HRM Issues/Diversification Strategies 1

HRM Issues/Diversification Strategies

Robin Griggs

BUS 599 Strategic Management

Dr. Christella Hogan February 26, 2012

HRM Issues/Diversification Strategies 2

Abstract
In this paper I will identify and discuss the trends in the steel industry and how it may impact Nucors strategy, discuss the organizational structure and management philosophy at Nucor, identify three (3) HRM issues related to strategy implementation and recommend actions to address these issues, based on the situation, recommend whether a related or unrelated diversification should be used by the company. Provide supporting rationale, and based on your recommendation for related or unrelated diversification, identify the organizational structure issues that the company would need to address to implement that diversification.

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HRM Issues/Diversification Strategies Human Resource Management (HRM) is the function within an organization that focuses on recruitment of, management of, and providing direction for the people who work in the organization. HRM can also be performed by line managers. HRM is the organizational function that deals with issues related to people such as compensation, hiring, performance management, organization development, safety, wellness, benefits, employee motivation, communication, administration, and training. HRM is also a strategic and comprehensive approach to managing people and the workplace culture and environment. Effective HRM enables employees to contribute effectively and productively to the overall company direction and the accomplishment of the organization's goals and objectives. http://humanresources.about.com/od/glossaryh/f/hr_management.htm Discuss the trends in the steel industry and how it may impact Nucors strategy. Global steel industry trends over the past five decades, changes in steelmaking technology had revolutionized the worlds steel industry. Up until the 1960, steel was produced in large-scale plants using capital-intensive basic oxygen blast furnace technology and open hearth furnace technology where steel was made from scratch using iron ore, coke, scrap, steel, limestone, and other raw materials-such companies were referred to as integrated producers because the value chains at such plants involved a number of production steps and processes to convert the raw materials into finished steel products. But the starting in the 1960s, the advent of electric arc furnace technology spurred new start-up companies to enter the steelmaking business. These new companies, called minimills because their plants produced steel on a much smaller scale than did the integrated mills, used low-cost electric arc furnaces to melt scrap steel and cast the molten

HRM Issues/Diversification Strategies 4 metal directly into a variety of steel products at costs substantially below those of integrated steel producers. (p. C-212-213) Consolidation of the industry into a smaller number of larger and more efficient steel producers had heightened competitive pressures for Nucor and most other steelmakers. Nucors most formidable competitive threat in the U.S. market consisted of Mittal Steel USA and foreign steelmakers that were intent on exporting some of their production to the United States; there were many foreign steel producers that had costs on a par with or even below those of Nucor, although their competitiveness in the U.S. market varied significantly according to the prevailing strength of their local currencies versus the U.S. dollar. (p. C215-216)

Discuss the organizational structure and management philosophy at Nucor. Nucor had a simple, streamlined organization structure to allow employees to innovate and make quick decisions. The company was highly decentralized, with most day-to-day operating decisions made by division or plant-level general managers and their staff. The organizational structure at a typical plant had three management layers: General Manager Department Manager Supervisor/Professional Hourly Employee

As long as plant managers met their profit targets, they were allowed to operate with minimal restrictions and interference from corporate headquarters. (p. C-204)

HRM Issues/Diversification Strategies 5 Identify three (3) HRM issues related to strategy implementation and recommend actions to address these issues. Management is obligated to manage Nucor in such a way that employees will have the opportunity to earn according to their productivity. (p. C-206). My recommendation for this would be that earning a bonus would not just be contingent upon their productivity but their hard work and all they do for the company to ensure deadlines are being met. Employees should be able to feel confident that if they do their jobs properly, they will have a job tomorrow. (p. C-206). My recommendation for this would be to make sure everyone has been properly trained so they are to maintain their positions and for those that lack provide them with what they need to do their jobs effectively and efficiently. Employees must have an avenue of appeal when they believe they are being treated unfairly. (p. C-206). My recommendation for this would be to establish a department that would allow employees to report unfair practices without being penalized for it. Based on the situation, recommend whether a related or unrelated diversification should be used by the company. Provide supporting rationale.

Based on current situation at Nucor my recommendations would be that of related diversification. Unrelated diversification is defined as unrelated differentiation is a diversification

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strategy where companies expand their operation into markets or products beyond current resources and capabilities. This strategy is also sometimes referred to as the conglomerate strategy. The unrelated diversification seems to be applicable and meaningful in at least two cases: Firstly, if the parent company is able to provide different businesses with managerial knowledge and expertise that strengthens the individual business, it will be very feasible to diverse into different markets that will potentially increase parent company profits. Secondly, unrelated diversification might give a company the opportunity of increasing the strength of the economy of different markets, and to develop competencies that can be shared between different markets and products. http://www.businessmate.org/Article.php?ArtikelId=199 By going using unrelated diversification it would allow Nucor to expand and invest into other markets. This would allow the company other options to explore so that not only do they continue to meet the needs of the consumer but it also allows them continue to generate more revenue for the company through various ventures. Based on your recommendation for related or unrelated diversification, identify the organizational structure issues that the company would need to address to implement that diversification. Managerial skills found within the company may be successfully used in other markets, where the dominant logic and managerial procedures of management can be successfully transferred to other markets. http://www.businessmate.org/Article.php?ArtikelId=197

HRM Issues/Diversification Strategies 7 With the kind of management operations they currently have at Nucor, it may work within the other markets the company decides to explore. This would allow those that seem to be struggling in certain departments to be transferred into one of the other markets that would allow them to not only keep their jobs but allow them to grow within the organization without feeling like if they do not keep up with current expectations then they end up with nothing. It also gives the other markets an opportunity to learn about Nucor as well as allowing Nucor to introduce different types of diversity within its organization. In conclusion, I have identified and discussed the trends in the steel industry and how it may impact Nucors strategy, discussed the organizational structure and management philosophy at Nucor, identified three (3) HRM issues related to strategy implementation and recommended actions to address these issues, based on the situation, recommended whether a related or unrelated diversification should be used by the company. Provided supporting rationale, and based on your recommendation for related or unrelated diversification, identified the organizational structure issues that the company would need to address to implement that diversification.

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References Thompson, A. A., Strickland, A. J., & Gamble, J. E. (2010). Crafting and executing strategy: The quest for competitive advantage: Concepts and cases: 2009 custom edition (17th ed.). New York: McGraw-Hill-Irwin. http://humanresources.about.com/od/glossaryh/f/hr_management.htm http://www.businessmate.org/Article.php?ArtikelId=197 http://www.businessmate.org/Article.php?ArtikelId=199