Topic > Du Pont Competitive Advantage - 776

. What are Du Pont's competitive advantages in the TiO2 market since 1972? How permanent or defensible are they? What does Du Pot need to do to maintain its competitive advantages in the future? As the paper suggests, Du Pont has been a dominant company in the TiO2 market as it is the only company to possess ilmenite chloride operational technology, which ultimately led to lowering its competitive advantages. lower cost than its competitors. Given that chloride technology is cheaper than other technologies and that Du Pont is the only company operating the plant, these two factors give Du Pont important advantages over other companies. But it won't be long before he loses the privilege of these advantages, unless Du Pont thinks of a new strategy to maintain them. In this case two strategies were introduced and considered by Du Pont, a growth strategy which involves aggressive expansion to control the market and limit the competitors' ability to expand. The other is called a maintenance strategy which targets 45% market share by gradually increasing investments. Each of these strategies involves different types of risks that Du Pont should consider.2. Given the forecasts provided in the case, estimate the expected incremental free cash flows associated with Du Pont's growth strategy and maintain strategy for the TiO2 market. How much risk and uncertainty surround these future cash flows? Which strategy seems more attractive (e.g., using the DCF method (i.e., NPV)? The estimated free cash flows for the two strategies are $391 million for the growth strategy and $365 million for the (Please refer to the Excel sheet for the breakdown of the calculation.) I believe both strategies bring the same demand uncertainty, p...... half of the sheet... and many other factors.4 .What strategy should Du Pont pursue?Du Pont is organized into ten industrial departments, the pigment department, is the second smallest of the ten departments , which represent only 4.68% of Du Pont's revenue. Although there is considerable risk associated with the growth strategy, the committee is willing to grow this department because it is one of the smallest departments for du Pont and the company has an excellent financial performance overall. This brings us to the conclusion that the growth strategy should be pursued. Du Pont can afford to take a risk on this strategy given the small impact this department has on the associated financials, not to mention the fact that returns with the growth strategy are higher than the maintenance strategy..