DowDuPont Merger and Acquisition consulting package

Dow: Breakthroughs to World Challenges
Yuuki KPA and Anh Do

1. Key Recommendations
2. Executive Summary
3. Approach
4. Detailed Recommendations
1. Recommendation I
1. Problems and Impacts
2. Solutions & Recommendations
3. Implementations
2. Recommendation II
1. Problems and Impacts
2. Solutions & Recommendations
3. Implementations
5. Conclusions
6. Appendices
6.1 Appendix 1: PESTEL
6.2 Appendix 2: SWOT
6.3 Appendix 3: Financial Information
7. Citations
Table of Content
Page 2

Key Recommendations
I. Research on stakeholders’ post-
merger reactions regarding
sustainability
I. Develop strategies to retain talents
and share knowledge and resources
Page 3

Executive Summary
DowDupont currently has two sets of sustainability goals: Dow’s 2025 Sustainability Goals and
Dupont’s 2020 Sustainability Goals, addressing different areas. Post-merger reorganization of the
sustainability goals is vital so DowDupont as a merged entity can best reallocate resources to enjoy the
merger synergies. To formulate the best sustainability strategies, DowDupont needs to reconcile three
forces: the overall end goal or desired synergy obtained from the merger*; what stakeholders want from
the merger, how their reactions change and the implications of these changes on their expectations;
and what information, knowledge and resources are now available to both companies, and their
research, development and production potentials. Our recommendations center around research
initiatives to understand and anticipate stakeholders’ post-merger reactions, which will help DowDupont
reformulate sustainability goals; and leverage existing resources to secure the means to achieve the
goals.
*These are Dow and Dupont’s visions and purposes of the merger, which is assumed in this report as having been clearly
recognized and effectively communicated to all DowDupont’s management and employees.
Page 4

Core Problems
DowDupont’s biggest problem regarding sustainability efforts is currently having two sets of sustainability
goals: Dow’s 2025 Sustainability Goals and Dupont’s 2020 Sustainability Goals. These two goals have
their similarity and differences. As the two companies merge into one Holding, having separate sets of
goals based on their previous names does not highlight the desired and promised post-merger synergies,
since the separations imply two companies are not working together. It is important for the DowDupont
Holding to have either one set of goals for the entire Holding, or three sets of goals for the three smaller
companies you intended to create under DowDupont Holdings, or other options that don’t involve splitting
the goals by the pre-merger entities.
Page 5

Approach
The merger largely changed the external and internal factors affecting DowDupont’s sustainability
efforts. We approached the problems through a thorough environmental and internal analysis of
DowDupont after the merger. We also studied scholastic research and advice from consulting firms
regarding post-merger integration, and applied the ideas and knowledge to DowDupont’s
sustainability efforts.
We used the PESTEL model for external analysis and the SWOT model for internal analysis to
assess these factors and understand how impactful each of them are. The report is build upon the
AFI model as we first Analyze the problems, the Formulate the strategies, and finally build a plan to
Implement the strategy.
The recommendations and implementation steps mentioned in this report are theoretical and brief.
We must first know the desired synergies of DowDupont’s merger, whether it’s cost synergies or
growth/revenue synergies. After analyzing the industry, we realized that DowDupont needed both
synergies. With the most updated combined financial situation, and the merged entity’s budget for
sustainability, we can give consulting advice on which synergies to choose. We would need to follow
up with the company’s own market research, results of the information system upgrade, interviews
with employees, the chosen culture, etc. More detailed consulting advice could be formulated with
these pieces of information.
Page 6

I. Research on stakeholders’ post-merger expectations regarding
sustainability
A. Problems and Impacts
In a McKinsey’s article, Gryzwa, et al stated “during post-merger integration (PMI), the stakeholder
landscape is becoming more difficult to navigate,” meaning post-merger research for changes in
stakeholders’ expectations is essential. External stakeholders may form new sets of expectations towards
DowDupont, the merged holding, with some remain the same, brand new ones added and old ones
removed.
Page 7
These changes impact DowDupont as a whole, and the merged entity sustainable efforts. Here are a few
possible changes via the PESTEL analysis for us to see the impacts (refer to Appendices 1 and 2 for more
complete analysis):
● Political and Legal: DowDupont agreed to a new set of regulations upon the success of the merger;
government may set even stronger sustainability targets to DowDupont. Government will expect
more from them regarding to the protection of the environment.
● Social: Consumers may expect more from sustainability efforts following DowDupont’s major merger
since they care about the environment tremendously.
● Economic: External shareholders or activist investors play an increasingly stronger role in shaping
post-merger businesses. For example, Third Point, one of DowDupont’s investors, already sought to
split DowDupont Holdings into six smaller companies, and you negotiated for three, “with a transfer of
products representing approximately US$8 billion of revenues from the materials products business
into the specialty products business” (Deloitte, 2018). Other similar demands can arise, and can
result in major reallocations of sustainability resources.

I. Research on stakeholders’ post-merger expectations regarding
sustainability
B. Solutions and Recommendations: Conduct thorough market research
According to Kato and Schoenberg (2013), “a more complete understanding of what determines
acquisition performance is only likely to come when the impact on all salient stakeholders is
considered,” which calls for thorough reassessment of stakeholders demand and expectations post-
merger.
Page 8
Before searching for new ideas and innovations for more sustainable
production, DowDupont should conduct market research to capture any
changes in the internal and external factors affecting the merged entity.
You could use primary and secondary sources for your research. After you
got the information and data from your research, you can bring in their
internal team to discuss your plans and strategies regarding to post-merger
expectations.
Furthermore, the results of these research projects can help DowDupont be
proactive when facing new demand from external stakeholders.

I. Research on consumers’ post-merger expectations regarding
sustainability
C. Implementations
DowDupont should first reassemble a list of stakeholders, and rank them in terms of their power and
influences on DowDupont’s business. Before ranking, it’s essential to highlight which stakeholders are the
same between the two companies, and which previously only belong to one.
Secondary exploratory research based on case studies of stakeholders’ reactions to previous mergers and
acquisitions (M&A) efforts should be conducted to formulate hypotheses potential reaction to the merger.
Page 9
Primary research (such as interviews, focus groups, surveys) should be
conducted to the most powerful stakeholders so DowDupont can confirm or
reject the hypotheses, and have a clearer, more direct view of the changes (if
exist) in stakeholders’ expectations post-merger. For customers alone, this
can also be a great attempt to reach out to them and reassure them of the
quality and number of choices they still have, despite the merger; and prevent
them from switching to competitors. These are problems identified by BCG
(BCG, 2018).
Note: Not to fall under confirmation bias is of quintessential importance. It’s
very easy to form a hypothesis that nothing changes, then design the
research to prove exact that. A fair research design will not only yield useful
results that help DowDupont find its long term direction, but also prevent
future passive responses to problems that could have been anticipated.

While knowledge sharing is highly desired for effective integration (Faulkner et. al, 2012), the merger
makes information sharing between two organizations harder due to “the lack of shared context and
mutual knowledge” (Heo and Yoo, 2002). This is one of DowDupont’s post-merger weaknesses and since
it is still in the beginning phase of of the merger which added problems to their post-merger efforts.
Page 10II. Develop strategies to retain talents and manage
knowledge
A. Problems and Impacts
Challenges facing the chemical industry include managing toxic wastes and high
carbon footprint, as well as the need to sustain local jobs and conserve natural
resources such as soil and water (Porter et. al, 2017). Having higher expenses than
competitors (Appendix 2) means DowDupont must soon create the synergies from
shared resources.
Furthermore, two research teams from two companies come from two different cultures
that will need time to assimilate and collaborate smoothly. Both teams are competent,
and their tremendous land and capital resources for research and development are a
few of their strengths (Appendix 2), but if they cannot work together, DowDupont will not
be able to mitigate its existing weakness: having high expense.
“During a merger, a company risks losing key personnel,” according to BCG report on
Post Merger Integration, since the uncertainties following the merger make employees
question their future at the company (BCG, 2018). Success in sustainability efforts
depend on a good team of researchers and product developers, whose skills are
transferable to competing companies and other industries. Hence, it is more difficult and
important to keep these imperative and specialist talents in the new merged entity. This

II. Develop strategies to retain talents and manage
knowledge
B. Solutions and recommendations
For information sharing, DowDupont should allow information and research
data to be shared between research teams from both companies. This step is
the process of sharing knowledge on how that will advance current research
and allow allocation of resources between two companies that will eventually
improve efficiency and reduce cost (Jen-te, 2007).
Page 11
Culture assimilations between the teams can start fostering an understanding the
differences in cultures, then figuring out the desired culture (BCG, 2018). Dow and Dupont
both had very high expenses compared to competitors before the merger (Marketline,
2017). DowDupont needs the economies of scales to reduce cost. Having different teams
working on similar tasks concurrently can be highly inefficient and counteract the
economies of scales to be grasped from the merger to reduce cost (BCG, 2018). Culture
assimilation efforts are also communication initiatives that assure employees of the
fairness and transparency of the merger.
To retain talent, financial bonuses can be employed to “align employees with the
goals of the PMI” (BCG, 2018). Tying the bonuses to a performance metrics can
motivate employees and create a clearer picture of the “future in the company” that
they want to see.

II. Develop strategies to retain talents and manage knowledge
C. Implementations
Information Management:
Information systems should be reorganized to facilitate sharing of information across departments from
both companies. All researchers and employees should read about the other teams’ sustainability efforts
and related research to get a profound understanding of each other “strategies and plans.”
Note: avoid assuming that some information is common sense or taken for granted (Jen-te, 2007).
Page 12
Culture Assimilation:
First, norms, values, and culture artifacts should be communicated
clearly between the teams. The teams then identify the differences in
their cultures and prioritize which ones are relevant to the new culture
of DowDupont as a whole. Everyone must agree to these new values.
Talent Retention:
Communicate with researchers and sustainability efforts employees to
figure out what they need. Formulate a bonus strategy for these
employees based on their needs and concerns.

Conclusions
DowDupont currently has two sets of sustainability goals: Dow’s 2025 Sustainability Goals and
Dupont’s 2020 Sustainability Goals, addressing different areas. As the two companies merge into
one Holding, having separate sets of goals based on their previous names does not highlight the
desired and promised post-merger synergies. To find out the right way to formulate new
sustainability goals, DowDupont needs to reconcile three forces: the overall end goal or desired
synergy obtained from the merger*; what stakeholders want from the merger, how their reactions
change and the implications of these changes on their expectations; and what information,
knowledge and resources are now available to both companies, and their research, development
and production potentials.
The company can do so by simultaneously research the changes in stakeholders’ expectations,
and take steps to retain talents and facilitate information and knowledge sharing. By doing so,
DowDupont will have a higher chance of reaping the benefits of the merger, such as economies of
scales, shared resources and cost reductions, etc., while mitigating the effects of culture clash and
unforeseen changes in stakeholders’ expectations.
Page 13

Conclusions
For strategy implementation, both primary and secondary market research should be conducted to
understand the market demand and anticipate changes in stakeholders’ expectations.
Concurrently, pre-merger Dow and Dupont should speed up the process of knowledge and
resource sharing to optimize research capacity and cultivate culture assimilation between
research team from both companies. Plans to provide financial incentives for employees should
be formulated to retain the best talents in time of post-merger uncertainty.
These strategies help DowDupont develop sustainability goals that align with stakeholders’
demand and expectations, while reducing expenses and build better research teams for future
sustainable innovations.
Page 14

Appendix 1 : PESTEL Analysis (focusing on
sustainability)
Political
● Different environmental protection policies
between countries.
● Changes in expectations post-merger.
● Will get involved if not adhere to the
environmental regulations.
Economic
● Price fluctuations in oil and other raw
materials.
● Low demand, stagnant growth.
● Stakeholders will have a say in the new
sustainability efforts.
Social
● The public will expect greener products from
this merger
● Want to purchase products from
environmental conscious companies
Technological
● Advancement in technology for specialties
and materials.
● Could help with their sustainability efforts
in the production processes.
Ecological
● Productions processes cause high carbon
footprint and toxic waste.
● Chemical production uses high energy and
natural gas consumptions.
Legal
● Different and complicated legal processes
and requirements between countries.
● Will get sued if not abided by the
environmental standards and expectations
Page 15

Appendix 2 : Industry Growth
This figure shows the
increasing trend in global
chemical market values
from 2013 to 2017.
However, during the
period, the Asia-Pacific
has grown by 5.5% while
the US market has grown
by only 0.8%. The global
market is expected to
maintain the momentum
in the next five years, but
that’s thanks to the
growth in Asia-Pacific
offsetting the slow growth
in the US market.
Page 16

Appendix 3: SWOT Analysis
Strengths
● Large scale production lowers cost,
allowing more resources for
sustainability
● Excellent research teams experienced
in multiple areas
● Two companies’ resources and efforts
Weaknesses
● Dow and Dupont are pursuing separated
sustainability goals
● Employees are uncertain about their future
● Very high expenses compared to competitors
● Cultural clashes between two companies post-
merger
Opportunities
● Increasing in demand in Asia
● Ample supply of natural resources for
U.S. based companies
● A chance to build a purposeful brand
to attract and retain customers’ loyalty
Threats
● Decreasing global demand for commodity
chemicals
● Increasing influences from external
shareholders
● Higher expectations post-merger regarding
reduction of energy needs, improvement of
process efficiency, compliance with
environmental regulations, and repurposing of
existing products.
Page 17

Appendix 4: Financial information - compare with competitors
Page 18

Appendix 5: Financial information - compare with competitors
As shown in this figure,
DowDupont is not found in the top
ten highest income, but it is found
on the top ten highest revenue
(previous slide). This shows that
the company has higher expense
than competitors.
Page 19

Citations:
BCG (2018). BCG on Poste-Merger Integration. Slideshare. Retrieved in April 29th 2018 from: https://www.slideshare.net/TheBostonConsultingGroup/bcg-on-
pmi-a-handbook-for-senior-executives
Deloitte (2018). 2018 Global Chemistry Industry Mergers and Acquisitions Outlook. Deloitte. Retrieved in April 29th 2018 from:
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Manufacturing/gx-global-chemical-report-2018.pdf
Faulkner David, Teerikangas Satu, and Joseph J. Richard. (2012). The Handbook of Mergers and Acquisitions. Oxford Scholarship Online. Retrieved in April
29th 2018 from: http://www.oxfordscholarship.com/view/10.1093/acprof:oso/9780199601462.001.0001/acprof-9780199601462-chapter-18?print=pdf
Follette Clint, Jung Udo, Kharisov Ilshat, Felde zum Meyer Alexander, and Rubel Holger (2017). Making a Business Case for Sustainability in Chemicals. BCG.
Retrieved in April 29th 2018 from: https://www.bcg.com/publications/2017/making-business-case-sustainability-chemicals.aspx
Heo Dongcheol and Yoo Youngjin (2002). "Knowledge Sharing in Post Merger Integration," Case Western Reserve University, USA . Sprouts: Working Papers
on Information Systems, 2(18). Retrieved in April 29th 2018 from: http://sprouts.aisnet.org/2-18
Jen‐te Yang, (2007) "The impact of knowledge sharing on organizational learning and effectiveness", Journal of Knowledge Management, Vol. 11 Issue: 2,
pp.83-90, Retrieved in April 29th 2018 from: https://doi.org/10.1108/13673270710738933
Kato, Junichi and Schoenberg Richard (2014). The Impact of Post-Merger Integration on the Customer-Supplier Relationship. Industrial Marketing Management.
Volume 43, Issue 2: 335-345. Retrieved in April 29th 2018 from: https://www.sciencedirect.com/science/article/pii/S0019850113001910
Jen‐te Yang, (2007) "The impact of knowledge sharing on organizational learning and effectiveness", Journal of Knowledge Management, Vol. 11 Issue: 2,
pp.83-90, Retrieved in April 29th 2018 from: https://doi.org/10.1108/13673270710738933
MarketLine. (2017). MarketLine Industry Profile Global Chemicals. MarketLine. Retrieved March 19 2018.
Porter, Kramer, and Lobb. (2017). Dow: Breakthroughs to World Challenges. Harvard Business School. 9-715-403.
Sarathy, Morawietz, Gotpagar, and Bebiak. (2017). 2017 Chemicals Trends. Strategy& PwC. Retrieved in April 20th 2018.
https://www.strategyand.pwc.com/trend/2017-chemicals-industry-trends
The Dow Chemical Company. (2018). 2025 Sustainability Goals: Delivering Breakthrough Innovations. Dow. Retrieved March 19 2018.
https://www.dow.com/en-us/science-and-sustainability/2025-sustainability-goals/delivering-breakthrough-innovations
The Dow Chemical Company. (2018). Dow open to collaborative approaches to meet global sustainability challenges. Dow. Retrieved March 19 2018.
https://www.dow.com/en-us/science-and-sustainability/dow-open-to-collaborative-approaches-to-meet-global-sustainability-challenges
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