Friday, October 7, 2016

DuPont Case Study


DuPont Case Study

 
EXECUTIVE SUMMARY

DuPont is a global leader among industrial growth companies and a leader in science and technology. High-performance materials, specialty chemicals, pharmaceuticals and agricultural products are among the markets in which DuPont produces products. DuPont has an estimated family of 2,000 trademarks and branded products. The company also deals with science based solutions in regard to food and nutrition, healthcare, apparel, home and construction, electronics, and transportation.

Founded in 1802, the company operates in 70 countries and has 93,000 employees. It’s employees are made up of men and women of many races, cultures, and ethnic backgrounds. According to Charles O. (Chad) Holliday, Jr., the Chairman and CEO, a career at DuPont offers employees an opportunity to a bright professional future.
DuPont holds the “highest standards of performance” in maintaining its philosophy on “business Excellence.” Think Globally and act locally is the strategy of Dupont. Ranked as number 56 in the Fortune 500, and 68 by Hoovers 500, Dupont’s direct market competitors BASF AG, Bayer AG, and Dow Chemical are no match for it’s presence in the market place.

Introduction: The Firm

DuPont, also known as E. I. du Pont de Nemours and Company is a science company with nine business units, “delivering science-based solutions that make a difference in people’s lives in food and nutrition; health care; apparel; home and construction; electronics; and transportation. Founded in 1802, the company operates in 70 countries and has 93,000 employees” (Index Information, 2001). Currently, Charles O. (Chad) Holliday, Jr., 52, is Chairman and CEO in the forefront of this “functional corporate structure with a domestic corporate staff orientation, and an international division” (Keegan, 1999).

“For nearly 200 years, Dupont’s core values have remained constant: commitment to safety, health and the environment; integrity and high ethical standards; and treating people with fairness and respect. DuPont is a global leader among industrial growth companies, and a leader in science and technology in a range of disciplines including high-performance materials, specialty chemicals, pharmaceuticals and agricultural products. DuPont has an unparalleled portfolio of 2,000 trademarks and brands, including many well-known consumer brands” (Product Markets, 2001). In 1990, DuPont and Merck agree to form a joint venture, DuPont-Merck Pharmaceutical Company.

The 4 P’s

Product: In 1804, the gunpowder was first shipped under the DuPont label. Then, in 1931, Freon® refrigerants were introduced, and Neoprene, the first general purpose synthetic rubber was announced. Following, in 1938, the introduction of nylon fiber, Teflon®  fluorocarbons, and Butacite® resin sheeting for safety glass were created. Then in the 1960s, the introduction of Lycra® brand spandex, electronic materials, Nomex® and Kevlar® brand fibers into the United States market was made (Product Markets, 20001).

DuPont produces a family of products and services according to its market segmentation. The different segments in which DuPont conducts business are “Aerospace, Agriculture, Apparel, Automotive, Construction, Packaging, Pharmaceuticals. The company aims to grow in core businesses, such as white pigments, Lycra®, nylon and polyester. At the same time, DuPont is becoming a major player in life sciences and is rapidly building competencies and product positions in biotechnology-derived products in agriculture.” Some of DuPont’s best-known brands are: “DuPont™ Teflon® resins, DuPont™ SilverStone® non-stick finish, DuPont™ Lycra® brand spandex fiber, DuPont™ Stainmaster® stain-resistant carpet, DuPont™ Antron® carpet fiber, DuPont™ Dacron® polyester fiber, DuPont™ Kevlar® brand fiber, DuPont™ Corian® solid surface material, DuPont™ Mylar® polyester films, DuPont™ Tyvek® brand protective material, and DuPont™ CoolMax® and DuPont™ Cordura® textile fibers” (Product Markets, 2001)

Place: “DuPont operates about 135 manufacturing and processing facilities in 70 countries worldwide. With established major market positions in North America and Europe, the company is expanding its presence in Asia Pacific and South America. The following chart displays the target markets in which Dupont does business to make it a Global company (Corporate Markets, 2001):

Price: According to the market segment and target market in which the product is being sold.

Promotion:Think Globally, Act locally.

Mission and Philosophy

“Healthy businesses need healthy communities to thrive. DuPont is committed to improving the quality of life and enhancing the vitality of the communities in which we operate throughout the world by supporting community sustainability efforts. Sustainable communities recognize the interdependence of social progress, economic success and environmental excellence. Through financial contributions and the active volunteer participation of employees, DuPont provides support to programs and non-profit organizations that address one or more components of community sustainability” (Corporate Philanthropy, 2001).

Vision Statement

“We, the people of DuPont, dedicate ourselves daily to the work of improving life on our planet. We have the curiosity to go farther … the imagination to think bigger … the determination to try harder … and the conscience to care more” (Environmental Commitment, 2001).

Management Philosophy

In his inauguration speech into the seat of Chairman and CEO of DuPont, Charles O. (Chad) Holliday, Jr., in an inspirational speech he is quoted saying “our solutions will be bold. We will answer the fundamental needs of the people we live with to ensure harmony, health and prosperity in the world. Our methods will be our obsession. Our singular focus will be to serve humanity with the power of all the sciences available to us. Our tools are our minds. We will encourage unconventional ideas, be daring in our thinking, and courageous in our actions. By sharing our knowledge and learning from each other and the markets we serve, we will solve problems in surprising and magnificent ways. Our success will be ensured. We will be demanding of ourselves and work relentlessly to complete our tasks. Our achievements will create superior profit for our shareholders and ourselves. Our principles are sacred. We will respect nature and living things, work safely, be gracious to one another and our partners, and each day we will leave for home with consciences clear and spirits soaring” (Environmental Commitment, 2001).

DuPont holds the “highest standards of performance” in maintaining its philosophy on “business Excellence.” By “adhering to the highest standards for the safe operation of facilities and the protection of the environment,” DuPont employees, customers and the people of the communities in which it does business will further strengthen Dupont’s corporate culture by means of moral satisfaction (Environmental Commitment, 2001).

Organizational Culture

Today, “DuPont is made up of men and women of many races, cultures, and ethnic backgrounds–people coming together in a mosaic of talent and creativity. They have a deep desire to work at the leading edge of their fields, to develop the technologies of the future, and to pursue excellence. Carefully selected, DuPont develops, and trains employees to help the company maintain its current scientific leadership and to expand that leadership into new areas. DuPont’s worldwide reputation as a good place to work is reflected in thousands of job applications received annually from all over the world, maintaining an earned international recognition for a series of race and gender awareness programs, for its pioneering work/life programs, and for its management of an ethnically and geographically diverse work force” (Corporate Work, 2001).

Strategy Development

“After 198 years of continuous operations, the company has in the past few years achieved one of its greatest transformations – liberating value through productivity and efficiency improvement, while reorganizing to speed decision-making and implementation. The aim now is to create value by at least doubling the rate of revenue growth, while maintaining emphasis on productivity improvement. DuPont’s unique set of competitive advantages derives from its strong core technology platforms, leading market positions, value-added products, brand franchises, global presence and financial strength”(Corporate Strategy, 2001).

Globalization 

The DuPont corporate headquarters are located in Wilmington, Delaware. Worldwide business headquarters are placed close to major customers and market centers – automotive headquarters are in Detroit, the electronics business is headquartered in Tokyo, and the worldwide petroleum operations are in Houston (Radebaugh, 2000). DuPont operates more than 200 manufacturing facilities in more than 40 countries. Currently, approximately a third of the company’s employees work outside the United States. The company has more than 40 research and development and customer service labs in the United States, and more than 35 labs in 11 other countries (Corporate Social, 2001).

Marketing Development

“DuPont has constantly continued to expand throughout its existence, and by the last half of the 1950s, the company established several subsidiaries in Europe and undertook a large construction program in 10 countries. In the next decade, more than 20 international subsidiaries and joint ventures were formed in Europe, Latin America, and the Asia/Pacific region. A driving force behind the international expansion of DuPont in the last half of the twentieth century has been the recognition that, to grow share in global markets, the company needed to build facilities within those markets to serve local customers” (Radebaugh, 2000).

“In response to growing international competition in the 1970s and 1980s, the company put more emphasis on marketing, and it sought growth through diversification. During the 1980s, DuPont invested more than $10 billion in over 50 acquisitions and joint ventures in its diversification efforts. A major part of this investment was the purchase in 1981 of Conoco, a fully integrated oil, gas, and coal company with operations around the world” (Radebaugh, 2000).

Marketing Strategy:

“As DuPont moves through the last decade of the twentieth century and toward its third century, it emphasizes several areas: competing globally; sharpening its business focus; increasing productivity; committing to safety, health, and environmental excellence; empowering people, capitalizing on its strong corporate and product brand franchises; and continuing to extend its significant science and technological achievements” (Radebaugh, 2000). “The focus on reducing costs and improving productivity is necessary to give the company the flexibility for competitive pricing and to grow market share and earnings” (Corporate Social, 2001).

Political and Legal Stand

“We will build alliances with governments, policy makers, businesses and advocacy groups to develop sound policies, laws, regulations and practices that improve safety, health and the environment” (Corporate Environment Safety, 2001).

Economic Conditions and Trends

Afraid of a hostile take over, in 1995, DuPont bought back “156 million shares from Seagram for $8.8 billion in cash and warrants, and in 1996 repurchased the warrants, thus largely ending the Seagram stake in DuPont that began with the acquisition of Conoco in 1981.” Also, “DuPont and Dow formed a 50-50 joint venture, DuPont Dow Elastomers; the company refocused on discovery research; major discoveries were announced in olefin polymerization to make new forms of polyethylene, in a biological “green” process for the manufacture of a new type of high-performance polyester” (Radebaugh, 2000).

In 1802, DuPont was founded and was capitalized at $36,000 with 18 shares at $2000 each (Radebaugh, 2000). Recently In 2000, DuPont had revenues of $28.3 billion and net income of $2.3 billion. Today, about half of the company’s sales are made outside of the United States.  Exports from the United States are over $5 billion in the year 2,000, making the company one of the largest U.S. exporters. DuPont sees superior profitability and sustainable growth in its leading global competitive positions (Corporate IR, 2001).

Conclusion

Ranked as number 56 in the Fortune 500, and 68 by Hoovers 500, Dupont’s direct market competitors BASF AG, Bayer AG, and Dow Chemical seem as though they can not touch DuPont’s stronghold on global marketing strategies (Hoovers 500, 2001). “DuPont’s actions are specific to each unique region” as it seeks leverage in developing regiocentric tactics (Radebaugh, 2000). The companies’ view of the entire world as a potential market also makes it strive to develop ultimate integrated geocentric strategies. Therefore, DuPont’s management direction defines the true meaning of a global or transnational company (Keegan, 1999).

In conclusion, the DuPont Company celebrates its 200th birthday in the upcoming year 2002. Happy birthday to one of USA’s oldest and strongest companies, I’ll see you in the stock market.

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