns in a low cost environment is a difficult proposition, but if addressed correctly would help HRM become a source of competitive advantage for Nucor.

Under the current situation, diversification would not benefit Nucor. There are two main reasons for this. Unrelated diversification would not be effective because Nucor's core competencies are not easily transferred to entirely new lines of business. Firms in mature industries are not worth buying unless they have synergies, which rules out unrelated diversification; firms in growth industries require a different set of managerial skills than do mature firms like Nucor. Related diversification is also not recommended because there is little room for the development of value-added products (forward integration) in a commodity business and there is little benefit to backward integration either has prices of raw materials are largely set by the market.

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Geographic diversification is the only option that has any merit, but given the sensitivity most nations take to their steel industries, there is little room for expanding into the world's growth markets; non-growth markets offer little potential benefit.

Given that no diversification makes sense, I would recommend that Nucor maintain its current organizational structure. The company has a structure that has allowed it to become an innovator in its field, to the point where it is the only healthy major steel company left in the United States. Organizing around products with numerous subsidiaries bound by an overarching corporate mandate allows each arm of the company to develop its own proprietary technologies, while taking advantage of the developments in other areas. The joint venture component of the organization will continue to give Nucor access to global markets and to emerging technologies, allowing it to stay ahead of its U.S.-based competition, so that should be maintained and indeed it has (Lococo & Kumakura, 2010).

Nucor has been successful to date with its business model, in particular the focus on innovation with an eye to reducing production costs. While foreign competition remains a threat, Nucor's strengths have allowed them to succeed regardless. As such, the company would be advised to stay the course -- they do not need to make any panic moves towards diversification when focusing on their existing strengths has always been sufficient to succeed despite the intensity of competition.

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