Businessmodel of Dow Chemical

Customer Segments

Dow has a niche market business model, with a specialized customer segment. The company targets its offerings at manufacturers of products using specialty chemicals, advanced materials, and plastics. These include firms in the food, transportation, medicine, personal care, and construction sectors.

Value Proposition

Dow offers one primary value proposition: brand/status.

The company has established a powerful brand due to its success. It is known as the “chemical company’s chemical company” due to the fact that it sells more items to other industries than end users. It is the third largest chemical firm in the world by revenues, after Sinopec and BASF. It markets more than 6,000 product families and sells its offerings in 180 countries. In 2015 it generated $49 billion in revenues and employed 53,000 people globally. Lastly, it has won many honors, including seven R&D 100 Awards from R&D Magazine, two Agrow Awards for its Dow AgroSciences unit, and two Golden Mousetrap Awards, all in 2015.

Channels

Dow’s main channel is its direct sales team. The company promotes its offering through its website, social media pages, sports sponsorships, and participation in expos and conferences.

Customer Relationships

Dow’s customer relationship is primarily of a self-service nature. Customers utilize its products and services while having limited interaction with employees. The company’s website features the “Dow Answer Center”, a self-service database providing technical information about its products.

It also features the “Dow eLibrary”, which provides Safety Data Sheets for its products. The site enables visitors to sign up for an e-mail newsletter offering recent news, reports, and information about the firm. That said, there is a personal assistance component in the form of phone and e-mail support.

Key Activities

Dow’s business model entails designing, developing, manufacturing, and distributing its products for customers.

Key Partners

Dow’s key partners are the suppliers who provide the raw materials it uses to manufacture its products – primarily chlorine-based and hydrocarbon-based raw materials.

Dow also forms alliances with various groups for differing purposes, as follows:

• Academics – Academic institutions the company works with to advance research and develop the next generation of scientists.
• Industry – Chemical trade associations and professional organizations the company supports in order to promote the importance of chemistry. It provides funding and shares technical expertise and best practices. Specific partners include TRANSCAER, the American Chemical Society, the American Institute of Chemical Engineers, and the Materials Research Society.
• Government – Governmental agencies and institutions the company works with to advance the role of chemistry in solving the world’s top challenges. It forms research partnerships through which it shares insight into scientific applications and collaborates on breakthrough solutions. It also lends support for the development of science-based regulations, laws, standards, and practices. Specific partners include the U.S. Department of Energy, the National Institute of Standards and Technology, the European Commission, Fraunhofer, and the China Association for Science and Technology.
• Non-Governmental Organizations – NGOs the company works with to share information, develop research projects, and collaborate on innovations in the area of sustainability. Specific partners include The Nature Conservancy, Habitat for Humanity, the Clinton Global Initiative, Acumen, the Global Water Challenge, and CDP (Carbon Disclosure Project). ### Key Resources

Dow’s main resource is its intellectual property, which includes 4,651 active United States patents and 19,541 active foreign patents. The company also depends heavily on physical resources, namely the 179 manufacturing sites it operates in 35 countries.

Lastly, it relies on its team of 6,000+ scientists who have expertise in Analytical Science, Catalysis & Synthesis, Engineering Science, Formulation Science, High Throughput Capabilities, and Materials Engineering and Modeling.

Cost Structure

Dow has a cost-driven structure, aiming to minimize expenses through low-price value propositions. Its biggest cost driver is cost of sales, a variable expense. Other major drivers are in the areas of sales/marketing, research/development, and administration, all fixed costs.

Revenue Streams

Dow has one revenue stream: revenues it generates from sales of the products and related services to its customers. They are sold through short- and long-term contracts.