Dow Chemical Intra-entrepreneurship Case

1. INTERNAL ENTREPRENEURSHIP AT
THE DOW CHEMICAL COMPANY
Group 5
• Alice
• Gitanjali
• Maria Vasantha Nathan
• Neha Thomas
• Rahil Nicholas
• Samuel Nirmal Kumar

2. ENTREPRENEUR vs. INTRAPRENEUR
ENTREPRENEUR INTRAPRENEUR
• Enters the business with • Enters into a venture with
his own money – more capital funding and
risk resources from parent
(employer) company – less
risk
• Has ownership to the
business/firm • Only manages the business
– no ownership
• Is entitled to
returns/profits from the • Is entitled to fixed salary +
business bonus (if any)

3. DOW CHEMICALS – COMPANY BACKGROUND
 Leader in Science and Technology and provided innovative plastic,
chemical and agro products.
 Second largest chemical manufacturer in the world
 Served different consumer markets.
 Sales reached $27.8 billion in 2001 on the merger with Union Carbide.
 This surge came after continued flat growth of the organization.
 Growth became a priority.
 Several new growth initiatives launched in 2000 (including epoxy.com).

4. • Ranked #50 on 2001 Fortune 500 (following merger with
Union Carbide in 2001)
• Annual sales of approximately >$59,000 million
• >50,000 employees around the world
• 171 manufacturing sites in 35 countries
• Serve customers in >170 countries

5. BUSINESS SEGMENTS
• Electronic and Specialty Materials
• Coatings and Infrastructure
• Health and Agricultural Sciences
• Performance Systems
• Performance Products
• Basic Plastics
• Basic Chemicals
• Hydrocarbons and Energy

6. EPOXY BUSINESS @ DOW
• Epoxy resins - used in manufacture of electrical laminates, composites,
adhesives and coatings.
• Turnover in 2000 – Under $1 billion.
• Specialty, high margin business, but highly capital intensive.
• 20% of customers (global) generated 80% sales.
• Epoxy business – cyclical in nature
• Problem for Dow – capacity utilization was becoming difficult
• Distribution channels – Direct Company supply & Distributors
• EpiCenter and Customer Account Executives (CAE) – customer support
resources and helpline

7. IMPORTANCE OF CUSTOMER TO
DOW
Identifying
the gap

8. EXTERNAL ENVIRONMENT
• Dot com revolution – 1998
• ChemConnect, Plasticsnet
• Quick money from internet based initiatives and
businesses
• MyAccount@Dow initiative

9. ORIGIN OF IDEA
• 1998 - dot.com revolution
• Scheduling of internet training programs by Dow Chemicals
• Ian Telford – Idea of an Internet start-up for their EP&I division
• Wanted to explore the Un-addressed Space of the
Customer base
• Exploit first-mover advantages

10. E-epoxy.com
• First presentation made to Epoxy Leadership Team in 1999.
• Three key features of the new channel:
- Orders had to be in multiples of truck loads
- Only selected epoxy products offered online.
- Fixed contractual terms, no negotiations.
• Initial responses in favour of idea – 3/12 members.
• Corporate IS against the idea – ready to launch MyAccount@Dow
(extranet).
• Problems with posting prices of products online.

11. • Telford proposed a new pricing policy for products online(promo-code).
• Business plan developed.
• Telford started a rumor via e-mail prior to meeting claiming a major
competitive announcement was in the offing.
• ELT approved a budget of $1 million for the venture.
• The venture was put on hold in mid 2000 – due to reorganizing by Bob
Wood.
• Telford succeeded in presenting the idea to Wood and got commitment
of many managers.
- Projections of internet’s impact on business.
- Site useful for auctioning production not tied to contracts.
- Finding alternate customers to clear idle capacity.

12. • Telford’s commitment resulted in Wood’s approval of the venture.
• On August 1, 2000 Telford became the head of epoxy.
• Telford had a good coordination with the IS dept. and succeeded in
building a committed team.
• Launch on January 29, 2001 covered US and Europe.
• Global launch with 9 different languages and webpages followed on
September 19.
• Initial problems due to different geographies.
• Ad campaigns gave the first mover advantage.

13. FINANCIAL PERFORMANCE
• Positive EBIT in the fourth quarter of 2001, less than a
year after launch.
• Consistently positive EBIT there after due to strict cost
control and low running costs
• Around 300 customers registered by March 2002
• 2003 – EBIT showed cumulative positive
• Hit a rough patch in 2005

14. HURDLES FACED
• Acknowledgement of the epoxy.com idea by EP&I division
• Especially during the change in the top management executives
• Problems with proposed posting of product pricing
• Thought that price transparency would potentially limit their negotiating
ability with key accounts
• Had to carefully leverage the meager budget given for the initial
research and prototype building
• Although customers can order products online, Dow Chemical
Company would still need to contact with customers to clarify
and confirm some orders. This might increase the labor cost
and decrease the order process efficiency.

16. SWOT ANALYSIS
Strengths Weakness
• Low investment – high returns • Future of the initiative depends
• Fast growing sector – e- upon the team that inherits it
commerce
• First Mover advantages • Slow to change sales practices
Opportunities Threats
• Can expand online into other Prices of products become
business segments also easily available to competitors also.
since basic framework is already
present. Eg. Xiameter Success in the online selling
• Attract more customers due to sphere is generally short lived.
ease of use

17. INTRAPRENEUR & THE ORGANIZATION
• Support and conditions to work
• Encouragement for self-development
• Communication throughout organization
• Development of Organization
• Objectives and vision of organization
• Engine for internal growth
• Network to function effectively
• Internal entrepreneurs need to be hired, trained and motivated

18. ENTREPRENEURIAL LESSONS (1)
Understanding the markets and spotting the gaps
Identifying the right target market
Seek help where ever and when ever required and from the best
sources – Seek the right partnerships
Choose high return, low investment ventures
Have an eye for detail and a long term plan and vision
Be passionate and have high levels of energy

19. ENTREPRENEURIAL LESSONS (2)
Selecting and building up the right team
Understanding all the stakeholders
Travelling the path less travelled
Correct execution of an idea
Going around obstacles rather than knocking them down – Smart
way of doing things
Positive publicity of an entrepreneur = Positive publicity for the
enterprise (and vice versa)