Dow Chemical
Internal entrepreneurship at the Dow Chemical Company
Dow Chemical Company
Description
Dow Chemical is a multi-national chemical manufacturing company, specifically serving various consumer markets with innovative chemicals and plastics products. With net profit margins dropping over a period of time, the firm had prioritized growth initiatives in the early 2000s. The emergence of the internet had empowered start-ups to disrupt the chemical manufacturing industry, which represented a significant threat to the firm. Dow Chemical’s leadership team responded by formally educating themselves on emerging e-commerce business models, which paved the way for a new growth venture, e-epoxy.com. The initiative was pushed forward by Ian Telford, who despite modest resources takes the necessary actions to garner support and coordinate resources internally towards implementation.
Evaluation
EP&I Division: Epoxy was a high margin business for Dow Chemical, but required significant capital for production. Additionally, the epoxy industry was cyclical and capacity utilization was an issue. 80% of the revenue was produced by the firm’s major customers (top 20%). However, the cost of servicing these clients was high as well, as they required dedicated support from account executives. The mid-level customers were supported via EP&I’s call center, which was more cost-effective. However, an opportunity existed to capture market share among small and spot market customers, unaddressed segments which had a lower cost to serve. The e-epoxy.com venture represented a good opportunity for growth, in line with Dow’s corporate strategy.
E-epoxy.com Venture: The initial reaction from leadership to the venture proposal was not positive. There were several challenges to the new business model. First, publishing prices online was counter to the traditional pricing policies in the epoxy business. There was concern that the
Dow Chemical Company
Description
Dow Chemical is a multi-national chemical manufacturing company, specifically serving various consumer markets with innovative chemicals and plastics products. With net profit margins dropping over a period of time, the firm had prioritized growth initiatives in the early 2000s. The emergence of the internet had empowered start-ups to disrupt the chemical manufacturing industry, which represented a significant threat to the firm. Dow Chemical’s leadership team responded by formally educating themselves on emerging e-commerce business models, which paved the way for a new growth venture, e-epoxy.com. The initiative was pushed forward by Ian Telford, who despite modest resources takes the necessary actions to garner support and coordinate resources internally towards implementation.
Evaluation
EP&I Division: Epoxy was a high margin business for Dow Chemical, but required significant capital for production. Additionally, the epoxy industry was cyclical and capacity utilization was an issue. 80% of the revenue was produced by the firm’s major customers (top 20%). However, the cost of servicing these clients was high as well, as they required dedicated support from account executives. The mid-level customers were supported via EP&I’s call center, which was more cost-effective. However, an opportunity existed to capture market share among small and spot market customers, unaddressed segments which had a lower cost to serve. The e-epoxy.com venture represented a good opportunity for growth, in line with Dow’s corporate strategy.
E-epoxy.com Venture: The initial reaction from leadership to the venture proposal was not positive. There were several challenges to the new business model. First, publishing prices online was counter to the traditional pricing policies in the epoxy business. There was concern that the