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Comparative Business Analysis: BASF Group, Bayer AG, and

Dow AgroSciences

Amy Hylkema

AEB 3133 Agribusiness Management


Ms. Jane Bachelor

Apopka Campus Spring 2007

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Amy Hylkema
AEB 3133
Spring 2007

Reviewed by Jane L. Bachelor


University of Florida
Indian River Research and Education Center
Fort Pierce, Florida

Table of Contents

BASF .................................................................................................... 3-11

Bayer ................................................................................................... 12-19

Dow AgroSciences ............................................................................ 20-28

Final Comparison .............................................................................. 29-30

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Mission Statement:
“We offer intelligent solutions based on innovative products and tailor made services.
We create opportunities for success through trusted and reliable partnerships”.

Stated Values:
Innovation for the success of our customers
Safety, health, and environmental responsibility
Personal and professional competence
Mutual respect and open dialogue
Integrity
“Our innovative products, intelligent solutions and services make us the most competent
worldwide supplier in the chemical industry. We strive for high return on assets and
sustainable development. We welcome change as an opportunity. We, the employees of
BASF, together ensure our success”. Together, the mission statement and values form
the framework of all decisions and activities.

Executive Summary

BASF is the world‟s largest chemical company, ahead of Dow, DuPont, and Bayer. The
limited liability corporation is composed of five business segments: agricultural products,
plastics, performance products, basic chemicals, and oil and gas exploration and
production. The company has a world wide client base. Its two major competitors are
Bayer and Dow Chemical, according to Dunn and Bradstreet. They develop products,
procedures, and services on a scientific and highly technical level to help their clients be
more successful. Their commercial slogan in the 1990s says it best: “At BASF, we don‟t
make a lot of the products you use; we make a lot of the products you use better”.

The target market includes industries such as textile manufacturers, agriculture and
horticulture producers, pharmaceuticals, the health care industry, and the automotive
industry. BASF attributes it years of success and industry domination to “…broad
experience in research and development, manufacturing, marketing and sales expertise,
and customer focus which makes us the preferred partner”. Their focus is to create
“smart, tailor made solutions to meet the requirements of customers all over the world”.

History

BASF began as the result of the birth of the chemical industry in the 19 th century. Both
the textile industry and the chemical industry were ripe with new innovations due to

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modern advances in mechanization and an increasing population. Large amounts of
inorganic chemicals like sulfuric acid, soda ash, and chlorinated lime were needed for the
processing and bleaching of cotton – the most popular and most available textile. Soon,
chlorine bleach, soap, glass, and fabric became widely available as a bi-product of the
chemical era. The stock corporation Badische Anlilin & Soda Fabrik (BASF) was
created in 1865 by Friedrich Engelhorn in Manheim, Germany. He envisioned the vast
opportunities in synthesizing dyes and drugs from coal and tar. The manufacturing
facilities were built on the Rhine River in Ludwigshafen, Bavaria. Ludwigshafen became
one of the fastest growing cities in Germany during the second half of the 19 th century
due to the presence of BASF.

In 1868, BASF appoints its first head of research, a chemist named Heinrich Caro. Under
his leadership, many new colors of dyes were developed, opening the world textile
market to BASF‟s new products. In 1876, the synthesis of methylene blue earned them
their first patent. The coal tar dye was used in the textile industry as well as in medical
research – creating one of the first multiple purpose products. By the 1900 World‟s Fair
in Paris, BASF was already being called “without question, the largest chemical producer
in the world”. Between 1865 and 1900, the number of employees surged from 30 to
6,207. In 1912, after years of research, the Haber-Bosch process was perfected, allowing
for the synthesis of ammonia from nitrogen and hydrogen. Ammonium nitrate fertilizers
were created and tested thoroughly at the newly developed agricultural research station in
1914. The station studied the use of fertilizers and plant physiology and paved the way
for BASF to enter the field of agricultural chemistry.

After the First World War, the German economy was in disarray. Business slowly began
to recover in the mid 1920s due in part to large scale investments with foreign capital.
BASF merged with five other companies to form IG Farben. The foreign investors
quickly pulled their funding after the Wall Street crash of 1929. The Nazis party soon
took over the political landscape and the economy rebounded with fast growth in the
construction, automotive, engineering, and chemical industries.

The Second World War led IG Farben to shift production to the war effort. Several
technological advances were made including production of magnetic tape, styrene and
plastics, polymers, methanol, and urea-formaldehyde condensates. Because the BASF
plant produced nitrogen, gasoline, and rubber, it was bombed heavily by the Allies. Post
war recovery efforts were hindered by political unrest, reparation agreements, lack of
coal and other fuels, transportation problems, and the French occupation of the Rhine
River. In 1952, BASF was re-established as its own entity.

Eventually, there is a post war economic boom that lasted until the late 1960s. Advances
and growth in plastics, pesticides, fertilizers, and petrochemical use were contributors.
On January 30, 1952, an initial public offering of BASF stock was made available.
BASF and Dow agreed on a twenty year joint venture in Freeport, Texas in 1958. The
plant produced basic chemicals and fiber intermediaries and became the springboard for
BASF‟s current day U.S. operations. There was a series of world wide acquisitions

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between 1950 and 1980, giving the company a foothold in many industries spread across
the globe.
Organization and Corporate Governance
Corporate governance is overseen by two jointly responsible bodies, the Board of
Executive Directors and the Supervisory Board. Together, they devise the corporate
strategy. Each board is headed by a chairman. The Board of Executive Directors is a
nine person group that is responsible for managing company operations. Its activities and
decisions are dedicated to the goal of increasing the company‟s long term value and
promoting company interests. The board reports to the Supervisory Board on a regular
basis. The Supervisory Board monitors, advises, and appoints members to the Board of
Executive Directors. The twenty member board consists of ten shareholder
representatives and ten employee representatives.

Dr. Jurgen Hambrecht is the current Chairman for the Board of Executive Directors. He
joined BASF in 1976. His duties include responsibilities with the following departments:
legal, taxes, and insurance, strategic planning and controlling, executive management and
development, investor relations, and communication between the BASF business
segments.

The global headquarters for the Agricultural Products and Nutrition business segment are
in Limburgerhof, Germany. The president is Michael Heinz. The segment is subdivided
into four regional business units with their own headquarters:
1. Europe, Middle East, Africa - Germany
2. North America – North Carolina
3. South America - Brazil
4. Asia/Pacific - Singapore
BASF Group Business Segments

Agricultural Products & Nutrition – Products manufactured range from herbicides,


pesticides, and fungicides to high quality vitamins and active ingredients in countless
pharmaceutical products. For animal nutrition, they provide one of the broadest ranges of
food additives (micronutrients, digestibility enhancers, preservatives, and colorants) that
allow the livestock feed and pet food industries to offer feed of the highest quality and
nutrition.
Basic Chemicals – The chemical segments product‟s range from petrochemical and
inorganic origins and extends to intermediaries and specialties for the world market.
Plastics – BASF is one of the global leaders in providing engineering plastics, styrenes,
and polyurethanes.
Oil & Gas – explore, drill, and produces crude oil and natural gas products.
Performance Products – This business segment works directly with clients to design,

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manufacture, and provide tailor made products and processes for a vast portfolio of
businesses.
Sales by Business Segment 2006
TOTAL SALES (In Million Euros) %
1 Chemicals 11,572 22.00
2 Plastics 12,775 24.28
3 Performance Products 10,133 19.26
4 Agricultural Products & Nutrition 4,934 9.38
5 Oil & Gas 10,687 20.31
6 Other 2,509 4.77
Total 52,610 100.0
In 2005, BASF achieved total sales of 42.7 billion Euros with 81,000 employees. In
2006, BASF achieved total sales of 52.6 billion Euros with 95,000 employees. That is an
increase in sales of 23%.

Agriculture Products Market

BASF is a major supplier of fine chemicals and agricultural products for the farming,
urban pest control, forestry services, turf and ornamental plants, food processing, animal
and human nutrition, pharmaceuticals, and personal hygiene industries. Their stated
vision is “To be the world‟s leading innovator optimizing agricultural production,
improving nutrition, and enhancing quality of life”. Their extensive research in
biotechnology focuses on creating solutions for more productive agriculture, healthier
plants, and improved nutrition. They are also focused on producing products more
efficiently and economically, while keeping the local ecosystem healthy.

This business segment produces a vast array of fertilizers, herbicides, fungicides, plant
growth regulators, and insecticides utilized by the green industry. These products, along
with improved seed technologies developed by the research and development team have
assisted the world‟s farming community in decreasing crop inputs, increasing yields, and
reducing post-harvest diseases. Products that are manufactured for final sale are
generally formulated in facilities close to the market where there will be utilized. BASF
is dedicated to continuous research and development of new, environmentally sound
agricultural chemicals that will help the world‟s farmers attain the greatest crop yields to
feed the ever growing population.

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The world‟s population over the next four decades is expected to reach nine billion. In
the last fifty years, the massive increase in food production is attributed to only an 8%
increase in farm land. The other 92% has been attributed to increased productivity per
acre of farm land. It will no longer be possible to expand crop growing areas by any
great amount in the future. In order to meet the demands of food production, even more
efficient applications of biotechnology, plant production, land management, and
distribution will be vital. BASF is continually searching for ways to continually increase
production without depleting natural resources.

BASF Plant Science is the internal biotechnology research and development arm of the
company. It has R&D platforms at seven sites in Europe and North America and consists
of 600 employees. They are responsible for coordinating with research partners at
universities, research institutes, and biotechnology firms. Their focus is on creating more
efficient agriculture, healthier human and animal nutrition, and utilizing plants in the
production of renewable raw materials. Between 2006 and 2008, BASF will invest 270
million Euros in the expansion of its plant biotechnology operations.

International Presence

International collaboration will be vital to the success of providing enough food to a


quickly growing world population. In an effort to help fulfill current and future needs,
and take advantage of the opportunities for profitable growth, BASF has opened
manufacturing plants around the world. With production operations at more than one
hundred large sites, BASF is close to its clients in 170 countries and can supply them
with products quickly and reliably. There are thirty five sites in Europe, thirteen in North
and Central America, twelve in South America, six in Africa, and twenty four in the Asia
Pacific region. There is planned future growth in the Asia, Africa, South American, and
Pacific regions. By the end of 2005, there were 80, 945 and 2,330 trainees worldwide.
Below is a chart with employment data by region for 2004 and 2005.

2005 2005 2004


% %
Europe 56,614 69.9 70.2

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Thereof Germany 45,620 56.4 56.9
Thereof BASF Aktiengesellschaft 34,143 42.2 43.1
North America (NAFTA) 9,826 12.1 12.9
Asia Pacific 9,669 12.0 10.9
South America, Africa, Middle East 4,836 6.0 6.0
80,945 100.0 100.0
The decline of 1,000 workers between 2004 and 2005 has been attributed to a “Group
wide measures to maintain and increase the competitiveness”. An additional 17, 400
positions have been created for employees from companies that provide support services
for BASF. Due to acquisitions and growth in 2006, the number of employees rose to
95,000, with two-thirds of the global workforce employed in the European region.

Recent International Company News

Being a worldwide company means having a worldwide presence. In December of 2006,


BASF was awarded a contract to supply greenhouse gas reduction technology to the
largest Chinese petroleum company. This technology reduces nitrous oxide emissions by
converting the harmful gas into inert nitrogen and oxygen, two components of our natural
atmosphere. It is estimated that this technology will reduce ten million tons of carbon
dioxide equivalents per year, thus improving air quality and reducing environmental
impacts for everyone.

In May of 2006, BASF announced the acquisition of CropDesign, a Belgian


biotechnology enterprise. The existing employees became a part of the BASF research
team, and have been working on gene discovery activities to pinpoint desired genetic
traits of various plant crops. They are specifically looking for finding the gene and
discovering the traits for drought tolerance, improved nutrient efficiency, and yield
improvements. Wheat, rice, grains, and cereals are all important crops in feeding a
hungry and ever growing world. Continued research on these crops will hopefully lead to
improved and higher quality yields.

As of January, 2007, BASF venture capital has invested in the United States fuel cell
company in California. These micro fuel cells can be used in portable devices that
require long run times without the availability of a power supply. Laptop computers, cell
phones, radios, and other communication devices will benefit from improving this
technology.

Human Resources

BASF seeks “People with ideas and passions that are interested in going beyond the
limits of conventional chemical industry markets and are willing to do things differently”.
They offer career opportunities in a variety of expert fields – logistics, finance, sales and
marketing, research, engineering, communications, legal, economics, etc. They offer
college internships and graduate theses appointments in the hopes of building their future
pipeline of top employees. The company website has a human resource link that displays
vacant positions and allows potential candidates to post their resumes.

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In addition to receiving competitive salaries, employee wages are supplemented with
various social benefits. Health insurance, pension plans, employee stock purchasing
programs, and 401Ks are all a part of the total benefits package.

Financial Data

In 2006, BASF reached some important internal goals. For the first time in its history,
sales passed 50 billion Euros and earnings before interest and taxes (EBIT) reached a
record 7.2 billion Euros. As stated by Dr. Hambrecht, BASF Chairman, “Our ambitious
team has achieved this using its own strength. Our value enhancing acquisitions in the
areas of catalysts, construction, chemicals and resins, and research have helped us grow
in highly innovative areas and have brought us closer to our customers”.

Key Financial Data


Million € Change in
2006 2005 %
Sales 52,610 42,745 23.1
Income from operations before depreciation and amortization (EBITDA) 9,723 8,233 18.1
Net income 3,215 3,007 6.9
Earnings per share (€) 6.37 5.73 11.2
Dividend per share (€) 3.00 2.00 50.0
Return on assets (%) 17.5 17.7 -
Return on equity after tax (%) 19.2 18.6 -
Research and development expenses 1,277 1,064 20.0

Both dividends and earnings per share increased year over year. Due in part to a
successful sales year, net income and EBITDA were markedly higher in 2006 than in
2005. There is an optimistic outlook for 2007, as well. They are basing the business
planning on the following assumptions: global economic growth of 3.2%, average oil
price of $55 per barrel, an exchange rate of $1.30 per Euro, and moderately high interest
rates in Europe. They expect significantly higher sales, once again, due to previous
business acquisitions and organic growth from the existing business and clients.

Company stock has performed well in 2006, increasing their value by 17.5%. Long term
investors with 1,000 Euros worth of shares in 1996 that reinvested all dividends would
have 3,291 Euros in 2006, an overall increase of 229%. The five year growth rate of
BASF stock is 15.7% annually. Not a bad investment, in my opinion.

Future Success Planning

Below is a diagram of the recently developed strategies and principles for sustaining and
promoting future growth and success.

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Profitable growth will be important in the international competition for capital. By
focusing even closer to discovering and satisfying client needs, both BASF and their
client base will grow and thrive. Their continued commitment to hiring the best qualified
employees and management teams will help to ensure continued success. By combining
economic success with social responsibility and environmental protection, the goal of
sustainable development can continue to be attained.

Growth through acquisitions is a key strategy to future success. In 2006 alone, BASF
Group purchased Engelhard Corp., Johnson Polymer, CropDesign, and PEMEAS. These
companies contributed to higher than expected sales and operating incomes. Their target
companies for acquisitions are for “innovative businesses that grow faster than the market
as a whole and that make the portfolio more resilient to cyclicality”. They are also
focusing efforts for future growth through market focused innovations, and technologies
of the future. Plant biotechnology, nanotechnology, industrial biotechnology, and energy
management systems are believed to be the technology driven opportunities of the future.

Research and development will continue to be the key to future financial success in all of
the business segments. It is important to keep the pipeline of potential products filled in
order to remain a technologically competitive and financially sustainable worldwide
business. Below is a chart of current and future products in development by BASF
Agriculture Products with their sales potential.

Additional Evaluation of Management

BASF seems to have a strong foothold in key, high value world markets. Their efforts to
continuously improve customer service should keep client retention rates, and therefore

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repeat business and revenues, high. The well developed pipeline of future products and
commitment to diligent research and development of new products will allow BASF to
remain a top innovator of life improving products and services. There are well outlined
goals and commitments that seem to be followed in their business practices. Once again,
this company has a large international presence and is not dependant on one country or
region‟s economy. As with retirement funds, having a diversified business portfolio
spreads the possible risks over a large area, thus reducing the possibility of company
wide failure. As I have researched this company, there has been nothing that has stood
out as being a potential for economic disaster.

* Information in this paper can be found at BASF.com and Hoovers.com

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Bayer, Far More Than Aspirin
Stated Values: “A will to succeed · A passion for our stakeholders · Integrity, openness
and honesty · Respect for people and nature · Sustainability of our actions”

Mission Statement: “We have set our course for the future.”
The corporate mission statement includes the slogan “Bayer: Science for a Better Life”.

This statement summarizes and reflects the Bayer Group‟s strategies, goals, and values.
It underscores the potential and willingness for Bayer to help develop and shape future
innovations to benefit mankind in the fields of health, crop, and materials science.
Werner Wenning, Chairman of the Board of Management for Bayer AG wrote this
statement in a 2006 company publication:
“We have set our course for the future. This new mission statement
defines our future perspectives, our goals and our values, and guides our
strategy at a time of sweeping change. It outlines to our stockholders,
our customers, the public and especially our employees how we think and
behave as a company. In seeking to arouse everyone‟s enthusiasm to
contribute to Bayer‟s success, we aim to impart one thing above all else: the
fascination that is Bayer.”

Executive Summary
According to the company profile, “Bayer is a research based, growth oriented global
enterprise with core competencies in the fields of healthcare, nutrition, and high tech
materials. Our products and services are designed to benefit people and improve their
quality of life”. According to Hoovers, a Dunn and Bradstreet company, Bayer‟s top
competitors are BASF, Dow Chemical, and Johnson& Johnson, with 27 other companies
listed as minor competitors. They are a corporation with ties to the entire world market.
Their target market includes pharmaceutical, textile, agricultural, horticultural,
production, and medical companies that sell to end users. Research universities,
healthcare management firms, and individual governments are also a part of Bayer‟s
marketing mix. Bayer‟s goals and objectives are simply stated on their website. “We
want to create value through innovation, growth, and improved earning power”. At
Bayer CropScience, there vision is to be “a leading partner in providing innovative
products and combined solutions for the production of quality food, feed, and fiber to
meet the global challenges of tomorrow.” They seek out mutually beneficial partnerships
that are long term, consistent, and predictable with a goal to generate value through
human innovation.

History
On August 1, 1863, Friedrich Bayer and Johann Weskott created a joint business venture
and opened a dyestuffs factory in Wuppertal, Germany. Two years later, invested in a
coal, tar, and dye factory in the United States and began exporting products. In 1876, the
business venture expanded to include a dye factory in Moscow. The joint stock company
Bayer & Co. was established on July 1 st, 1881, by the descendants of Bayer and Weskott.

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During the next twenty years, the pharmaceutical division was established with the help
of chemist Carl Duisberg. Bayer researcher Dr. Felix Hoffmann synthesized a
chemically stable form of the active ingredient in aspirin in 1897. Bayer aspirin was
trademarked in 1899, and became the world‟s first painkiller.

In 1925, Bayer & Co. merged with several smaller companies to form I.G.
Farbenfabriken AG. As Germany‟s largest and most recognized chemical company I.G.
Farbenfabriken was drawn into working with the government during the Third Reich. In
1939, Gerhard Domagk, a researcher, was awarded the Nobel Prize for Medicine for his
antibacterial effect of sulfonamides, a common ingredient in modern day antibiotics. In
an attempt to improve the image of the company in the post war era, the company
changed its name to Farbenfabriken Bayer AG in 1951. By 1972, they were simply
known as Bayer AG.

The push for international expansion of the chemical and healthcare group began in the
early 1970s. In 1979, an agriculture center was developed in Monheim which is now the
corporate headquarters for Bayer CropScience, which was established in 2002 as the first
legally independent subgroup of Bayer. Bayer made several acquisitions of American
pharmaceutical companies and became one of the world‟s largest manufacturers of
diagnostics systems and reagents for clinical chemistry in the 1980s and 1990s. In 2001,
the CropScience group acquired Aventis CropScience for 7.25 billion EUR, making it a
world leader in crop protection. The next year, Bayer shares were listed on the New
York Stock Exchange. In 2003, Bayer Chemical AG, Bayer HealthCare AG, and Bayer
Technology Services gained legal independence as part of the Bayer Group‟s
restructuring. In 2004, Bayer was selected as the first private sector partner to the United
Nations Environment Program in the youth and environment area. They provide material
and financial support in excess of one million EUR annually to facilitate world wide
youth environmental programs. Bayer recently purchased Icon Genetics AG which
specializes in researching innovated methods of producing and utilizing genetically
modified crops.

Organization

The Board of Management consists of four members with Werner Wenning as chairman.
The board serves to commit to serving the interests of the entire enterprise and achieve
sustained increases in corporate value. They are responsible for defining corporate
strategy, setting the annual budgets, and allocating corporate resources, which are no
small tasks. The Board of Management is also responsible for making sure that the
Supervisory board receives comprehensive, timely information on any and all matters
regarding planning, business development, and risk management. Members serve for
five years and are eligible for reappointment after there term has ended. The Supervisory
Board consists of twenty members with Dr. Manfred Schneider as chairman. This board
is responsible for overseeing the work of the Board of Management and approving the
financial statements and the annual budgets. Half of the board is elected by employees,
the other half elected by stockholders. The board is kept aware of all business policies
and corporate planning and strategies Below is the organization chart for the subgroups

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and service companies. Each piece of the portfolio operates independently under the
leadership of the management holding company of Bayer AG.

Bayer Healthcare- researches, develops, markets, and manufactures products for disease
prevention, diagnosis, and treatment.
Bayer CropScience- a global leader in crop protection and horticultural pest control
Bayer Material Science- a renowned supplier of various high performance materials and
innovative system solutions used in countless products for everyday living.

Central Service Functions Combined Into Three Service Companies:


Bayer Business Services- Bayer Group‟s international competence center for
information technology based services.
Bayer Technology Services - the technological backbone of the Bayer Group. They
engage in process developments for plant engineering, construction, and internal
optimization.
Bayer Industry Services - the operator of Germany‟s largest chemical park network,
consisting of three sites.

International Market Presence

The Bayer Group employs 110,200 people world wide. Below is a breakdown of the
global workforce by region.

Workforce
110,200 employees worldwide (as of June 30, 2006), including:

61,300 in Europe (of which Germany: 44,100)


18,000 in North America
16,900 in Asia/Pacific
14,000 in Latin America/Africa/Middle East

Bayer is represented by 350 company locations globally with headquarters in


Leverkusen, Germany. In 2005, they posted sales of nearly 12 billion EUR in the
European market alone. This accounts for more than 43% of total sales worldwide.

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More than 52,000 Europeans are employed at the European sites, where 65% of all
research spending was used in 2005. Belgium, France, the United Kingdom, Ireland,
Italy, and Spain all have major production facilities and almost every country in Eastern
Europe has at least one branch.

While Europe may be home base, Bayer is present on five other continents. All divisions
of Bayer are represented in Africa with crop protection being the major focus. They are
continually searching for improved efficiencies and scientific advances in food
production to feed a hungry continent. South Africa accounts for 56% of total sales for
the continent, and continues to hold a key position with Bayer‟s Africa success strategy.
The South African operation serves much of the continent and is equally important to
Indian Ocean country markets like Madagascar and Mauritius.

The combined countries of the Middle East serve to bridge the gap between Europe and
the Far East. Its entire portfolio of groups and services is represented, as well. Since
1990, the Asia-Pacific region has become the focused target for future growth and
revenues. In 2005, this region accounted for 4.6 billion EUR, or 16% of total Group
sales. Japan has the world‟s second largest economy so it is obviously important for
Bayer to maintain a stronghold there. China and Taiwan comprise the second largest
Asia market. China will continue to develop a larger presence in the world‟s corporate
environment. Currently, manufacturing and construction industries are expanding rapidly
and Bayer is planning on spending billions in capital expenditures to corner the market in
polymer production and manufacturing.

Bayer has actively supported and helped develop growth in South Korea‟s economy with
the building of facilities for all three groups. Thailand, Vietnam, Myanmar, Laos, and
Cambodia will all play a future role in the expansion of the company‟s regional
manufacturing base in the Asia-Pacific region. Singapore, Indonesia, Malaysia, the
Philippines, Brunei, and East Timor are known as the South ASEAN country group. In
this region, business is driven by life science operations. The Indian country group
consists of India, Sri Lanka, and Bangladesh. There are 12 sites in these locations that
focus mainly on agriculture and polymers.

There is a strong company presence in Australia and New Zealand and has helped
contribute to the region‟s growth. The six production facilities focus on agricultural
advances, health care, and polymer development and production.

The North American market plays a large role in the success of the Bayer Group. They
are represented by two separate operating subsidiaries: Bayer Corporation is
headquartered in Pittsburg, and Bayer Inc. in Toronto, Ontario. Total North American
sales reached 7.3 billion EUR in 2005. The United States organization is the largest
within the Bayer Group with 55 locations spread across the country. They offer 10,000
products and market the entire spectrum of its portfolio. There are 3,500 scientists
employed that work specifically on research and development. A budgeted 565 million
EUR were spent in 2005 on research and development in the states. Bayer Inc. operates
both the HealthCare and MaterialScience Groups in Canada. The Crop Science Group

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also has a large presence and all three Groups focus on improving the quality of life for
Canadians. Producing products that fight disease, crop and animal protection, and
developing improved high performance materials are all services that are performed in
this region.

Bayer has been present in Latin America for 110 years. Almost every country has
affiliates and there is a high level of awareness among consumers for brand recognition.
In 2005, Bayer achieved sales in this region of 2.4 billion EUR. They have been able to
benefit from the growth and modernization of the region and have helped to develop and
shape the business environment since they have been a presence for such a long time.
Brazil is the largest single market in Latin America. In 2005, 36% of sales generated
were in this country. Mexico accounted for 27% of sales that same year, and is home to
three production facilities. Central America, the Caribbean, Columbia, Ecuador, Chile
and a dozen other Latin American countries all contain production facilities for Bayer.
Below are the newly released sales figures for Bayer CropScience in 2006

Sales by Region – Bayer CropScience 2006

Sales by Business – Bayer CropScience 2006

Recent International News

On March 7, 2007, Money Magazine reported that Bayer announced plans to cut 6,100
employees world wide by 2009. This cut has been planned since Bayer acquired its rival,
Schering, in 2006. These job cuts aim to reduce expenses by $925 million per year. Of
the planned cuts 3,150 will occur in Europe, 1,000 in the United States, 1,200 in Latin
America and Canada, and 750 in the Asia-Pacific market.

On March 28, 2007, Bayer CropScience announced two new joint ventures in China.
Sales are expected to grow from 65 million Euros to 100 million Euros in this region in
the next few years. Bayer also plans to invest 25 million Euros in the Chinese region to
further develop crop advancements. China is an attractive market for core crops like

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cotton, vegetables, canola, and rice. It has a similar climate and soil profile to many
regions of the United States, so many of the same plant material can be produced. The
future market for seeds is one of the future drivers of growth that Bayer CropScience is
paying particular attention to.

Human Resources

It is Bayer‟s stated belief that a “world wide presence requires world class employees in
all fields”. They seek out highly qualified young employees in marketing, information
technology applications, and research and development. It is there goal to hire and train
employees while they are just out of college to build for the future success of the
company.

The company website has an extensive online link for worldwide job opportunities
among hundreds of facilities. The user friendly site allows the user to input education
level, desired location, and desired division. The site lists all of the published job
openings. In addition, Bayer offers internships, student grants, and vacation work for
college students, as well as a combined degree/vocational training program to employees
who want to move up within the company. Each employee is offered a performance
related bonus program in addition to their annual salary, as well as a pension plan. Long
term stock ownership programs have been developed to not only reinvest in the company,
but also benefit individual employees‟ retirement plans.

Financial Data
Bayer Group (in million Euros) 2005 2006 Change%

Net sales 24,701 28,956 +17.2

EBITDA 4,122 4,675 +13.4

Net income 1,597 1,683 +5.4

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Earnings per share (€)
2.19 2.22 +1.4

Dividend per Bayer AG share (€) 0.95 1.00 +5.3

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Net cash flow 3,227 3,928 +21.7

Capital expenditures 1,210 1,739 +43.7

Research and development expenses 1,729 2,297 +32.9

Bayer has managed to improve its financial position in all of the categories listed above.
Sales, earnings, and income are all up, as are dividends and net cash flows. There were
increases in capital expenditures and research and development expenses year over year,
but these increases can be viewed as the cost of securing future business advancements.
The stock price continues to climb from $58.28 on February 12, to $62.45 on March 28,
2007. It seems that Bayer is in a good financial position for 2007.

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Future Success Planning

To continue to develop the company‟s innovative spirit, a Group wide initiative has been
launched under the slogan “inspiration, ideas, innovation”. This long term initiative has
been designed in the hopes that it will encourage all employees to develop and offer
creative ideas and suggestions. This creates an atmosphere of sharing and inclusion and
lets employees know that there voice will be heard.

Between 2000 and 2011, twenty six new active ingredients have been scheduled for
released by the Bayer CropScience Group. It is estimated that these new products will
peak sales potential by an additional 2 billion EUR by 2011. These products were
created by the scientists in the research and development departments of facilities
worldwide. Continued innovation in products and technology as well as developing a
greater presence in international markets will help ensure the future success of the Bayer
Group.

Additional Evaluation of Management

Bayer restructured the organization by creating independent groups instead of one mega-
company. This reduces overhead, increases efficiencies and profitability, increases
output with fewer inputs, creates more streamline manufacturing and distribution, allows
for a more highly trained and specialized staff, and streamlines training operations. Each
of these benefits can only help the Bayer Group continued success in their markets.
While it can be harder to keep a corporate identity with some many divisions of the
company, they seem to be doing a good job keeping the employees informed of actions
and ideas throughout the divisions. While there are independently operating Groups,
there is still a management board that oversees all operations and is constantly updated on
the status of the divisions. There actions have kept Bayer working as one cohesive unit.

Creating and successfully managing such a diversified portfolio spread over multiple
countries and areas of the world is a positive. This keeps a single incident in one country
from adversely affecting the entire company (natural disasters, terrorism, economic
downturn, etc.) Bayer should be applauded for being present in so many countries that
are not at peace with other companies in the portfolio – the UK and Ireland, North
America and the Middle East, etc. I did find any documentation to support this, but I
would assume that Bayer has a well established diversity training program that
contributes to the atmosphere of tolerance.

Focusing on developing in new markets that have barely been tapped, like the China and
Asia-Pacific markets is a great decision. Controlled growth is the way to increase the
success and profitability of a company. The key is to be able to handle the growth while
maintaining efficiency, product integrity, and customer service.

Bayer continues to view research and development as its security for the future. Creating
innovative products and technologies will continue to keep them on the forefront of

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modern scientific advances. Below is a graph depicting the way funds have been
allocated for research and development over the last three years.

Research and Development Expenses 2005 Research and Development Expenses 2006
by subgroup in % by subgroup in € million

The only additional comments I have regarding the Bayer Group are in reference to the
corporate decision to not renew the licensing on the product Azulux. This product was
the only herbicide on the market in the United States that was labeled to treat crabgrass in
St. Augustine turf. On the surface this decision seemed to not make good business sense
since Bayer had the market cornered. They were able to charge a premium for this
product since there was no real competition. Upon further review of the global picture, I
realized that this was actually a sound business decision. There are only two states that
have a significant amount of St. Augustine turf, Texas and Florida. In fact, the most
common variety of St. Augustine was named for the two universities that collaborated to
create a sun tolerant variety. The University of Florida and Texas A&M created the
„floratam‟ variety, blending both universities‟ names into one. Even though selling
Azulux created a revenue stream for Bayer Corporation in the US, it probably did not
amount to much of anything when viewed from the Bayer Group‟s corporate
headquarters in Germany. Bayer seems to create and supply products that affect and
serve the global market, rather than provide specialty items that can only be utilized by a
small section of the world. So, while this decision has negatively impacted thousands
landscapers and millions of homeowners, it has been another successful business decision
by Bayer.

There is an obvious commitment to constantly improve human health, crop and animal
health, and technological advances in production and security. There is a commitment to
“act in a way that balances economic, ecological, and social needs of current and future
generations by reconciling short term results with long term requirements”. These all
contribute to the betterment of mankind and the continued evolution of Bayer‟s unique
identity and success.

*Information from this paper can be found on Bayer.com and Hoovers.com

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Mission Statement: “To constantly improve what is essential to human progress by
mastering science and technology”.

The component “constantly improve” is the concept bedrock to Dow‟s corporate culture.
H.H. Dow, the company‟s founder once said, “If you can‟t do it better, why do it?” This
statement fuels the drive to be a constantly adapting, innovative company. Being
“essential to human progress” means that they develop products that provide improved
lifestyles for all the people of the world. This idea connects Dow with all of the external
markets they serve, looking at the world from outside-in. This allows Dow to seek out
growth opportunities and to develop new products that are necessary for human
development. By “mastering science and technology”, they work to continually create
solutions for their clients and society.

Core Values: “Integrity and respect for people”


Dow Chemical Company has a belief in the inherent value of all people. They state that
“our promise is there most vital product- our word is our bond. The relationships that are
critical to our success depend entirely on maintaining the highest ethical and moral
standards around the world…we will ensure the health and safety of our communities,
and protect the environment in all we do.” They believe that their communities are their
neighbors and that the customers are their partners in creating value. Their customers‟
loyalty is the greatest reward.

Executive Summary
Dow AgroSciences is a wholly owned subsidiary of the Dow Chemical Company, the
second largest chemical company in the world. Dow Chemical, headquartered in
Midland, Michigan, and its subsidiaries manufacture plastics, hydrocarbons, agriculture
chemicals, petrochemicals, Styrofoam, fibers, Saran film, and performance chemicals.
Together, the combined divisions of Dow Chemical manufacture more than 3,500
products. These 3,500 products are sold in more than 175 countries. According to Dunn
and Bradstreet, its top competitors are BASF, DuPont, and Exxon Mobile Chemical.
They are ranked 36th on the list of Fortune 500 companies.

Dow AgroSciences is a limited liability corporation based in Indianapolis, Indiana. The


AgroScience division is ranked as a “…top tier agricultural company dedicated to
providing innovative crop protection, seeds, and biotechnology solutions to serve the
world‟s growing population”. As a global leader in providing pest management and
biotechnology product solutions, they have been responsible for helping to increase the
world‟s food supply and promote health and improved quality of life for the ever growing
world population. They employ 5,500 people in more than fifty countries and have
worldwide sales of $3.4 billion.

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History
The Dow Chemical Company was incorporated in 1897. After the development of a
sales department and the introduction in 1906 of its first product for fruits and flowers,
the agricultural chemicals division was established in 1908. On June 26, 1937, the
company‟s stock was listed on the New York Stock Exchange for the first time. Dow
AgroScience began as the agricultural unit of the Dow Chemical Company and as a part
of the Eli Lilly and Company‟s agricultural business in 1950.

The joint venture, DowElanco, was formed in 1989, and continued to develop new
products and acquire strategic businesses. In 1997, the Dow Chemical Company
acquired 100 percent of DowElanco and renamed it Dow AgroSciences. Major
acquisitions in the 1980s and 1990s include Mycogen Seeds, Cargill Hybrid Seeds,
Sentrichem, and the agricultural chemicals business of Rohm and Haas. In 2002,
President Bush bestowed the National Medal of Technology to Dow “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”.

Dow AgroSciences‟ plans for the future focus on implementing its strategies revolving
around productivity, portfolio management, and innovation. This allows them to
maximize growth by concentrating on current products as well as continually developing
new, revolutionary products and solutions.

Organization and Corporate Governance


The ultimate authority for corporate governance rests on the shoulders of the Board of
Directors. The current Chairman of the Board of Directors is Andrew Liveris. He is also
the president and CEO of Dow Chemical Company. In March of 2007, the board
announced major organizational changes. Soon there will be eight groups rather than
two, with a president for each group. Below is the new organizational chart with the
additional six groups. Each group president is held responsible for implementing the
appropriate growth strategies for the businesses in his division, as well as contributing to
the short term and long term financial goals set fourth by the Board of Directors.
Basic
Plastics
Hydrocarbons Basic
& Energy Chemicals

Dow Board of Directors Polyurethanes


AgroSciences & Standing
Committees

Specialty Designed Polymers


Plastics & Latex
Specialty Chemicals
Epoxy &
Internediates

There are five standing committees which operate directly under the Board of Directors.
These committees include the Governance Committee, Audit Committee, Compensation
Committee, the Environment, Health, and Safety Committee, and the Executive

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Committee. All members of the standing committees are elected by the Board of
Directors. Each of these committees plays an integral role in the organization.

The purpose of the Governance Committee is to “…consider and report to the Board of
Directors all matters relating to the selection, qualification, compensation, and duties of
the members of the Board”. They also act as the nominating committee for directors and
assist the Board with corporate governance issues. The four member Audit Committee is
appointed by the Board to assist in monitoring the integrity of financial statements,
performs the internal audit functions, and assures compliance with legal and regulatory
requirements.

The Compensation Committee is responsible for discharging the board from matters
relating to total compensation, benefits, and perquisites of the CEO and other senior
executives. This removes any potential improprieties or unethical compensation
packages to be developed. The duties of the Environment, Health, and Safety Committee
oversees and assesses the effectiveness of all programs relating to the environment,
health, and safety policies and programs. They advise the board on matters that impact
corporate social responsibilities and the company‟s public reputation. Lastly, the four
member Executive Committee exercises all of the powers of the Board of Directors
between their scheduled meetings. The Executive Board manages and directs the
business affairs of the company in the absence of the Board of Directors.

Jerome Peribere assumed his role as president and CEO of Dow AgroSciences in
February of 2004. In 2006, he was appointed to Dow Chemical Company‟s Office of the
Chief Executive. Peribere began working for Dow in France as a sales representative in
Specialty Chemicals in 1977, after receiving a master‟s degree in business economics and
finance. He was named Regional Marketing Manager of Eastern Europe in 1982. By
1988, he was the European agricultural business director. Peribere moved to Indiana in
1993 to assume the position of global commercial director. After several other
promotions, he became the vice president of Agricultural Chemicals in 2002.

Dow Chemical‟s Operating Segments and Businesses

Agricultural Sciences – Dow AgroSciences has a broad spectrum of agricultural crop


protection chemicals including herbicides, insecticides, fungicides, and fumigants. The
large herbicide portfolio provides weed management solutions around the world. Its
insecticides and fumigants are used in over a hundred agricultural markets globally.
Multiple fungicides provide protection from pathogens in fruits, vegetables, grain, and
specialty crops. The combination of products created and sold by the AgroSciences
division provide several crop management strategies that lead to higher crop yields and
profits.

The Plant Genetics and Biotechnology division is committed to providing solutions that
will improve crop production and output for food and feed uses. This division is divided
into the Seeds and Traits, Healthy Oils, and Animal Health segments. The Agronomic
Seeds and Traits segment has proprietarily developed top performing seeds for corn,

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cotton, soybeans, alfalfa, canola, and sunflowers – all vital crops to help fulfill the
world‟s needs for food, clothing, and fuel. The Healthy Oils segment is constantly trying
to improve plant traits that will lower saturated fats. The goal is to create the most
healthy oils and products to best benefit farmers, food producers, and consumers. The
Animal Health segment is currently exploring plant cell produced vaccines and
antibodies for use in animal disease prevention. They have already developed several
disease prevention antibiotics for livestock, which helps keep the food supply safer.

Performance Plastics – Dow Automotive, Dow Building Solutions, Dow Epoxy,


Specialty Plastics, Polyurethane Systems, Technology Licensing and Catalyst

Performance Chemicals – Dow Latex and Acrylic Monomers, Designed Polymers,


Specialty Chemicals

Basic Chemicals – Core Chemicals, Ethylene Oxide/Ethylene Glycol


Basic Plastics – Polyethylene, Polystyrene
Hydrocarbons and Energy
Unallocated and Other – Dow Ventures
2005 Sales by Operating Segment 2005 Sales by Geographic Region
(Dollars in millions) (Dollars in millions)
Performance Plastics $ 11,388 North America $ 19,850
Performance Chemicals $ 7,713 Europe $ 16,624
Agricultural Sciences $ 3,364 Asia Pacific $ 5,174
Plastics $ 11,815 Latin America $ 4,659
Chemicals $ 5,660
Hydrocarbons and Energy $ 6,061
Unallocated and Other $ 306

Market
In addition to the agriculture industry, there are several specialty markets that utilize the
products developed by Dow: golf courses, lawn and ornamental horticulture growers,
landscape management companies, the livestock industry, and interior/exterior pest
control industries. The regions of the world where Dow products are available include
North America, Latin America, Asia-Pacific, Europe, the Middle East, and Africa.
Below are graphs depicting Dow AgroSciences‟ global sales by region and division.
Currently, almost half of all sales revenue is generated from North American sales. I
believe that in the future, a greater portion of sales revenue will be generated in other
regions due to the increased presence in manufacturing, research and development around
the world.
Dow AgroSciences Global Sales by Geography 2005
North America 45% Europe 26%
Latin America 15% Asia 14%

International Presence

“Dow AgroScience is dedicated to serving the world‟s growing population via


revolutionary solutions”. They estimate that the world population will grow forty percent

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to 9.1 billion people in the next fifty years! Innovation can come from every corner of
the globe; therefore, international collaboration is vital in finding solutions to world
issues. Dow currently employs 42,400 people worldwide. That is a drop of 10,000
employees since 2001; however, the ratio of men to women has remained the same at
76% male and 24% female employees. I could not find any publications to explain the
cutting back of the workforce, but I assume that it was a budget cutting measure to help
keep profitability high.

2005 EMPLOYEES BY GEOGRAPHIC AREA – DOW CHEMICAL COMPANY


North America 22,646
Europe 13,276
Asia Pacific 2,782
Latin America 3,709

In an effort to help fulfill future demands, Dow has opened more than twenty major
manufacturing locations worldwide. Each location has its own dedicated website that is
available in English and the language native to the area, thus keeping the local
communities involved and aware of Dow‟s progress. In addition to providing
employment opportunities and strengthening the local economies with tax revenues, they
seek to address the specific needs of the communities, such as education, health, and
recreation. These major manufacturing locations include sites in Brazil, Benelux,
Germany, Canada, France, Texas, California, Michigan, Louisiana, and West Virginia.
Each location has been selected in part for the ease of product distribution and the
available supply of the labor force. There are future plans to add more manufacturing
and research sites throughout the European Union, Australia, China, Russia, and Latin
America.

Research and development are the keys to developing future markets and profits. Dow
AgroSciences has a considerable manufacturing and research presence throughout
Europe. Twenty percent of Dow Europe‟s employees are devoted to research and
development. Diseases of prosperity – aging, obesity, diabetes, and heart disease, are
being researched in Europe. Canada also has a large portion of their Dow employees
devoted to research and development of solutions for weed, insect, and disease
management as well as plant genetics.

Recent International News

A conference was organized by Dow AgroScience in June of 2006 in Brussels. This


conference was aimed primarily at “…forging collaboration between European
companies, institutes, and universities in key areas of life science and biotechnology and
in improving awareness among decision makers.” The European bio-economy has a
market size of nearly 1.5 trillion EUR and employs more than 22 million people. The
goal for Dow was to “forge some very strong collaboration with European partners,”
according to Jerome Peribere, the president and CEO of Dow AgroSciences. By
developing a foothold in this vastly potential market, Dow is securing its goals for future
success. Both plant derived vaccines and the developing of healthier oils were the key
topics of the conference.

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On December 22, 2005 Dow AgroSciences announced a research collaboration with the
University of Melbourne in Australia to pursue plant derived vaccines for the Avian flu.
This joint venture project is funded partially by grants from the Australian government as
well as Dow itself. This Linkage-Projects program supports collaborative research
projects between industries and higher education facilities. The project aims to provide a
proof of concept for the rapid production of poultry and livestock vaccines. Plant derived
vaccines avoid the usual caveats of vaccines developed with components of animal
origin. The hope is to further develop these types of vaccines for human use.

China seems to be on the forefront of many new business ventures in the last five years.
To further develop this country‟s budding corporate explosion, it is important to educate
the young citizens of China. Dow is directly involved with developing Tsinghua
University‟s department of chemical engineering. According to Dr. Zheng Liu, the
chairman of the department, “As an educational institution renowned for the world class
caliber of its graduates, we are delighted to have Dow so closely involved in helping
develop today‟s young Chinese talent into tomorrow‟s top industry professionals.”

Human Resources

The unique corporate culture has evolved from the everyday practices of the core values.
The unique talent and leadership abilities of the employees are valued as their greatest
resource. They seek to hire well qualified individuals with the “…ability to develop
solutions and the compassion to make a difference”. Employee survey feedback shows
that there are several strengths in the diverse culture including the ability to focus and
complete the task at hand. The employees also feel that the commitment to people is
outstanding and that each person has ownership in their future. The employees also
reported a feeling of belonging to a diverse, inclusive, learning culture. It sounds like
employee morale is alive and well at Dow. This helps reduce turnover rates and
expenses.

The company website has a link for career opportunities. One can search the intranet for
job postings worldwide. They have a college recruitment program in place that provides
sales internships in crop, turf, ornamentals, or urban pest management. There are also
internships available in lab based research for undergraduate and graduate students. By
teaming with colleges and universities, Dow hopes to attract a well educated work force
to become the innovators of tomorrow‟s products. There are multiple tiered career paths
in research and development, sales and marketing, and functional support which include
legal, financial, and technical support disciplines.

Financial Statements for Dow Chemical Company


PERFORMANCE HIGHLIGHTS 2005 2004
Net Sales $46.3 billion $40.2 billion
Net Income $4.5 billion $2.8 billion
Earnings per Share – Diluted $4.62 /share $2.93 /share
Injury and Illness Rate (recordable incidents per 200,000 hours) 0.40 0.51
Taxes paid $1.6 billion $1.2 billion
Total purchases $43.2 billion $39.3 billion
Dividends declared per share $1.34 $1.34

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Debt to Capital Ratio 39% 48%
Charitable Contributions $23.2 million $17.1 million

From the numbers published above, one can see that net sales, net income, earnings per
share, and charitable contributions have increased year over year. While total purchases
increased in 2005, the debt to capital ratio decreased by nine percent. It seems that
finances have been better managed.

Dow stock is traded on the New York Stock Exchange under the symbol (DOW). On
February 22, 2007, the stock closed at $43.13 per share, which was up .13 cents for the
day. As of March 14, 2007, stock prices were $43.19 per share. Below is a chart of the
stock prices from April 2006 through March 2007. The fifty two week high was $43.73
and the low was $33.00.

DOW Stock Chart – April 2006 – March 2007

Every quarter since 1912, Dow has paid its shareholders a cash dividend – that is 382
consecutive quarters! The quarterly dividends payable in April, 2007 will be 37.5 cents
per share.

An assessment of each unit‟s investment potential was made in order to maximize


investment capital and value for the shareholders. Those that were deemed able to grow
at above industry levels received the largest amount of investment capital. Some
divisions are run strictly to generate cash flows to develop other divisions, while some
divisions must show growth and increased profitability or face divestment. There is a
clear financial success plan in place.

Future Success Goals and Planning

In 2006 Andrew Liveris, the CEO of Dow Chemical Company, announced 2015
Sustainability Goals for all Dow business units. He outlined the ambitious multiple step
program that “…addresses some of the most pressing economic, social, and
environmental concerns facing the global community in the next ten years”. He
committed the company to creating at least three breakthrough solutions in achieving
affordable and adequate food supplies, decent housing, sustainable clean water supplies,
and improved personal health and safety.

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He also announced Dow‟s commitment to improving energy efficiency, developing
alternative energy sources, and addressing the global climate change believed to be
partially caused by the consumption of fossil fuels. Between 1996 and 2005, Dow
reduced its fossil fuel consumption per pound of product by twenty percent. Over the
next ten years, the goal is to further reduce consumption per product pond by twenty five
percent. With a continued focus on world issues, Dow will undoubtedly be a fixture in
the worldwide corporate community for years to come.

Dow has already taken steps to increase its international presence by working with
universities and research groups in developing countries like China, India, Russia, and
Brazil. This strategic investment strategy will help ensure future success. China has
become the center of attention when it comes to estimating immediate growth potential -
in 2005 alone they posted sales of $2.3 billion. They accelerated the entry strategy in
Russia by building a Styrofoam and polystyrene plant and have recently signed an
agreement with a Russian energy firm to supply polyethylene products. They are
exploring new partnerships in the Middle East to secure advantaged oil feed stocks to
ensure long term competitiveness in the global market.

Dow AgroSciences is the leader in focusing on the cutting edge technology of plant
derived vaccines. They are actively pursuing solutions for the avian flu, West Nile virus,
and canine diabetes. It is believed that plant made technologies can find additional
solutions for animal nutrition, food safety, food borne pathogens, and several classes of
diseases.

There has been a recent push for attaining growth with strategic customers by developing
“stronger, more dynamic customer relationships that yield mutually beneficial
opportunities for success,” by providing the products, technologies, and services that
enable advances in new directions.

The development of the H.H. Dow Academy in 2005 provides advanced education and
training opportunities for the company‟s future leaders. Education and innovation will
always be a focus for this and many other successful, sustainable corporations.

Additional Evaluation of Management

There commitment to building a “people-centric performance culture” by focusing on


international recruiting and employee retention reinforces the idea that the workforce is
the single most important source of competitive advantage. Dow wants to ensure that
their future workforce is as great and successful as the current workforce, or perhaps even
better. The fact that they illustrate a compassion for the areas they inhabit creates a
feeling of ownership and inclusion in each local market. The focus in research and
development is great for future growth and revenue potentials, not to mention great for
mankind.

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By further dividing the Dow Chemical Company into eight, rather than two divisions,
more sustained and consistent revenues will be generated. This new structure creates an
environment of greater individual accountability and increased autonomy. Each business
unit will be able to make decisions that increase efficiencies in training, managing,
developing, and growth. Each unit has its own long term success drivers and factors so
by hiring people with the specialized skill sets for individual business units, a greater
level of success will be achieved.

In a rapidly consolidating and globalizing industry, Dow has an array of strengths


including geographic reach, business and product diversity, future potentials, range of
customers and markets, and a global manufacturing and distribution capability. As they
continue to spread into the world market, developing the right staff and management
teams will be vital to creating and maintaining a cohesive business unit.

*All information contained in this document can be found on Dow.com, Dowagro.com, and hoovers.com

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Final Comparison

I wanted to research three companies with similar portfolios in order to truly compare and
contrast them. BASF Group, Bayer AG, and Dow AgroSciences are all multi-billion
dollar corporations with diverse portfolios of agricultural, human and animal health,
specialty chemical, and energy products that serve to better mankind. Dunn and
Bradstreet lists these three companies as top competitors with one another. It is estimated
that by 2050, the world population will reach nine billion people. Today‟s food
production levels will have to double with out the addition of much farm land. Since this
is becoming a pressing issue in our industry, I wanted to research companies that were
successfully addressing this issue.

Historically, these companies are linked to each other either by being a part of the same
parent company or by working on joint ventures. BASF and Bayer are both companies
that began in Germany in the 1860s. Out of necessity when the German economy
dissolved after World War I, these two companies merged together with four others to
form IG Farbenfabriken. Post World War II, these companies went their separate ways.
Both BASF and Bayer‟s world headquarters are still in Germany. Dow is the only
American based company in this comparative analysis and was incorporated thirty years
after its German competitors. In the 1950‟s, Dow and BASF worked on a joint venture in
Texas to produce basic chemicals. This joint business venture supplied the base for
BASF‟s North American business. Even though these companies are top competitors,
they still have many of the same roots.

When researching these companies, I discovered that there were far more similarities
than differences. All three have a world-wide presence and strive for employee and local
buy-in. Each has a highly qualified executive board and similar recruiting and training
programs. Each offers a wide variety of products in several markets. Corporate
longevity has been well established since each company has been in business for over
100 years. Projected growth, an increased global presence, and a financially-backed
business plan will continue to keep these companies in business for years to come.
Science and technology, along with research and development, are the drivers of their
competitiveness, which keeps each company striving to be the first to find the next
solution to a world issue.

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In the agriculture science divisions, the goal of each company is to find ways to increase
the world food supply to keep up with an ever increasing demand. The agriculture
products divisions of each company have been recognized as future growth vehicles for
this reason. In addition to increasing the world food supply, these companies are
researching bio fuels, plant derived vaccines, and other bio-products. Utilizing crops for
research and development of more eco-friendly products boosts the agricultural economy.
According to MSNBC, the price of a bushel of corn has doubled over the last three years
due to the increased production of ethanol gasoline. The price of eggs has also risen 40%
in the same time period since chickens eat corn feed. The increase in price of agriculture
products increases the profitability of farms, particularly American farms since we grow
the bulk of the world‟s corn. Research and development will continue to be the focus to
achieve crop yield goals as well as future sales growth.

I am by far not the most qualified person to tell someone how to run a billion dollar
corporation. If, however, I owned or was a part of the management team for any business
I would focus company efforts on four main areas: employee retention, customer service,
sales growth, and research and development. Each of these areas helps support the
internal structure and integrity of the company. Research and development gives a
company a competitive edge and allows for growth in product lines. A larger assortment
of cutting edge products offered leads to a larger amount of product sold and greater
revenues. A well planned and run customer service division keeps current customers
happy and leads to even more sales growth. It is easier to retain the book of business you
have than to constantly replace existing customers with new clients. Repeat business is
often the largest percentage of sales. Lastly, having high employee retention rates
increases efficiency, reduces costs, boosts morale, and avoids the pitfalls of revolving
door hiring practices. When employees believe in management team directives, company
products, company values and mission statements, and their co-workers, everything else
tends to fall into place.

Bayer, Dow, and BASF all contribute to the health and wellness of society. Product
developments in agriculture science, human and animal health, specialty chemicals, and
energy by these companies have improved the quality of life for billions of people. Each
of these companies has a diversified portfolio of products, world-wide presence, and huge
potential for growth and development in the coming years. Their successes are ultimately
linked to man-kind‟s successes.

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