FINAL PROJECT REPORT

STRATEGIC FINANCIAL ANALYSIS & DESIGN

GROUP MEMBERS:

Hafiz Abbas Mansoor (10638)

Hafiz Huzaifa Anwar (61723)

Submitted to:

Dr. Arsalan Hashmi

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ACKNOWLEDGEMENTS:
We would like to thank everyone who had contributed to the successful completion of this
project. We would like to express my gratitude to our course instructor, Mr. Arsalan Hashmi for
his invaluable advice, guidance and his enormous patience throughout the development of this
project.

In addition, we would also like to express our gratitude to our loving parents and friends who had
helped and given us encouragement.

INTRODUCTION OF DUPONT CORPORATION:

E. I. du Pont de Nemours and Company was one of the longest continually operating companies
in the United States. It traced its origin to a French émigré, Eleuthère Irénée (E. I.) du Pont, who
had studied chemistry and who, at age 14, had written a paper on gunpowder. In 1799, his family
fled revolutionary France, and in 1802, he founded a company in Delaware, at the urging of
Thomas Jefferson, to manufacturer gunpowder from its origins in gunpowder, in the 1880s, the
company pioneered the manufacture of dynamite. At the turn of the 20th century, the chemistry
of nitrocellulose, critical to explosives, began to spawn early innovations in plastics, lacquers,
films, and fibers. In 1911, the U.S. government, citing antitrust reasons, forced DuPont to break
up its monopoly gunpowder business. Much of the company's success was due to its efficient
structure, which designated different levels of management. In this sense, DuPont profoundly
influenced the way U.S. corporations were run. Too much success, however, ultimately worked
against the company. DuPont controlled so much of the explosives market that in 1912 the U.S.
government ordered it to divest itself of a number of its assets. Adding to the company's troubles
was a continuing feud between Alfred du Pont and his cousins, who eventually took away all of
Alfred's real responsibilities within the organization. Notwithstanding this, the company made
enormous profits during World War I, which it used to diversify into other businesses. DuPont
also expanded into the textile business, manufacturing artificial fibers for use during World War
I (1914–1918). When the company acquired rights from the French to manufacture cellophane in

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the 1920s, it began manufacturing rayon and developed a stronger version of the cord used in
automobile tires. By far the most important of DuPont's creations was nylon, developed in 1930
by a research group headed by Wallace H. Carothers. DuPont's thermoplastics division spun off
all kinds of products, including shower curtains, radio dials, eyeglass frames, and screwdriver
handles. In the 1990s DuPont began to recover from the downturn of the 1980s. The company
posted record profits in 1994 and 1996, and stock prices rose. New joint ventures in the areas of
synthetic fibers, chemicals, and agricultural products continued to turn profits. In 1997 DuPont
purchased a division of Ralston Purina that manufactured soy products, and also bought out
Merck's share in the DuPont Merck Pharmaceutical Company. In an effort to concentrate on its
core businesses, DuPont divested itself of Conoco in 1998. In that year DuPont had a net income
of $4.7 billion. Nearing the close of the twentieth century, the company could safely boast that
DuPont products had become inseparable from the everyday life of most societies in the world.
By 2011, DuPont was among the world’s largest chemical companies; it had $38 billion in sales
and operations in 90 countries. Among its most well-known products were nylon (introduced in
1935), Tyvek (used in construction), Kevlar (a protection product), and Teflon (a protective
surface), shows the evolving nature of DuPont’s businesses since its founding.

PROBLEM IN THE CASE/KEY ISSUES:

Ellen Kullman joined DuPont Corporation in 1988 as the marketing manager. In DuPont
Corporation Kullman had a reputation for making business grow. Ellen Kullman was
appointed CEO of DuPont Corporation in 2009 and later in the same year, chairman. The
first year for Ellen as CEO was very difficult for her and the company because the company
was suffering with its performance and was also suffering financially. Shortly after her
appointment as CEO, in February 2009, DuPont’s stock price fell below $19. Due to this
downturn Kullman decided to cut costs and lay off 4,500 employees. She had dismissed
rumors that the business was up for sale after reports had surfaced that the company had
hired Credit Suisse to seek potential buyers for it. She decided to give business a chance in
order to see that if they can achieve the performance targets or not. If yes, then it will be great
but if any of their businesses can’t obtain their targets then alternatives should be considered.

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 For several years, the business, which produced paint for the auto and trucking industries,
had struggled with low demand and high raw-material costs that had hurt profits. The issue
was what should be done to produce the greatest value for shareholders. She had called for an
internal review of the business that fall to assess its value to DuPont compared to what
outside parties might pay for it. She would have to decide whether to retain the business or
sell it and, if so, at what price. The main challenge when Ellen Kullman took charge as the
CEO of the company was understanding the dynamic relationship between what should not
change & what is required to be changed and having absolute clarity on that for the
prosperity of the company. Deciding what would not change was easy: the company’s
commitment to science and innovation as primary drivers of growth since its founding in 1802 as
a maker of black powder. Deciding what to change was far more difficult. Ellen Kullman knows
that to get the things right, it is crucial to get all the necessary information and analyze it.
Proper planning is one of the core values of Ellen Kullman. She also understands that control
should not be overwhelming. Ellen Kullman is always open to new strategies and incentives.
She was ready to listen to the employees. She also provided her feedback and made her
employees (and especially managers) understand the importance of responding to other
employees’ questions or providing the necessary coaching. Kullman’s challenge was
balancing the need for immediate action to maintain the company’s financial stability during the
crisis, while focusing on strategic objectives that would preserve the company’s leading market
position in the future. Among the highest hurdles: Motivating employees to work on the things
they could control and avoid becoming paralyzed by the market’s volatility.

ANALYSIS OF THE PROBLEM:

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SWOT ANALYSIS:
Below are the Strengths in the SWOT Analysis of DuPont Corporation:
 DuPont’s performance coating is world’s premium supplier for automotive coatings and
is known for its product quality and customer satisfaction.
 DuPont has over 60,000 employees in the organization and is present in over 80 countries
 Company is geographically diversified which helps company grow and reduce the
impacts of slowdown in any particular country.
 Company has broad business portfolio; besides automotive coatings they are also into
construction, energy solutions, food, healthcare, manufacturing, plastics and textiles
businesses.
 Company spends heavily on R&D as it believes in continuous innovation to remain
leaders and pioneers in automotive coating industry.
 DuPont’s Knowledge Centers & Innovation Centers provide all the required
infrastructure, facility and ambience for innovations as DuPont is a market-driven science
company.
 Product Portfolio: DuPont has a large product portfolio where it provides products in a
large range of categories. It has a number of unique product offerings that are not
provided by competitors.
 Its products have maintained quality over the years and are still valued by customers,
who find it as good value for the amount of money that they pay.
 DuPont has a large asset base, which provides it with better stability.
 DuPont has qualified and accredited professionals working under in its team.

Below are the Weaknesses in the SWOT Analysis of DuPont Corporation:

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  Even though DuPont is spending more than the average research and development
expenditure within the industry, it is spending way less than a few players within the
industry that have had a significant advantage as a result of their innovative products.
 The time it takes for products to be purchased and sold are higher than the industry
average, meaning that DuPont builds up on inventory adding unnecessary costs to the
business.
 A significant proportion of the property that DuPont owns is rented rather than
purchased. It has to pay large amounts of rent on these adding to its costs.
 There is a lack of proper financial planning at DuPont regarding cash flows, leading to
certain circumstances where there isn’t enough cash flow as required leading to
unnecessary unplanned borrowing.
 The performance appraisal is not in a systematic manner. People are often not appraised
for their performance. This leads to lower work morale and lack of promotion
opportunities for employees.
 The decision making is highly centralized, and decisions by teams need to be approved
by certain officials. This reduces efficiency in operations by making them more time
consuming. It also leads to reduced innovation.
 Worker morale is low due to company culture and politics that have grown in recent
years.
 The workload is a high per worker as there are fewer workers than the actual work
required. This puts workers under psychological stress and is likely to be less productive.
 DuPont has a lower budget for its quality control department than competitors. This leads
to lack of consistency and the possibility of damage to quality across its various outlets.
 DuPont has a higher employee turnover rate compared to competitors. This means that it
has more people leaving the job, and as a result, it is spending more on training and
development as employees keep leaving and joining.

Below are the Opportunities in the SWOT Analysis of DuPont Corporation:

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  There has been an increase in the number of internet users all over the world. This means
that there is an opportunity for DuPont to expand their presence online; by using the
internet to interact with its customers.
 There has been a new trend and a growth in sales of the e-commerce industry. This
means that a lot of people are now making purchases online. DuPont can earn revenue by
opening online stores and making sales through these.
 There has been an increase in the number of social media users worldwide. The three
social media platforms; Facebook, Twitter and Instagram, have shown the greatest
number of increase in monthly active users. DuPont can use social media to promote its
products, interact with customers and collect feedback from them.
 Technology comes with numerous benefits among many departments. Operations can be
automated to reduce costs. Technology enables better data to be collected on customers
and improves on marketing efforts.
 Increase in education and training by numerous institutes has increased the amount of
skilled labor available within the country. This means that if DuPont is able to hire skilled
labor, it would have to spend less on training and development, therefore, saving costs.
 Increased globalization does not restrict DuPont to its own country. It can extend its
operations to other countries, entering into these markets and making use of the
opportunities that lie in these markets.

Below are the Threats in the SWOT Analysis of DuPont Corporation:

 New technological developments by a few competitors within the industry pose a threat
to DuPont as customer attracted to this new technology can be lost to competitors,
decreasing DuPont’s overall market share.
 The bargaining power of suppliers has increased over the years with the decrease in the
number of suppliers. This means that the costs of inputs could increase for DuPont.
 There have been numerous players that have entered the market and are gaining market
share by gaining existing companies’ market share. This is a threat to DuPont as it can
lose its customers to these new entrants.

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  There has been an increase in competition within the industry putting downward pressure
on prices. This could lead to reduced revenue for DuPont if it adjusts to the price changes
or loss of market share if it doesn’t.
 Substitute products available are also increasing, which is threat collectively for the
whole industry as consumption of current products decrease.

PRACTICAL SOLUTIONS TO THE PROBLEM:

Ellen Kullman was the strong and determined leader and she had a reputation that her
extraordinary skills can help the business grow enormously. She was named DuPont’s CEO in
January 2009 and, later that same year, chairman. That year was a difficult one for the company
because its performance was closely tied to the broader economy, which had fallen into a
recession. Shortly after her appointment as CEO, in February 2009, DuPont’s stock price fell
below $19. In response to the downturn, Kullman cut costs, laid off 4,500 employees, and
continued to transition the company from a commodity chemical business to a specialty chemical
and science–driven business. Commodity chemicals typically were cyclical, and intense priced-
based competition kept margins low. By moving toward specialty chemicals and more
customized products based on DuPont’s research and development (R&D), Kullman hoped to
focus the company on highergrowth and -margin businesses. She had a big challenge in front her
that whether she had to sell performance coating division or not as this division was suffering
from humongous financial crisis. There was a rumor expanding in the market this division is up
for sale and the company had hired Credit Suisse to seek potential buyers for it. Kullman stated
that the business would be given a “chance” to see if it could meet certain performance targets,
saying: “From a performance standpoint we will give them a chance to see if they can get there.
If any of our businesses can’t obtain their targets, obviously we will look at alternatives.”

Kullman’s first step was “understanding the dynamic relationship between what should not change
and what has to change and having absolute clarity on that.” Deciding what would not change was
easy: the company’s commitment to science and innovation as primary drivers of growth since its
founding in 1802 as a maker of black powder. Deciding what to change was far more

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difficult. Kullman identified three trends that would transcend the current crisis and provide a strategic
framework for the company’s annual $1.4 billion investment in research and development increasing
agricultural productivity, reducing dependence on fossil fuels and protecting lives. But organizing the
company to respond to these long-term trends during a period of extreme uncertainty required strong
leadership and specific initiatives “To change the way we think,” said Kullman. She shared four
leadership principles that she has implemented to guide DuPont through the financial crisis. The first
principle was focus on what you can control. Kullman realized she needed to shift the company’s
attention from what was going wrong to the immediate action required to protect DuPont’s financial
position as revenues fell dramatically. Kullman found so many individuals in the company who were
scared about the company’s financial position and they were unable to determine that what to do in
order to get out of these crisis. Kullman realized what she had to protect along with her team i.e.
mostly financial stability and flexibility. Practically she was focusing on the mindset of the employees.
To preserve financial stability, she issued four financial directives: Maximize variable contribution
dollars, drastically reduce spending, zero-base capital expenditures, and significantly reduce working
capital.
The second of her leadership principles for the crisis has been to “Adopt a new trajectory by
rethinking your business model.” For DuPont, that meant “getting people to think differently” about a
business model that had always measured success based on plant capacity and capital investment. The
change has involved developing service-based models providing new ways to engage with customers
and monetize products. Although it is difficult to get people who are very successful to embrace
change, she has found that they are willing to try new models when markets are in disarray and when
there’s uncertainty about what will work in the future.
Kullman’s third crisis leadership principle was “Communication is the key”. Kullman said that she is
a firm believer that there is a direct correlation between growth and the success of our communication.
When DuPont had an aligned team that understands very clearly what the goals and the tradeoffs are,
that’s when things can absolutely happen. She further said that If the company leaders are not willing
to get out and communicate on the really tough issues, then the credibility DuPont corporation has in
the decisions we are making is always going to be called into question.
The last of her four crisis leadership principles was to maintain pride around the company’s mission.
Kullman believed that there is nothing like a bad economy to get people confused about what their
mission is. They start thinking their mission is to reduce cost. That’s a tactic, that’s not DuPont’s

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mission. During informal weekly meetings with employees, Kullman said she was amazed that the
number one question was about whether we are going to stick with our mission. She quickly realized
that people are scared & they want direction. Kullman said that making sure that people understand
the mission and linking their daily activities to the company’s broader purpose is essential to reducing
fear, maintaining morale and keeping employees motivated. DuPont’s mission was “Sustainable
growth,” and it’s really critical that we maintain the focus on the mission and keep reminding people
of it. People have a lot of pride in the mission and they want to understand that the mission is not
going to change, even though the world around it has changed tremendously. You’ve got to capture
that heart and soul, Kullman said. That’s how DuPont is going to be successful.
These four principles clearly show the expertise level and the skills of Ellen Kullman. Her four
principles were looking practically the best approach in order to help DuPont to get out of the
financial crisis. Ellen Kullman has contributed considerably to the development of the company.
Her leadership was the necessary push that let the company overcome the difficulties it faced.
Ellen Kullman is a democratic leader who tends to guide people, not control them. Kullman
never intruded in the process unless she saw that an employee was moving in the wrong
direction. She also noted that even if an employee was moving in the wrong direction, she did
not simply tell how to do. She made the employee share the company’s philosophy and core
values. After this, the employee came up with his/her ideas to solve an existing issue. Ellen
Kullman’s philosophy was based on her strive for innovation and development. She
stressed the importance of development and innovation for the company. She believed
that it is crucial to invest in the development of innovative strategies in such fields as
science, technology & education. She believed that DuPont is the company where her
philosophy fits. Admittedly, DuPont shares the same vision. The company’s philosophy
was innovation and development. The company invests into the development of its
employees. The strength of Kullman was her readiness to change. She understood that
organizations, as well as people, should change constantly. Kullman also managed to
make people share her standpoint. Notably, she encouraged diversity in the workplace.
She saw it as one of the ways to change and renovate. Sharing new ideas and approaches
based on different experiences and cultural backgrounds is effective.

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RECOMMENDED SOLUTIONS TO THE PROBLEM:
 The online approach for expanding business at the time of crisis. Ellen Kullman could
diversify the DuPont’s business by its digital transformation. Through E-Commerce and
strengthening social media existence might had played an important part to gain potential
customers globally with minimum investments and get the business out of the financial
crisis.
 Sales strategies were required to be evaluated. I that way Kullman could figure out what
needed to be fixed or changed. Promotions were required to be reviewed. Had they helped
DuPont to generate profits or had they resulted in losses instead?
 In this case Ellen Kullman decided to go through with the same team although around
4,500 were thrown out but the existing people were same old. She must have considered
the change in team i.e. she must have analyzed the previous performances of the
employees and who’s performance was not up to the mark should have been replaced
with the more efficient individual because that was the do or die situation for the
company.
 Nothing was mentioned in the given case and we did not found in our research too that
Kullman had consulted any expert regarding the DuPont’s situation. Usually consulting
experienced and expert people in crisis situation is very helpful because these expert
individuals are usually habitual of dealing with the crisis situations and using their
experience and consultancy any situation can be handled handsomely. So in our opinion
Kullman should have consulted the experts too so she could also gain some ideas to get
out of this crisis.

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