DOW CHEMICAL: The Business Case for Internet Telephony

1. DOW CHEMICAL: The Business Case for Internet Telephony Presented by Group 2: Eric Gosselin Muhammad Zeeshan Ali Charlotte Prévost Ashley Elinburg Luke Duffner Ryan Boyd Dirk Lange

2. DOW CHEMICAL CEO William S. Stavropoulos, Dow Chairman of the Board and CEO, named in 1995. Eric

3. MAIN COMPETITORS

4. HISTORY • 1897: The Dow Chemical Company incorporates with Albert E. Convers as president • 1900: Midland Chemical Company merges into Dow Chemical • 1918: Herbert H. Dow named president of Dow. The company adopts its diamond trademark • 1937: The Dow Chemical Company stock is listed for the first time on the New York Stock Exchange, June 26

5. HISTORY (cont) • 1993: Fortune magazine names Dow one of America's "Top 10 environmental champions”. • 1999: Dow and Union Carbide Corporation merged. From now on Union Carbide will become a subsidiary through a tax-free, stock-for-stock transaction valued at $11.6 billion. On a consolidated basis, Dow Chemical will then be the world's 2nd largest chemical company overall, ranking number 50 on the Fortune 500. • 2002: President George W. Bush honours The Dow Chemical Company with the National Medal of Technology "for the vision to create great science and innovative technology in the chemical industry and the positive impact that commercialization of this technology has had on society."

6. Dow Chemical: Background • Annual sales of $33 billion in 2003 (+18%) • Present in 180 countries • Approximately 46,000 employees Charlotte

7. Dow Chemical Products: Dow is a leader in science and technology, providing innovative chemical, plastic and agricultural products and services to many essential consumer markets. • Dow segment is: • Performance plastics (Dow Automotive, Engineering Plastics,…) • Performance chemicals (Emulsion Polymers, Industrial Chemicals, Oxide Derivatives,…) • Agricultural Sciences (Dow AgroSciences LLC) • Plastics (Polyethylene,Polypropylene,Polystyrene) • Chemicals (Core Chemicals, Ethylene Oxide/Ethylene Glycol) • Hydrocarbons and Energy (Hydrocarbons and Energy) • … (New Businesses)

8. Dow Chemical: it is also…

10. Dow Chemical: Financial Ratios in 2002

11. Dow Chemical: Financial Results in 2003 • 2003 sales increased to $32.6 billion, up 18 percent compared with 2002 sales. • A 33 percent increase in feedstock and energy costs in 2003, compared with 2002. • Net income rose to $1.7 billion, compared with a loss of $338 million a year ago. • Dow reported earnings of $1.87 per share, compared with a loss of $0.37 per share a year ago.

12. Case Background • Building a 50,000-user integrated IP voice/data network • Pioneering Commitment to Technology • Overhauling Global Network • Utilizing IP Telephony Luke

13. Case Background • IP installations are scarce in the U.S. bring new users from acquired companies into Dow’s new work process with IP-Technology • IP-based multimedia applications • Example: regional web-based call centers improve customer service • Running unified messaging provide productivity gains of about 25 minutes per user per day • Lower costs through bypassing the public telephone networks • Upgrading or changing standard IP systems is much easier and cheaper than with PBX systems • Disadvantages of the new IP technology: guarantee applications performance when voice and data coexist + echo in the line Dirk

14. Question 1 Why have companies been reluctant to rely on Internet Telephony instead of traditional telephone systems for business use? • Companies have been reluctant to invest in IP telephony as they have concerns about the ability of IP phones to simultaneously work with voice and data transfer as both of them have different network requirements. • Companies are scared of the transfer cost from one technology to other. Muhammad

15. Question 2 Do the potential business benefits support Dow Chemical’s decision to implement a new global VOIP network? Why or why not? • Dow’s decision to implement a new global VOIP network is definitely supported by the potential benefits that such a system offers to this company. • Existing telephone systems – out of date • Supports Dow’s acquisition strategy • Improved customer satisfaction • Resulted in productivity gains • Offers improvement in the area of employee relations • Cost savings Ashley

16. Visit the website of Equant at www.equant.com and view their VPN and IP telephony news and services. Would you recommend that more companies implement IP telephony services? Explain your answer. Question 3 Yes, I would recommend that more companies implement IP technology and services. Looking at Equant VPN and IP telephony news and services, we notice that it provides: • High performance at speeds of 155 Mbps - backed by service level commitments • Five classes of service to accommodate all types of applications • Multimedia capabilities for both on-net and off-net voice and video-over-IP Ryan

17. More over, let’s point out the fact that with IP Telephony, companies can: • Lower their costs by converging communications on a single connection • Rely on expertise to migrate to IP telephony in a way that makes business sense • Outsource their entire IP telephony system from planning to implementation and management, so they can stay focused on their core business • Adopt an IP telephony architecture to suit their business situation • Install, maintain and monitor IP telephony equipment internationally Therefore, companies like Dow should consider changing to IP telephony services. Otherwise their competitors will decide to change and the company who chooses not to will be left behind.