Assignment on Epd

Case Questions:

1. Provide an overview of the case.

2. What is the core problem discussed in the case?

3. What is the specific management decision problem faced by DuPont?

4. How new technology and market challengers posed competition on DuPont?

5. Do you think the strategy adopted by DuPont is right? Why or why not?

6. Identify a company from any industry that may have been facing similar challenges.

Answer to the question no. 1

The long-time market share leader in the carpet industry, DuPont was searching for new ways to expand in a slow growth market, which had been growing at approximately 5% per annum over the period 1990–7 and was predicted to remain level or even decline in following years. Its earnings were down by 1.7% as of 31 March 1998 for DuPont fibre operations, and the carpet industry was flat. In addition, in the residential segment of the market, DuPont needed a way to differentiate its nylon fibre carpets from increased competition, including the strong challenge of Amoco’s new polypropylene fibre carpets.

DuPont estimated that 30% of carpet sales were from new residential construction, and the other 70% were from replacement purchases. Ninety-seven percent of all carpeting is produced from man-made fibres derived from petroleum. The leading fibre in the industry has been nylon, which was invented by DuPont in the 1930s. Though the leader in the industry, DuPont was challenged by other high quality nylon producers, like Monsanto, Allied, and BASF, and a host of generic low-end fibre producers. DuPont had 27% of the global nylon market and 58% of the nylon-6/6 market (the most advanced nylon fibre).

In the early 1980s, a major breakthrough benefiting the consumer emerged; stain resistant carpets. The four major fibre producers quickly announced their versions of the stain resistant carpets in an effort to remain competitive. Amoco also entered the market when it announced a ‘New Revolution in Carpeting’, carpets made...