Case Study Du Pont Freon
Case Study: Du Pont Freon Products Division
The Du Pont Freon Products Division’s main business is production and sale of chlorofluorocarbons (CFCs) which are mainly used in refrigeration equipment and air conditioning systems. In 1987, the division accounted for two percent of Du Pont’s revenue and employed 1200 people. Starting in the early 70s, concerns have been expressed that CFCs contribute to and might cause the depletion of the ozone layer. In 1988, however, the first hard evidence was published proving that CFC causes the ozone layer to deplete. This contribution to the depletion is, according to the evidence, widespread and more severe than originally believed. In face of the new evidence, Joe Glas, CEO of Du Pont Freon Products Division needs to decide what the future of the companies CFC business is going to be. In order to derive the decision, this essay will first look at Du Pont’s Strategy regarding the CFC business from 1974 to 1986 and afterwards consider the impacts of the Montreal Protocol and the Trends Panel Protocol.
Evaluation of Du Pont Freon Products Division from 1974 to 1986
As an overall overview, it can be depicted that Du Pont Freon’s strategy is not very clear and obvious and has changed at least once during the indicated period, especially regarding the company’s political strategy. It appears as if Du Pont Freon did not really know in which direction they wanted to evolve, due to failing assessment of market development and general uncertainty in the market. In the following, the company’s marketing and research strategy will be briefly analyzed, followed by an assessment of the political strategy.
Du Pont Freon’s marketing strategy is based on the company’s generic positioning as low-cost manufacturer. This, however, led to the fact that after tax operating income was very low for the division’s price sensitive products. After-tax operating income for two of the division’s main products CFC-11 and CFC-12 was only 1.6% of sales
The Du Pont Freon Products Division’s main business is production and sale of chlorofluorocarbons (CFCs) which are mainly used in refrigeration equipment and air conditioning systems. In 1987, the division accounted for two percent of Du Pont’s revenue and employed 1200 people. Starting in the early 70s, concerns have been expressed that CFCs contribute to and might cause the depletion of the ozone layer. In 1988, however, the first hard evidence was published proving that CFC causes the ozone layer to deplete. This contribution to the depletion is, according to the evidence, widespread and more severe than originally believed. In face of the new evidence, Joe Glas, CEO of Du Pont Freon Products Division needs to decide what the future of the companies CFC business is going to be. In order to derive the decision, this essay will first look at Du Pont’s Strategy regarding the CFC business from 1974 to 1986 and afterwards consider the impacts of the Montreal Protocol and the Trends Panel Protocol.
Evaluation of Du Pont Freon Products Division from 1974 to 1986
As an overall overview, it can be depicted that Du Pont Freon’s strategy is not very clear and obvious and has changed at least once during the indicated period, especially regarding the company’s political strategy. It appears as if Du Pont Freon did not really know in which direction they wanted to evolve, due to failing assessment of market development and general uncertainty in the market. In the following, the company’s marketing and research strategy will be briefly analyzed, followed by an assessment of the political strategy.
Du Pont Freon’s marketing strategy is based on the company’s generic positioning as low-cost manufacturer. This, however, led to the fact that after tax operating income was very low for the division’s price sensitive products. After-tax operating income for two of the division’s main products CFC-11 and CFC-12 was only 1.6% of sales