Nucor the Steel Industry Is Assessment

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Three human resources management tactics that can help to address these issues are the fostering of corporate culture, the integration of new companies and JVs and lastly the path of promotion in the company. The corporate culture is essential to the success of a company like Nucor, which must attract talented individuals from throughout the industry in order to maintain its leadership position. In addition, in an industry focused on low cost production, corporate culture is often a key driver of cost reductions (as at Wal-Mart, Southwest Airlines, Costco and other low cost providers). In order to implement a low cost strategy, the culture must support that strategy (Mindtools.com, 2010). The integration of new companies and joint ventures into the Nucor fold is partially a strategic issue, but it is one with many HRM applications, from integration of compensation policy to establishing company-wide training programs and the aforementioned cultural initiatives. This has worked in the past, such as tying up with BHP and IHI in the commercialization of Castrip (Campbell, et al., 2004). Human resources can play a strong supporting role in the development of organization-wide consistency despite the large number of subsidiaries and JV within the Nucor organizational structure. Lastly, human resources must ensure that talented people make their way into the best positions. With so many subsidiaries and a relatively flat organizational structure, there are many great internal candidates for key senior management roles. It is critical, then, that the human resources department be able to identify the best talent and move that talent efficiently through the system.

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It is recommended that Nucor engage in related diversification. The company has considerable experience absorbing related steel companies and setting up joint ventures with others. There is a need for geographic diversification as, beyond the JV program, Nucor has very limited international exposure. It has technological advantages that, if combined with lower operating costs overseas, could result in even cheaper per ton production costs than they experience at present.

By contrast, an unrelated diversification would spell difficulty for Nucor. The company has no experience outside of the established steel markets. They may be innovative within the framework of the steel industry, but that is a low bar to hurdle in the grand scheme of things. Neither is Nucor an exceptionally proficient low-cost provider. It is part of their culture but only recently have they faced true competition on price, as evidenced by the fact that all of their domestic competitors are in poor financial health the minute some cheap imports arrived on the market.

Implementing the recommendation to engage in related diversification would not necessitate a change in organizational structure, unless the focus was on the geographic element. If that was the case, Nucor would be recommended to move towards more of a matrix structure, whereby it leveraged its international capabilities in distribution and production with its presence in multiple product markets. Such an organizational structure is more complicated than the existing structure but allows for better function in a truly international company, which is the ultimate direction for Nucor under any sort of diversification scenario.

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