E.I.Du Pont de Nemours and Company.pptVIP

Case Study E.I. Du Pont de Nemours and Company Student name:_ _______________ Brief of Background of Du Pont Company List several things related to the background of Du Pont. 1. Du Pont was founded in 1802. 2. By 1900,Du Pont had begun to expand rapidly through research and acquisition. 3. A technological leader in chemicals and fibers, the firm grew to be the largest U.S. chemical manufacturer. 4. At the end of 1980 the firm ranked fifteenth on the Fortune 500 list of U.S. industrials. 5.Du Pont had been well known for its policy of extreme financial conservatism. 6.Du Pont’s high level of profitability allowed it to finance its needs through internally generated funds. Main Problem Difficulty in the 1970s led Du Pont to abandon traditional capital structure policy. What were the major factors of difficulty to intensify the pressure on the Due Ponts capital structure policy? Three factors combined to intensify the pressure on Du Pont’s financing policy in the mid 1970s. Firstly, the escalation of inflation ballooned the cost of the program to more than 50% over budget by 1974. Secondly, the rapid increase in oil prices in 1973 pushed up Du Pont’s feedstock costs and in creased required inventory investment while oil shortages disrupted production. Finally, the recession in1975 had a dramatic impact on Du Pont’s fiber business. Main Problem Over the past 20 years, Du Pont became the largest chemical manufacturer in US. Its high level of profitability enough to finance its needs of funds. What was the main problem encountered by Du Pont to abandon long-held policy of all equity capital? Difficulties in the 1970s and the mega-merger with Conoco, had led the company to abandon its long-held policy of an all equity capital. Main Problem Difficulty in the 1970s led Du Pont to abandon traditional capital structure policy. Du Pont responded to the financing shortage by cutting dividend and slashing