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 1960s
After 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

Cont
In 1972 the firm changed its name to Nucor corporation
By 1998 it became Americas second largest steel maker and also
was in Fortune 500 company
Nucors sales during Iversons tenure grew at an annual compound
rate of about17% per annum
In the corresponding years both Nucor CEO John Correnti and
Iverson were named steel maker of the year

Operations of Nucor
Nucor 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

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

Strategies
Continuous Innovation
Usage of modern equipment
Individualized customer service
Usage of scrap metal
No acquisitions and mergers
Usage of low debt in total capital
No diversification

Organization Structure
Decentralized system
Four management layers:
Chairman/Vice chairman/President
Vice President/Plant General Manager
Department Manager
Supervisor

Cont
Autonomy to the General Manager in decision making
Nucors board of directors had only six members
The decision making was done by the individual plants General
Manager and they were not liable for the Headquarters to respond
to the problems
There were a total of 6800 employees working in the company

Significance of Human
Behaviour Patterns In
Management Control System

Nucor Recruitment System

Objective : To recruit people with:

Right mindset
Excellent Communication skills
Ability to work without supervision
Highly Motivated
Goal-Reliance and Self-Reliance

Internal Factors
Nucors USP Its Culture

Flat hierarchy
Trust and Teamwork
Minimal Management Interference
Managers 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 feedback
All managers, including CEO, wear same colour hard hat at
work (Green)

Nucors Mantra for Success

Hard Work

Unmatched
Reward System

Good Employees
Relationship

Equality

Spirit of
Innovation

Reward System

Pay directly linked with Productivity

Bonuses 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 education

Nucor Principles
Opportunity
to earn acc.
to their
productivity

Feel
confident
about the
job if they do
it properly

Should be
treated fairly

Should have
facility to
appeal

Compensation
Four compensation plans:
Product incentive plan
Department manager incentive plan
Non-production and non-department manager
incentive plan
Senior 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 figures
The plant General managers met as a group with head quarters
management three times a year to review each plants performance

Benefits
Profit sharing
Scholarship programmes
Stock purchase plan
Commitment 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 company
Their ability to be a successful first mover in the adaption of new
technology is remarkable
Although 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

Questions
Why has Nucor performed so well?
Nucor used plant location and growth to its advantage
Unique organizational structure
Always acknowledged the importance for employee relations and
satisfaction in the work place
Competitive advantage and a unique strategy

What are the most important aspects

of Nucors 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 strategy
Nucor 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 ventures

Nucor 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 integration
Before 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 advancement
Nucor 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 standards

Nucor 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 CORPORATION
Part (B)

Shift in Management Board

Ken Iverson was forced into retirement
John Correnti was voted out of power
David 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 Reconsider 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 Acquisitions
Expanding into global markets
Building blast furnaces
Diversifying into non-steel areas
Adding new organizational layers
Changing the composition of Board.

Questions?
1. 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 QUESTIONS

Que(Roll No 52)

: - Transfer Pricing is not an accounting tool

comment with an illustration.

Que (Roll No 53) :-Discuss and illustrate differences and

similarities between
a) Strategy Formulation and Management Control
Characteristics

Strategy Formulation

Management Control

a) Focus of plan

On one aspect at a time

On entire organisation

b) Complexities

Many variables hence complex

Less complex

c) Nature of information

Tailor-made for the issue, more external Integrated, more internal and historical,
and predictive, less accurate.
more accurate.

d) Structure

Unstructured and irregular, each problem Rhythmic, definite pattern, set procedure
being different

e) Communication of information

Relatively simple

Relatively difficult

f) Purpose of estimates

Show expected results

Lead to desired result

g) Persons involved

Staff and top management

Line and top management

h) No. of persons involved

Small

Large

i) Mental activity

Creative, analytical

Administrative, persuasive

j) Planning and control

Planning dominant but some control

Emphasis on both planning and control

k) Time horizon

Tends to be long

Tends to be short

l) End result

Policies and precedents

Action within policies laid

m) Appraisal of job done

Extremely difficult

Less difficult

b) Management Control and Task Control

Characteristics

Task Control

Management control

a)Focus of plan

Single task or transaction

On entire organisation

b)Nature of information

Tailor-made to operation, specific, often Integrated, more internal and historical,

non- financial, real time
more accurate

c) Persons involved

Supervisors

d) Mental activity

Follow directives or none as in case of Administrative, persuasive

machines or set objectives

e) Time horizon

Day to day

f) Type of cost

EngineeredExistence
of
objective Discretionary- Control is more difficult due
standard against which actuals can be to subjective consideration.
compared makes control easier.

Line and top management

Tends to be short

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..