Ch. 12 Implementing Corporate Diversification

With M-Form corporate diversification comes the need for a corporate governance and ethical business oversight.  This roles is held by the board of directors.  A typical board of directors operates within various oversight committees.  The DuPont board of directors maintain five individual oversight committees.  These are the Auditing Committee, Corporate Governance Committee, Environmental Policy Committee, HR and Compensation Committee, and Science/Technology Committee.  These committee operate in the interest of the firm with committee charters and codes of conduct.  These serve support, check, and balance the authority of the Chief Executive Officer and other executive officers choosing the direction of the firm.

http://www.dupont.com/corporate-functions/our-company/leadership/board-of-directors/articles/board-of-directors-committees.html

Ch. 11 Corporate Diversification

In the 1920’s DuPont was best known as the manufacturer of explosives and demolition technology.  It managed to leverage its knowledge of chemicals used in explosives to branch into fields of chemical products such as paints and fertilizer.  At that time, companies that were capable of diversifying and growing its product portfolio were more likely to adopt corporate diversification strategies.  The need arose from companies needing a corporate structure to complement their business strategy of diversification.  What came from this need was the beginning of multi-divisional corporate structuring. 

http://en.wikipedia.org/wiki/Multi-divisional_form

Ch. 10 Vertical Integration

Many observers claim that adequate vertical integration is crucial to continued growth and sustaining a competitive advantage.  It is a strategy adopted by many of the world’s largest firms and DuPont is no different.  In 1981 DuPont acquired Conoco Inc. in a $7.3 billion deal.  The chairman for DuPont at the time stated that the merger provided DuPont with a captive hydrocarbon feedstock source.  The goal was to reduce exposure of the combined firms to fluctuations in the price of energy and hydrocarbons.  This is a common strategy to unite the intensions of both firms and eliminate any additional costs of doing business in a 3^rd party structure.

Çh.9: Collusion

Another large business sector for Dupont is in seeds development and agriculture technologies.  In an effort to compete against Monsanto in 2006, Dupont and Syngenta signed a partnership arrangement to compete directly with Monsato, as apposed to each other.  Indirect collusion is refereed to as tacit, while direct collision (such as price fixing) is illegal.

Ch.8: Flexibility

Acquisitions have been a large part of Duponts historical strategy for product diversity. Merging is a means for expediting the process of developing new profitable product lines.  An example is Duponts acquisition of the Danish chemical company Danisco.  The strategy was to gain short cut entrance into the industry of designer enzyme development.  Danisco was known for making advances enzymatic digestion of cellulose material for fermentation and ethanol formation.

https://books.google.com/books?id=OR24BAAAQBAJ&pg=PA16&lpg=PA16&dq=Dupont+company+portfolio+flexibility&source=bl&ots=_Qfn4s0Au0&sig=6XduPjQZKal_kT5JdwlwDm9podQ&hl=en&sa=X&ei=ZkA0VZrPGcmrgwTu6YFI&ved=0CF0Q6AEwBw#v=onepage&q=Dupont%20company%20portfolio%20flexibility&f=false

Ch. 7: Product Diversification

Dupont was the first company in the world to incorporate a structural solution to product diversification.  Following strategic expansion in 1921, Dupont decentralized into separate divisions for each product line.  These "business units" operated under unique management and budgets.  Example units included agriculture, nutrition, electronics, communication, safety and protection, home and construction, transportation, and apparel.  Many sectors containing value added products and customer solutions, but that did not exactly relate well with one another in terms operation.  These units differed in capital requirement, industrial maintenance intensiveness, vendors, logistics, and even market strategy.  For these reasons it can be highly effective to manage the product lines separately. This form of diversification is common in many corporations today.

https://books.google.com/books?id=IvKYhrXAfRUC&pg=PA422&lpg=PA422&dq=Dupont+product+diversification&source=bl&ots=7nFFqkk2YL&sig=vmJvfU8E6PrsR6jQpFrAinF9QjU&hl=en&sa=X&ei=IyIrVZXfLoPAggS99ICIDw&ved=0CE0Q6AEwBQ#v=onepage&q=Dupont%20product%20diversification&f=false

Ch.6: Cost Leadership

Cost leadership means leveraging you advantages to decrease your costs of doing business below those of the competition. One of those advantages for Dupont is its sheer size and diversity. It is capable of leaveraging its economies of scale to influence large scale purchasing and supply chain management. So what does the major division and restructuring Dupont mean for the power that comes from its size and influence? In late December, Dupont announced that it would be splitting into two individual corporations, one dedicated to agriculture and the other dedicated chemicals. The new chemical company is to be called Chemours, while Dupont will keep its historic name and brand for the agriculture business. The greater impact is yet unknown, but many questions are left on the table. It was not long ago that such a stunt of separation occurred with Netflix. How will this limit Dupont's ability to leverage a diverse product portfolio between chemicals and agriculture?