The products include Pioneer and other brands of seeds, insecticides, fungicides, herbicides, insect control products, and plant growth regulators.
Acquisition and Selling of Conoco
Recommendation: This recommendation is dependent upon the performance of the division called Conoco the chief operating division taken on by the company in 1980s. We propose that DuPont should divest in Conoco in a phased approach so that firm can be liberated of non performing unit.
DuPont developed and marketed technologies such as Dacron, Mylar, Lycra, Kevlar, Tyvek, and Nomex between the year 1940 and 1980. From this growth DuPont expanded into pharmaceuticals and medical products industry. In 1981 Conoco an energy supplier was liberated. DuPont's joint venture with Merck in 1990 brought attention to non-US markets. The company then acquired Protein Technologies International, a manufacturer of soy protein products and Imperial Chemical's polyester-resins, a business with intermediates and polyester-films industry. DuPont bought Merck's share of the pharmaceutical joint venture renaming the company DuPont Pharmaceuticals in 1998. DuPont sold its interests in Conoco prior to the end of the year in 1999.
Conoco headquarters can be categorized as cost center. This cost center is where the resources are accumulated because it is one of the main cost centers of the company. Therefore it’s crucial to identify these resources properly for classification and proper management. The goal of the organization is to ensure its success by putting appropriate personnel with distinct skills necessary to fill important positions. The executive management as well as human resources managers is cognizant of the fact that placing inappropriate personnel for the job can have dire consequences such as loss of productivity that could underpin morale leading to higher job turnovers.
DuPont RATIO ANALYSIS
EBIT Margin
16.6%
EBITDA Margin
13.5%
Pre-Tax Profit Margin
-2.1%
Interest Coverage
0.9
Leverage Ratio
10.2
Asset Turnover
0.0
Revenue to Assets
0.1
ROE from Total Operations
0.0%
Return on Invested Capital
0.0%
Return on Assets
0.0%
Debt/Common Equity Ratio
1.66
Price/Book Ratio (Price/Equity)
0.35
Book Value per Share
$19.83
Total Debt/ Equity
1.84
Long-Term Debt to Total Capital
0.60
Cash Flow per Share
$-0.12
Free Cash Flow per Share
$4.59
Tangible Book Value per Share
$11.91
Price/Cash Flow Ratio
-56.1
Price/Free Cash Flow Ratio
1.5
Price/Tangible Book Ratio
0.58
In the market competition it is normally assumed that the lowest-priced product will realize the highest number of sales, which is false. Selling a wound dressing sold for $8 and the competitor’s at $20, will not likely be seen by some purchasers as a great deal. These buyers will have the propensity to question and follow up with a hesitation to purchase the product. Questions such as “This is too good to be true.” or assumptions that the company is in desperate need to sell and therefore will drive the price lower anticipating a good bargain.
Lower prices make penetrating the market quickly to get ahead of the competition. This strategy on the other hand could be costly for the company. For instance, competition normal selling price for a disposable intravascular ultrasound catheter is $500. They decide to sell the product for $300 instead of the original normal price hoping to gain business quickly. This assumption causes the company to lose $200 with each product sold magnified by the amount of total sales. Assuming they gain foothold of its customer base, the next action would be to try to gain loss revenues by increasing the price of the product. This strategy could backfire which can again, cost the company tremendous amount of revenue and the risk of losing customers they have initially sold the products to. On the other hand, a product priced at its value can be more