The founder of Dow Chemical sold bromine in the US for 36 cents per pound. Â Elsewhere in the world a German cartel sold it at 49 cents per pound, but there was an understanding that Dow would remain US-only while the cartel stayed out of the US.
Well, Dow was in financial trouble so he ended up taking his product overseas and easily beat the German cartels price. Â Eventually, in retaliation, the Germans came to the US with a super low price of 15 cents per pound.
Dow's response? Â He secretly bought the Germans product in the US, shipped it overseas, and sold it in the Germans backyard for 27 cents per pound…way less than what the Germans were selling it for.
The Germans couldn't figure out how come they weren't driving Dow out of business and why there was such a sudden demand for bromine in the US, so they lowered their price in the US all the way to 10 cents before they figured out what was going on!
My weekly best-of-Quora email is the best email I receive every week, and is where I got this story. Â So I tip my hat to Quora and David Fry who provided this great story.Â
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What’s the shrewdest, smartest maneuver you’ve ever seen in business?
Answer (1 of 104): Herbert Dow founded Dow Chemical in Midland, Michigan when he invented a way to produce bromine cheaply. He sold the chemical for industrial purposes all over the US for 36 cents per pound at the turn of the 20th Century. He couldn’t go overseas, however, because the internatio…
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Very smart and sneaky at the same time.
I'm sure you're aware but this kind of situation would generally be addressed by protectionary tariffs on imports of a commodity, especially in the pre-free trade era. Â Even today, these exist in the form of anti-dumping regulations even between partners or coalitions in free trade agreements, a notable example of which is bearings.
The difference today is that there are few true competitors in a global marketplace that is for the most part dominated by only a few major trading blocs and market prices are mostly determined by speculation on, not consumption of, commodities. Â That's not to say the companies themselves aren't competing on price amongst themselves, but rather that the given value is determined nearly exclusively on financial institutions' long or short holdings. Â Examples of this being played out quite recently can be seen in nearly every commodity since the late 90s (when investment banking became monetized by insurance and consumer banking).