Dow Chemical Case

2079 WordsSep 20, 20139 Pages
Dow Chemical Case When Petroquímica Bahia Blanca S.A. (PBB) began the process of becoming privatized by the Argentine government, Dow Chemicals saw the acquisition of this company as a golden opportunity to become the leading polyethylene player in Latin America. Dow Chemical’s was already a major player in the chemicals (ethylene), plastics (polyethylene), and agricultural products industries holding position as a low-cost producer. Breaking each segment of their business down into these categories respectively, Dow Chemicals was able to generate annual revenues of 20.2 billion making them the leader in market position worldwide for some chemical product lines accounting for 7% of global capacity. Dow embraced a strategy…show more content…
The Polyethylene industry is driven by demand in innovation of new packaging, raising living standards and growing populations in emerging markets. The demand in end user markets for products that are produced for commercial use by Polyethylene. Polyethylene represented approximately 15% of Dow’s total sales and 35% of its operating profit. Dow was the worldwide leader in production accounting for 7% of the global capacity for the production of ethylene and polyethylene. Dow Chemical was looking for expansion opportunities in the South American market. In 1995 the opportunity arose to become apart of the regions ever growing polyethylene market with in Argentina. Argentina’s economy opened up with the elimination of all duties, Charges and other restrictions in the trade between the members of Mercosur, a trading bloc created in 1991 which included Argentina, Brazil, Paraguay and Uruguay. The petrochemical producers in Argentina will now be competing with the much larger and advanced Brazilian petrochemical producers. This caused a big disadvantage for Argentina’s largest government controlled polyethylene plant PBB(Petroquímica Bahia Blanca) complex whose technology and scale was no longer in line with international standards. So the Argentine government decided to privatize the plant. Dow chemicals vice president for business development in Latin America, watch the rapid transformation occurring in Argentina. He watched the improved standard of living in
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