Transforming Business Models: Dow Corning's Strategic Shift PPT

This PPT slide, part of the 30-slide Business Model Innovation PowerPoint presentation, presents a case study of Dow Corning, illustrating how the company adapted its business model to target low-end customers through a distinct business unit. This strategic shift allowed Dow Corning to explore new market opportunities without undermining its traditional high-margin offerings.

On the left side, the established business model is outlined. It highlights a customer value proposition focused on customized solutions and negotiated contracts, which cater to a more premium clientele. The profit formula relies on high-margin, high-overhead retail prices that support value-added services. Key resources and processes emphasize R&D, sales, and service orientation, indicating a complex operational structure designed for high-touch customer interactions.

Conversely, the right side details the new business unit designed for low-end customers. This model is characterized by a simplified value proposition, offering no-frills, bulk pricing sold directly through the internet. The profit formula shifts to spot-market pricing with lower overhead, enabling the company to maintain profitability despite reduced margins. The focus on high throughput indicates a streamlined operation aimed at efficiency. Key resources and processes are adapted to include an IT system that emphasizes low-cost processes and maximum automation, showcasing a significant departure from the established model.

This analysis reveals how Dow Corning successfully navigated market segmentation by creating a separate unit that meets the needs of a different customer base while preserving its core business. The insights gained from this case can guide other organizations in exploring innovative strategies for growth without compromising existing revenue streams.

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