Dow The Chemical Company
Case Study
Case Study: The Dow Chemical
Company
Corporate Profile
Chemical Products:
Agriculture and Food
Healthcare and Medical
Building and Construction
Industrial
Utilities
Water and Process Solutions
Oil and Gas
Corporate Profile
Foundation 1897
Revenue 46 billions USD (2009)
Employees 50,000
Global Presence 170 countries
Industrial Plants 34 countries
Organizational Model
Before 1990s
Geographic
Present
Global Business Units
Formal Constraints
Centralization
Dows important or strategic decision are made at
companys highest levels; procedures are developed at its
headquarter; it is formalized through written procedures
issued by top management.
Rigid structure
Corporate organizational chart is defined based in
hierarchical levels; functions are formally defined as well as
how responsibilities are reported.
Universal processes
Processes are developed, approved and formalized at
corporate level and must be strictly followed by the whole
organization.
Formal Constraints
Highly formalized procedures
Every procedure is officially described in written
documents.
Uniform technological platform
The entire corporation uses SAP which was chosen by
corporate management.
Tied control system
There is a structure dedicated to enforce corporate
procedures and processes all around.
Informal world Constraints
Strong corporate culture
As a centenary organization Dow has developed its own
culture that is transmitted to new employees in a
informal way; this culture describes/explains what
happens in the organization.
Cultural diversity
Within Dow, many different cultures are represented; they
all affect the organization in a informal way.
Language barriers
In the same way, different languages affect the way
communication occurs in the organization.
Informal Constraints
Geographic distance between field and decision center
In a global organization, centralization creates a gap between
local stakeholders and decision makers. Hence, there is no need
of any formality to create difficulties among different time
frame, different language, different, culture, different interests
in doing businesses, different currency, and so on
No local dispute resolution
Like the decision making process, local disputes between
different areas are administered by managers who are far away,
affecting their sensibility to local issues.
Poor communication
Communication noise increases when messages travel greater
organizational distances. In a centralized structure, messages
have to go up and down in the structure instead of traveling
straight to the destination. Hence communication becomes
nosier.