Internal Rate of Return and Slab Casting Essay

1. What have been the sources of Nucors competitive advantage so far (namely, up until 1986)? Do you sparsek business as customary is likely to continue generating the same profits for Nucor? wherefore?2. What are the technological risks associated with thin-slab modelling? (What could go upon and how bad would it be? You may find the spreadsheet posted with these preparation questions helpful here.)3. What are the market risks associated with thin-slab casting? (What could go wrong and how bad would it be? You may also find the spreadsheet useful here.)4. What are the pecuniary risks associated with thin-slab casting? (What could go wrong and how bad would it be? Use the financial information in the occurrence for guidance.)5. If thin-slab casting works, do you think it is likely to generate a sustainable competitive advantage for Nucor?6. Should Nucor move to thin-slab casting?Case Analysis QuestionMake a recom m endation r egarding w hether Nucor should go forward with the t hin slab casting project. In developing your recommendation, you should a ddress s everal questions .1 . First, what have been the foundations of Nucors com petitive advantage o ver the past decade? Which of those (if any) are likely to help them succeed in the thin slab casting venture?2 . Second, do you think that thin slab casting w liverish be a source of s ustainable com petitive advantage? In answering this, you must consider two things.a . One, do you think thin slab casting will be a profitable investment?There is a spreadsheet available for download along w ith this project that will help you m ake an assessm ent. This s preadsheet calculates the inside rate of return (IRR) of the new p roject using cash flow projections. The projections are based on a ssum ptions detailed in the notes below the m ain spr eadsheet.Once you download the spreadsheet, you can exp erim ent with d ifferent values that correspond to different assum ptions regarding Nucors strategic concer ns. Som e of these m ay have a l arge personnel on the value of the project others may not. Some of the issues raised in the case whose effect you m ay want t o c onsider include scrap prices, tim e to r to each one f ull capacity, and r esponses by com petitors in the new m arkets Nucor would be e ntering.b . T wo, do you think that the profits obtained by thin slab casting w ould be sustainable? Why or why not?3 . T hird, what are t he options that would be candid or close d if Nucor p roceeded with thin slab casting?Your recom m endation should be based on both your calculations of cash flow projections and also on a m ore qualitative analysis intimately c om petitive advantage a nd p rofitabi lity, and t he extent to which they w ill be s ustainable (m eaning they cannot be easily im itated by other c om panies, etc.) .