write a paper on 3 Competitive analysis While SMSs thin slab technology would offer operating advantages for Nucor (a minimill firm), these advantages are narrowed significantly by the need for Nucor to price its thin slab products lower than thin slab products from the integrated mills (i e , the big competitors) because of the perceived lower quality of minimill steel Nucors competitors include integrated steelmakers with modernized and unmodernized integrated mills While estimates vary, lets assume that 40 of integrated steel capacity was in modernized plants Exhibit 12B shows that Nucor would have a large cost advantage over unmodernized integrated mills ($225 ton versus $300 ton for Hot Rolled) if it adopted SMSs technology However, the cost advantage over modernized mills is much lower In fact, Nucor might find it difficult to compete head on with a modern integrated mill that decided to price very aggressively This leads to two questions for you to answer Based on the CF analysis Modernize and CF analysis Unmodernized Excel worksheets, determine if we should expect the integrated steelmakers to modernize mills that are currently unmodernized Why or why not Assume they follow traditional investment criterion (NPV or IRR) rather than Nucors ROA Given your answer to the previous question, how concerned should Nucor be about competing against integrated steelmakers with modernized mills when it opens its first thin slab technology mill, if it does so Please observe the following assumptions and conventions Dont change any of the figures I have input Use 6 45 as the growth rate for the price of steel, not the historical 6 84 Assume the entire construction cost of modernizing a mill is incurred in 1986 Depreciate the modernization evenly over 25 years, starting when it comes online in 1987 Assume the unmodernized plant has already been fully depreciated 5 Final recommendation In light of all of the (cash flow, scenario, competitive, and real options) analysis above, should Nucor adopt the CSP process Why or why not Do not just repeat the three conclusions from above Consider issues that are not covered in the preceding analyses

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write a paper on 3. Competitive analysis While SMSs thin-slab technology would offer operating advantages for Nucor (a minimill firm), these advantages are narrowed significantly

write a paper on

3. Competitive analysis

While SMSs thin-slab technology would offer operating advantages for Nucor (a minimill firm), these advantages are narrowed significantly by the need for Nucor to price its thin-slab products lower than thin-slab products from the integrated mills (i.e., the big competitors) because of the perceived lower quality of minimill steel.

Nucors competitors include integrated steelmakers with modernized and unmodernized integrated mills. While estimates vary, lets assume that 40% of integrated steel capacity was in modernized plants. Exhibit 12B shows that Nucor would have a large cost advantage over unmodernized integrated mills ($225/ton versus $300/ton for Hot Rolled) if it adopted SMSs technology. However, the cost advantage over modernized mills is much lower. In fact, Nucor might find it difficult to compete head-on with a modern integrated mill that decided to price very aggressively.

This leads to two questions for you to answer.

Based on the CF analysis-Modernize and CF analysis-Unmodernized Excel worksheets, determine if we should expect the integrated steelmakers to modernize mills that are currently unmodernized. Why or why not? Assume they follow traditional investment criterion (NPV or IRR) rather than Nucors ROA.
Given your answer to the previous question, how concerned should Nucor be about competing against integrated steelmakers with modernized mills when it opens its first thin-slab technology mill, if it does so?

Please observe the following assumptions and conventions.

Dont change any of the figures I have input.
Use 6.45% as the growth rate for the price of steel, not the historical 6.84%
Assume the entire construction cost of modernizing a mill is incurred in 1986
Depreciate the modernization evenly over 25 years, starting when it comes online in 1987. Assume the unmodernized plant has already been fully depreciated.

5. Final recommendation

In light of all of the (cash-flow, scenario, competitive, and real options) analysis above, should Nucor adopt the CSP process? Why or why not? Do not just repeat the three conclusions from above. Consider issues that are not covered in the preceding analyses.