safety first. no one gets hurt on our shift today. presented by: erum syed mirza ehtesham napacha...

Safety First. No one gets hurt on our shift today.

Presented by:

Erum SyedMirza Ehtesham

Napacha SuttitumSantid Panichapong

http://www.nucor.com/index.aspx

External Analysis• General Environment Analysis• Driving Forces• Porter’s Five Forces• Key Success FactorsInternal Analysis• Organization Analysis• Financial Analysis• Strategic Analysis• Core CompetenciesSWOT AnalysisRecommendations


Overview


• General Environment Analysis

• Driving Forces

• Porter’s Five Forces

• Key Success Factors


External Analysis

External Analysis


General Environment Analysis

General Environment TREND

Demographic POSITIVE

Political POSITIVE

Socio-Cultural POSITIVE

Technological POSITIVE

Economic POSITIVE

Global POSITIVE


External Analysis

Global SegmentGlobal

Segment

Technological Segment

Technological Segment

Socio-Culture

Segment

Socio-Culture

Segment

Political/Legal

Segment

Political/Legal

Segment

Economic Segment

Economic Segment

Demographic Segment

Demographic Segment

G.E. Analysis

G.E. Analysis


Driving Forces

TechnologyCost reductionInnovative

processes

Economic Climatelow interest rates Increasing Steel demand


External Analysis


Five Forces Competitive Analysis


External Analysis

Power of Suppliers

Threat of Substitutes

Power of Buyers

Threat of New

Entrants

Rivalry Among Competitors

HIGH HIGH

LOW

LOW

HIGH



External Analysis

Key Success Factors

Lowering Operation Cost

Innovative Technologies

Increase Market Share

Environmental Friendly


Internal Analysis

• Organizational Analysis

• Financial Analysis

• Strategic Analysis

• Core Competencies


Internal Analysis


Organizational Analysis


Internal Analysis

Organization NUCOR

Mission / Goal “Take Care of Our Customers.”

Leadership CEO: Daniel R. DiMicco (55)

Organization Culture Zero lay off / Innovative

Structure Decentralized

Daniel R. DiMicco since Sep 2000


Products


Internal Analysis


Financial Analysis


Internal Analysis

Nucor (NUE) Industry United States Steel (X)Financial Analysis 2003 2004 2005 2006 2006 2003 2004 2005 2006P/E Ratio (TTM) 70 7.5 8.1 12.4 12.33 -4.3 6.1 6.9 9.7Revenue Growth 30.50% 81.60% 11.60% 21.00% 18.99% 34.10% 49.20% -0.50% 14.70%Net Margin (TTM) 1.00% 9.86% 10.32% 10.78% 10.79% -5.06% 7.61% 6.35% 5.88%

21.0018.99

14.70

NUE

Indust

ry X

10.78 10.79

5.88

NUE

Indust

ry X

12.40 12.30

9.70

P / E Ratio Revenue Growth Net Margin


Financial Analysis


Internal Analysis

Nucor (NUE) Industry United States Steel (X)Financial Analysis 2003 2004 2005 2006 2006 2003 2004 2005 2006Return On Assets (TTM) 1.42% 21.11% 19.75% 20.62% 17.14% -6.06% 11.42% 8.59% 7.87%Return On Equity (TTM) 2.69% 38.98% 33.99% 34.50% 34.54% -39.30% 68.28% 26.10% 20.16%

34.50 34.54

20.16

NUE

Indust

ry X

20.62

17.14

7.87

ROA ROE



Internal Analysis

NYSEPrice : 58.64 (12/1/06)

52 Wk High 61.70

52 Wk Low 32.18 0.2

3.54.1

2003 2004 2005

Dividend Yield1.3

0.90.8

EPS

NUE



Internal Analysis

Core Competencies and Sustainable

Advantages Valuable Capabilities ?

Yes

Costly-to-imitate ?

Yes

Rare Capabilities ?

Yes

Non-substitutable ?

Yes

Result: Nucor has sustainable competitive advantage and its performance implications rated in above

average returns


Strategic Analysis• Corporate Level

– Optimize existing operations– Use Greenfield technology– Acquisitions– Go Global

• Business-Level– Low-end products– Highest quality mini milled steel– Offer low and competitive prices– Lean management style


Internal Analysis



SWOT Analysis

SWOT Analysis


SWOT Analysis


SWOT Analysis

Strengths Financial Strength Technology innovator Decentralized business units,

high employee empowerment

Opportunities Acquisition strategiesLeverage, extend technology

advantageHigh Demand

Weaknesses High cost of Mini mill operation Exposure to economic,

business cycles of customers Lack of international presence

Threats High price of raw material Increasing consolidation

/Oversea competitors Changes in the cost of

electricity and natural gas


Alternatives


SWOT Analysis

CURRENT PRODUCTS/SERVICES NEW PRODUCTS/SERVICES

CURRENT MARKET MARKET PENETRATION New processes to reduce

energy costs Acquire existing steel firms in

US Low-cost productivity

PRODUCT DEVELOPMENT Technology initiatives in

Hismelt, Strip casting Modification in steel

making process

NEW MARKET MARKET DEVELOPMENT Acquisition in India

investment in China Joint venture with foreign

companies Acquisition of a current

supplier

DIVERSIFICATION R & D initiatives


RecommendationsInternal Strategy Recommendation

• Reduce energy cost by Wind Turbine

External Strategy Recommendation

Acquisition in India


Recommendations



Recommendations

Recommendation 1

Internal Strategy Recommendation

• Reduce energy cost by Wind Turbine


Objectives



• Implementation of wind turbines at five of its existing plants

• Locations: Auburn, Chemung, Denton, Norfolk, Seattle

• 12 month project

• $2.5 million per turbine

• Total budget of $13.5 million


• Auburn, NY

• Chemung, NY

• Denton, TX

• Norfolk, NE

• Seattle, WA



Locations


Justification

• Reduce energy costs• Reduce production

costs• Environmentally

friendly• Payback period of 6.2

years• $4.48 million NPV



Regular Electricity Consumption

Average cost of electricity per Kilowatt (cents) 9.015

Average production of steel at five plants (tons)

2,000,000

Average electricity consumed by five plants (KW) 1,133,000,000

Total Electricity Cost $1,018,751,831

Electricity Consumption with Wind Turbines

Electricity Production with five wind turbines (KW) 23,470,000

Cost of purchasing 23,470,000 KW from Electric company $ 2,115,821


Deliverables• Five wind turbines will be purchased

from G.E Co.

• Five plants with one 1.5 Megawatt/hr. wind turbine each

• The total capacity will be 13,140 Megawatts



Implementation and Milestones

• Initiate immediately for all five locations– 12 month of installation and conversion

• Wind turbines will generate portion of mini mills electrical demand



Risk Analysis

• Purchasing/Installation costs may rise• Actual savings less than expected

savings



Long Term Effects



• Financial Implications (12 month project)– Saving of $2 million in electrical expense per

year– Recovery of initial investments in 6.2 years

• Promote “going green” image

• Base for future expansion of this project

External Strategy Recommendation Acquisition in India


Recommendations

Recommendations 2

ObjectiveAcquisition in India

• Global presence of Nucor outside of the United States

• Acquire small companies in India such as MSP Steel and Power Ltd.

• 12 Month Period• Budget of $20 million • Lower production costs



Justification• Steel consumption is on the rise globally • Explore international markets• Shift production to low-cost countries

MSP Steel (MSPL)In thousands U.S. dollars 2002 2003 2004 2005 2006Total Income 318.56 888.39 1,085.81 8,477.85 19,304.54Operating Profit 4.49 -8.97 65.06 1,590.58 2,090.86Net Profit 2.24 2.24 60.57 549.64 246.78



MSPL : National Stock Exchange of India

318.56888.391,085.81

8477.9

19305

INCOME

Deliverables• Acquisition of MSP Steel in India within

12 month period

• Nucor will invest $15.33 Million

• Incorporate new and advanced technologies



Implementation and Milestones

• Acquisition in India should be initiated immediately

• Follow the acquisition steps

• Implement modifications to the existing steel company



Risk Analysis

• Not enough return back on investments

• Sudden decrease in the demand for steel

• Uncertainty of raw material supply



Long Term Effects

• Gain competitiveness

• Cut production costs

• Strong domestic growth in India



• Driving Forces• Key Success Factors• SWOT• Action Plans• Success


Conclusion

Conclusion

Thank You For Your Time & Attention



safety first. no one gets hurt on our shift today. presented by: erum syed mirza ehtesham napacha...

Documents

internal analysisdaniel

internal analysisnyseprice

steel demandsafety

wk low

wk high

yesrare capabilities

assets ttm1

net margin ttm1