Du Pont

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Industry and Competitive Analysis HBS Case Study: Du Pont 's Titanium Dioxide Business(A)

Group 4

Du Pont Titanium is the leading manufacturer of titanium dioxide, serving customers in the coating, paper and plastic industries. The company operates many plants and all of which use chloride manufacturing process. Three factors related to production will settle the cost advantage of titanium dioxide manufacturing. They are Economic of Scale, Capacity Utilization Rate and Experience Curve Effects. Economic of Scale : Total Output / Plants Numbers Capacity Utilization Rate : Total Output / Total Capacity Experience Curve Effects : Cumulative Output (production) Each of these factors in the production process has positive but decreasing marginal products and we assume that Du Pont choose inputs to the production process that minimize the cost of producing output. We use Cobb-Douglas Production function to derive the cost function by taking the logarithm in regression. Based on the Excel regression conduction, the cost function appears as follows :

ln (Costs) = 6.49 - 0.23 (ln Scale) - 0.07 (ln Cap. Utilization ) - 0.33 (ln Cum. Output)

REGRESSION R 的倍數 R 平方 調整的 R 平方 標準誤 觀察值個數 0.975871171 0.952324542 0.940405677 0.035744042 16

自由度 迴歸 殘差 總和 3 12 15

SS 0.306251811 0.015331638 0.321583449

ANOVA MS 0.102083937 0.001277637

F 79.9006091

顯著值 3.37258E-08

係數 截距 Ln WAC ln Cap. Utilization ln Cum. Output

標準誤

t 統計

P-值

下限 95%

上限 95%

6.491734208 0.406954944 15.95197283 1.9191E-09 5.605055556 7.37841286 -0.230819585 0.225911618 -1.02172517 0.32706805 -0.723038717 0.261399546 -0.079487932 0.245035965 -0.32439292 0.75122539 -0.613375435 0.454399572 -0.334160731 0.072235874 -4.62596644 0.00058415 -0.491549181 -0.176772281

Industry and Competitive Analysis HBS Case Study: Du Pont 's Titanium Dioxide Business(A)

Group 4

Appendix Regression DATA :
Year 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970

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