Case | HBS Case Collection | February 1984 (Revised February 1986)

E.I. du Pont de Nemours & Co.: Titanium Dioxide

by W. Carl Kester, Robert R. Glauber, David W. Mullins Jr. and Stacy S. Dick

Abstract

Disequilibrium in the $350 million TiO2 market has prompted Du Pont's Pigments Department to develop two strategies for competing in this market in the future. The growth strategy has a smaller internal rate of return than the alternative strategy due to large capital outlays in early years and positive cash flows arising only in later years. However, it is the more valuable project on a net present value basis for all discount rates less than 21%. Students are faced with the task of converting strategic plans and objectives into free cash flow projections and determining a breakeven discount rate between these mutually exclusive projects. A decision about which strategy to pursue must then be made. Rewritten version of an earlier case by the same author.

Keywords: Forecasting and Prediction; Cash Flow; Investment Return; Growth and Development Strategy; Strategic Planning; Projects; Chemical Industry;

Citation:

Kester, W. Carl, Robert R. Glauber, David W. Mullins Jr., and Stacy S. Dick. "E.I. du Pont de Nemours & Co.: Titanium Dioxide." Harvard Business School Case 284-066, February 1984. (Revised February 1986.)