Dow Chemicals Essay Research Paper BA 361ESSAY
? Dow Chemicals? Essay, Research Paper
Subject: ? Dow Chemicals?
Student: Mr. Russ Savage
Professor: Mr. Omar Malik
Date: 22 May 2000
I decided to build my essay on Dow Chemicals ( DC ) Company after reading an article in Business Week. Dow Chemical appears to be developing an aggressive market scheme that aligns with our category subjects, and that I have found really interesting. Dow Chemical ( DC ) company, over the last seven old ages has built their scheme around and focused on their? niche? , which is nucleus chemicals & A ; plastics-manufacturing operations, while at the same time cut downing substructure debt, spread outing its market portion, and seemingly constructing new strategic confederations.
Harmonizing to Dow Chemical CEO William Stavropoulos, The mission and ends of Dow Chemical company is to be a universe leader in chemical and plastics fabrication by developing new client demand merchandise lines and spread outing long-run profitableness through planetary market enlargement in such planetary markets as Europe and Asia.
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If Dow Chemicals presently owned assets did non aline with and back up this mission scheme, they were divested. Dow Chemicals has evidenced this by selling off more than $ 10 billion in concern assets, while at the same clip adding $ 10 billion in new concern that support their new scheme, and the strategic add-on of the Union Carbide Company.
To develop Dow Chemicals new scheme, which is to state to develop a competitory advantage within their selected market, Dow Chemical appears to hold exhaustively examined their function in the macroenvironment, which besides encompasses the political/legal, technological, demographic, societal, and macroenvironments elements. In analysing their macroenvironment they would hold considered such points as the current economic system involvement rates, currency exchange rates, and rising prices rates, which could impact the client demand for their merchandises, every bit good as moving on other environmental factors such as:
a ) Technology: Through their advanced research and development of unique and new advanced merchandises, they easy heighten the of barriers to entry for rivals.
B ) Sociable: Performing research on current and future tendencies for healthier and safer merchandises.
degree Celsius ) Demographic: Considered the age and instruction degrees of environing fabrication workss. Skilled workers straight impact production capacity.
vitamin D ) Political & A ; legal: What regulations and ordinances are in topographic point, what is the province of the authorities political construction, and environmental ordinances.
In add-on to analyzing their environmental factors, Dow Chemical applied an external analysis by placing strategic chances and menaces to their operating environment, such as possible rivals, provider and purchaser power, merchandise replacements, and competition. This may be why Dow Chemical chose to concentrate on its? niche? and divest $ 10 billion in unrelated concerns. Dow Chemical so performed an Internal analysis to nail its internal strengths and failings, and eventually performed a SWOT analysis or a competitory comparing between Dow Chemical and its external rivals to construct upon their strength? s in order to work chances, counter menaces, and besides to shore up failings.
Dow Chemicals market manoeuvres grounds the application of Business-level and Global-level schemes, every bit good as consideration of stakeholders net income degrees. The Dow Chemicals Business-level scheme is indicated by the manner it positioned itself in the market place by pull outing some elements of a Differentiation scheme and some elements of a Cost Leadership Strategy to derive a competitory market advantage. By Differentiation scheme, I mean to state that Dow Chemical elected to seek a competitory advantage by making new advanced merchandises that their client base considers to be alone and of import, and keeping a simple organisational construction.
Dow Chemical has incorporated some elements of cost-leadership by following a decentralised signifier of direction, a more custodies on control of daily maps of its? niche? , and cut downing employee compensation cost. This signifier of direction construction opens corporate communicating channels and reinforces intelligent employees of the Company? s mission. This was achieved by cut downing the work force by 30 per centum and extinguishing seven beds of direction. The current direction construction contains merely five people between the most junior employee and the Chief Executive Officer.
Dow Chemical appears to hold embraced a Global Strategy, which is increasing profitableness by harvesting the cost decreases that come from experience-curves and location economic systems and by spread outing its market portion outside of its place state. This concern savvy type of direction attack seeks to perforate a immense market handiness, which as planetary markets develop will bit by bit unite into merely one market.
In developing their mission ends and corporate scheme, Dow Chemical has evidently considered both External and Internal stakeholders and how strategic manoeuvres would impact their ultimate ends. Examples of stakeholder impacts are:
– Customers: Supply the nucleus of gross, particularly in untapped markets overseas.
– Suppliers: Provide input w/significant nest eggs through combined buying with Union Carbide Company and 13 other big companies.
– Governments: Significant reduced fabrication limitations and possible inducements to carry on concern in foreign states.
– Unions: Many foreign states are non nonionized, which could be a production cost inducement.
– Stockholders: Maximizing their Tax return On Investing by spread outing operations and deriving entree to hard markets.
– Employees: By set uping fabrication installations in skilled labour markets, which may develop into an extra client base every bit good.
– Board Members: To do such dramatic and intense corporate alterations, an indorsement from corporate board members must hold been supportive.
Dow Chemicals mission and ends, strategic programs, and direction manners are all geared towards capitalising on their market and increasing their bottom-line? net income for shareholders.
Dow Chemicals shows marks of being a Proprietary group, which patents its advanced merchandises in an effort to make barriers of entry from its closest rivals or other possible sellers. However, finally this will take to a punctuated equilibrium, which will be highlighted by periods of rapid alteration within this industry in order to keep market sh
are or gain an border in competitory advantage. Due to Dow Chemicals merchandise inventions, their industry competition rhythm will most likely alumnus from stable to new invention to a re-established new equilibrium, and so this rhythm will get down over once more when new inventions are achieved.
Directly correlated to Dow Chemicals merchandise inventions is the industries life rhythm with which it operates in. The five industry life rhythms are Embryonic, Growth, Shakeout, Mature, and Decline. Dow Chemicals strategic restructuring occurred because it had entered into the diminution phase, and required new inventions to stay competitory or even capture a section of the industry. With Dow Chemicals primary focal point on its? niche? , development of new merchandise lines, and Global market positioning it is shiping on revolutionising portion its industry by spread outing its market base and is now get downing a new stage of the Growth phase in the industry life rhythm.
Dow Chemicals acquisition of Union Carbide indicates an expansionary function into the Europe and Asian markets, which is an index of globalisation of production, where it hopes to take advantage of decreased labour, energy, and capital cost and increase gross. However, Globalized selling frequently creates intense competition, which is why I suspect that Dow Chemical feels industrially safer by concentrating on its? niche? , and increasing merchandise inventions were its feels it has a important competitory advantage with its consumer base.
Dow Chemical chose to capitalise on its value creative activity, low cost and distinction by unifying with Union Carbide. By exerting this market chance, Dow Chemicals can go on with new merchandise inventions in abroad locations and can increase their competitory advantage by deriving entree to the Middle East and Asiatic markets where Union Carbide is strong. The nucleus elements to a successful competitory advantage are the Generic edifice blocks. They are:
a ) Efficiency: By runing at the lowest possible production cost and maximising net incomes.
B ) Quality: By bring forthing a merchandise that meets or transcend your client demands and thereby constructing trade name Equity and Brand trueness.
degree Celsius ) Innovative: By puting in research and development to develop merchandises that meet your altering client demands, and act uponing barriers to entry and issue.
vitamin D ) Customer Responsiveness: By using corporate ownership/responsibility for the merchandise that you provide, and going socially responsible for related community and environmental concerns.
Is Dow Chemicals considered successful? I would state that they have embarked upon a sound concern scheme, but the their industrial market will be everlastingly altering, and in order for them to stay competitory, they besides must stay unfastened to new inventions and markets. I will turn to this more in the undermentioned paragraphs.
I would urge the undermentioned suggested future direction actions and schemes towards keeping or bettering Dow Chemicals current paces for a competitory advantage. First, I would propose a continued attempt on bettering upon the established Generic Building Blocks to keep their competitory advantage. The best manner to mensurate success may be through Benchmarking with other companies and merchandises, while endeavoring to battle organisational Inertia by placing barriers to alter, guaranting quality corporate leading, and appropriate judicial power is applied internally. A Company must stay flexible plenty to run into our ever-changing client demands. Second, I would propose that they exercise cautiousness in the country of specifying the bing concern ends, by continually inquiring and reexamining three inquiries: ( 1 ) Who is being satisfied? ( 2 ) What is being satisfied? , and How are client demands being satisfied? This will enable Dow Chemicals to loosely specify their concern, and prevent acquiring trapped in any one section of the industry by major displacements in demand.
Third, I would admonish shareholders to exert prudence with regard to end counsel and control of Dow Chemical. Status, power, occupation security, and income usually drive senior directors. Stockholders can command on-the-job-consumption and imperium edifice by using administration mechanisms, such as a board of managers with an outside manager appointed as president this will ease an impartial position and suggestion, and pitching CEO compensation towards a stock-based compensation program.
Fourth, I would promote Dow Chemical to ship upon a positive public dealingss, Selling, and Human Resource run. In 1984 Union Carbide had chemical spills in Bhopal, India, which was so settled with the Indian authorities. However, sick feelings may still predominate among the public. Social duty leads to profitableness. This could be achieved by Dow Chemicals Human Resources Department sharply engaging local occupants and acquiring employees involved in the determination devising procedure, safety safeguards, developing commissions and methods of employee feedback, and preparation. Public Relations and Marketing sections could construct upon these enterprises to reenforce a positive image, which could so take to an improved repute and increased market portion through trade name trueness and economic systems of graduated table.
And eventually, Fifth, I would strongly urge that Dow Chemical continually re-evaluate their industries by executing External analysis and Internal analysis. By re-evaluating the undermentioned factors, Dow Chemical should be able to reasonable track its competitory advantage place and adjust early plenty to stay competitory. They are:
a ) Potential rivals: This country represents a menace to profitableness, which can be combated by raising the barriers to entry/exit costs, trade name trueness, absolute cost advantages, economic systems of graduated table, and perchance through the development of superior repute influence and bask protection from local authoritiess.
B ) Competition: Monitor the competitory construction of the amalgamate industry, which could impact market portion, and even get down monetary value wars, which could be dearly-won. Monitor demand tendencies, which could name for market enlargement or abjuration, and eventually supervise issue barriers, which be a hindrance for possible entrants.
degree Celsius ) Power of Buyers: Monitor provider industries, when there are many providers, purchasers can rule a bargaining place, and thereby bring forth cost nest eggs. Consolidate purchases with Union Carbide to maximise a combined purchasing power place.
vitamin D ) Power of Suppliers: Monitor provider markets for new provider entrants or possible suited replacements.
vitamin E ) Substitute merchandises: Monitor the market for suited replacements for your manufactured merchandise, which could negatively impact your market portion.