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.