DOW CHEMICAL: The Business Case for Internet Telephony

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DOW CHEMICAL The Business Case for Internet
Telephony

• Presented by Group 2
• Eric Gosselin Muhammad Zeeshan Ali
• Charlotte Prévost Ashley Elinburg
• Luke Duffner Ryan Boyd
• Dirk Lange

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DOW CHEMICAL CEO

• William S. Stavropoulos, Dow Chairman of the
  Board and CEO, named in 1995.

Eric
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MAIN COMPETITORS
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HISTORY

• 1897 The Dow Chemical Company incorporates with
  Albert E. Convers as president
• 1900 Midland Chemical Company merges into Dow
  Chemical
• 1918 Herbert H. Dow named president of Dow. The
  company adopts its diamond trademark
• 1937 The Dow Chemical Company stock is listed
  for the first time on the New York Stock
  Exchange, June 26

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HISTORY (cont)

• 1993 Fortune magazine names Dow one of America's
  "Top 10 environmental champions.
• 1999 Dow and Union Carbide Corporation merged.
  From now on Union Carbide will become a
  subsidiary through a tax-free, stock-for-stock
  transaction valued at 11.6 billion. On a
  consolidated basis, Dow Chemical will then be the
  world's 2nd largest chemical company overall,
  ranking number 50 on the Fortune 500.
• 2002 President George W. Bush honours The Dow
  Chemical Company with the National Medal of
  Technology "for the vision to create great
  science and innovative technology in the chemical
  industry and the positive impact that
  commercialization of this technology has had on
  society."

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Dow Chemical Background

• Annual sales of 33 billion in 2003 (18)
• Present in 180 countries
• Approximately 46,000 employees

Charlotte
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Dow Chemical Products

• Dow is a leader in science and technology,
  providing innovative chemical, plastic and
  agricultural products and services to many
  essential consumer markets.
• Dow segment is
• Performance plastics (Dow Automotive, Engineering
  Plastics,)
• Performance chemicals (Emulsion Polymers,
  Industrial Chemicals, Oxide Derivatives,)
• Agricultural Sciences (Dow AgroSciences LLC)
• Plastics (Polyethylene,Polypropylene,Polystyrene)
• Chemicals (Core Chemicals, Ethylene
  Oxide/Ethylene Glycol)
• Hydrocarbons and Energy (Hydrocarbons and Energy)
• (New Businesses)

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Dow Chemical it is also
Compañía Mega S.A. Dexco Polymers
DH Compounding Company Dow Corning
Dow Reichhold Specialty Latex LLC DuPont Dow Elastomers L.L.C.
EQUATE Petrochemical Company K.S.C. Fort Saskatchewan Ethylene Storage
LG Dow Polycarbonate Petromont and Company Limited Partnership
Promix LLC. Siam Polyethylene
Siam Styrene Monomer Ltd. Sumitomo Dow Limited
UOP LLC OPTIMAL Group
Total Raffinaderij Nederland N.V. Univation Technologies, LLC
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(No Transcript)
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Dow Chemical Financial Ratios in 2002
2002 DOW Chemicals Bayer BASF
ROE Current Ratio Price Earning Ratio Book Value per Share 21.66 1.36 22.4 9.93 1.17 1.89 100.13 24.92 5.88 2.65 26.64 34.87
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Dow Chemical Financial Results in 2003

• 2003 sales increased to 32.6 billion, up 18
  percent compared with 2002 sales.
• A 33 percent increase in feedstock and energy
  costs in 2003, compared with 2002.
• Net income rose to 1.7 billion, compared with a
  loss of 338 million a year ago.
• Dow reported earnings of 1.87 per share,
  compared with a loss of 0.37 per share a year
  ago.

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Case Background

• Building a 50,000-user integrated IP voice/data
  network
• Pioneering Commitment to Technology
• Overhauling Global Network
• Utilizing IP Telephony

Luke
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Case Background

• IP installations are scarce in the U.S.
• ?bring new users from acquired companies into
  Dows new work process with IP-Technology
• IP-based multimedia applications
• Example regional web-based call centers
  ?improve customer service
• Running unified messaging ?provide productivity
  gains of about 25 minutes per user per day
• Lower costs through bypassing the public
  telephone networks
• Upgrading or changing standard IP systems is much
  easier and cheaper than with PBX systems
• Disadvantages of the new IP technology
  guarantee applications performance when voice and
  data coexist echo in the line

Dirk
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Question 1

• Why have companies been reluctant to rely on
  Internet Telephony instead of traditional
  telephone systems for business use?
• Companies have been reluctant to invest in IP
  telephony as they have concerns about the ability
  of IP phones to simultaneously work with voice
  and data transfer as both of them have different
  network requirements.
• Companies are scared of the transfer cost from
  one technology to other.

Muhammad
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Question 2

• Do the potential business benefits support Dow
  Chemicals decision to implement a new global
  VOIP network? Why or why not?
• Dows decision to implement a new global VOIP
  network is definitely supported by the potential
  benefits that such a system offers to this
  company.
• Existing telephone systems out of date
• Supports Dows acquisition strategy
• Improved customer satisfaction
• Resulted in productivity gains
• Offers improvement in the area of employee
  relations
• Cost savings

Ashley
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Visit the website of Equant at www.equant.com
and view their VPN and IP telephony news and
services. Would you recommend that more companies
implement IP telephony services? Explain your
answer.
Question 3

• Yes, I would recommend that more companies
  implement IP technology and services.
• Looking at Equant VPN and IP telephony news and
  services, we notice that it provides
• High performance at speeds of 155 Mbps - backed
  by service level commitments
• Five classes of service to accommodate all types
  of applications
• Multimedia capabilities for both on-net and
  off-net voice and video-over-IP

Ryan
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• More over, lets point out the fact that with IP
  Telephony, companies can
• Lower their costs by converging communications on
  a single connection
• Rely on expertise to migrate to IP telephony in
  a way that makes business sense
• Outsource their entire IP telephony system from
  planning to implementation and management, so
  they can stay focused on their core business
• Adopt an IP telephony architecture to suit their
  business situation
• Install, maintain and monitor IP telephony
  equipment internationally
• Therefore, companies like Dow should consider
  changing to IP telephony services. Otherwise
  their competitors will decide to change and the
  company who chooses not to will be left behind.