Dow focuses on Performance, Market-Driven businesses

Dow May10.png10 years ago, Dow was in the middle of completing its $12bn Union Carbide acquisition. This made it the world’s second largest chemical company, and a leading player in Basic petchems and polymers.

More recently, however, higher oil prices have made life increasingly difficult for chemical businesses that lack upstream integration. Dow’s response, born of realism, has been to de-emphasise the Basics area, and instead focus on growing Performance businesses, as described back in July 2008 when the $19bn Rohm & Haas acquisition was announced.

Now, Dow has taken this strategy one step further, with the announcement of a new Visionto be the most profitable and respected science-driven chemical company in the world“. The chart above highlights the change, with new Dow’s Business Model focused on Performance and Market-Driven businesses.

The move is seen as “transformational” by Vipul Shah, Dow’s President for SEA, India, Pakistan in an ICIS news APIC interview. He notes Dow is “right-sizing” its Basics business, whose focus becomes to “provide the feedstocks for the needs of our Performance businesses“. Whilst Dow will now start “investing heavily in R&D innovation platforms“.

Shah notes that 2010 will see Dow “spending more R&D dollars globally than in manufacturing and engineering“. And he sums up by noting that “what got us here over the past 130 years is not going to get us through the next 100 years“.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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