Dow Chemical
Topic: “Dow Chemicals”
I decided to construct my essay on Dow Chemicals (DC) Company after reading an article in Business Week. Dow Chemical appears to be developing an aggressive market strategy that aligns with our class topics, and that I have found very interesting. Dow Chemical (DC) company, over the last seven years has built their strategy around and focused on their “niche”, which is core chemicals & plastics-manufacturing operations, while simultaneously reducing infrastructure debt, expanding its market share, and apparently building new strategic alliances.
According to Dow Chemical CEO William Stavropoulos, The mission and goals of Dow Chemical company is to be a world leader in chemical and plastics manufacturing by developing new customer demand product lines and expanding long-term profitability through global market expansion in such global markets as Europe and Asia. If Dow Chemicals currently owned assets did not align with and support this mission strategy, they were divested. Dow Chemicals has evidenced this by selling off more than $10 billion in business assets, while at the same time adding $10 billion in new business that support their new strategy, and the strategic addition of the Union Carbide Company.
To develop Dow Chemicals new strategy, which is to say to develop a competitive advantage within their selected market, Dow Chemical appears to have thoroughly examined their role in the macroenvironment, which also encompasses the political/legal, technological, demographic, social, and macroenvironments elements. In analyzing their macroenvironment they would have considered such items as the current economy interest rates, currency exchange rates, and inflation rates, which could impact the customer demand for their products, as well as acting on other environmental factors such as:
a) Technology: Through their advanced research and development of unique and new
innovative products, they easily heighten the of barriers to entry for competitors.
b) Social: Performing research on current and future trends for healthier and safer
products.
c) Demographic: Considered the age and education levels of surrounding manufacturing
plants. Skilled workers directly impact production capacity.
d) Political & legal: What rules and regulations are in place, what is the state of the
governm...
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a) Potential competitors: This area represents a threat to profitability, which can be
combated by raising the barriers to entry/exit costs, brand loyalty, absolute cost
advantages, economies of scale, and possibly through the development of superior
reputation influence and enjoy protection from local governments.
b) Rivalry: Monitor the competitive structure of the consolidated industry, which could
affect market share, and even start price wars, which could be costly. Monitor demand
trends, which could call for market expansion or retraction, and finally monitor exit
barriers, which be a deterrent for potential entrants.
c) Power of Buyers: Monitor supplier industries, when there are many suppliers, buyers
can dominate a bargaining position, and thereby generate cost savings. Consolidate
purchases with Union Carbide to maximize a combined buying power position.
d) Power of Suppliers: Monitor supplier markets for new supplier entrants or potential
suitable substitutes.
e) Substitute products: Monitor the market for suitable substitutes for your
manufactured product, which could negatively impact your market share.
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bills when they are due and to take care of unexpected needs for cash, while
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