Dow Chemical Company

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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 government political structure, and environmental regulations. In addition to examining their environmental factors, Dow Chemical applied an external analysis by identifying strategic opportunities and threats to their operating environment, such as potential competitors, supplier and buyer power, product substitutes, and rivalry. This may be why Dow Chemical chose to focus on its “niche” and divest $10 billion in unrelated businesses. Dow Chemical then performed an Internal analysis to pinpoint its internal strengths and weaknesses, and finally performed a SWOT analysis or a competitive comparison between Dow Chemical and its external competitors to build upon their strength’s in order to exploit opportunities, counter threats, and also to shore up weaknesses. Dow Chemicals market maneuvers evidence the application of Business-level and Global-level strategies, as well as consideration of stakeholders profit levels. The Dow Chemicals Business-level strategy is indicated by the way it positioned itself in the marketplace by extracting some elements of a Differentiation strategy and some elements of a Cost Leadership Strategy to gain a competitive market advantage. By Differentiation strategy, I mean to say that Dow Chemical elected to seek a competitive advantage by creating new innovative products that their customer base considers to be unique and important, and maintaining a simple organizational structure. Dow Chemical has incorporated some elements of cost-leadership by adopting a decentralized form of management, a more hands on control of day-to-day functions of its “niche”, and reducing employee compensation cost. This form of management...
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