Genetically Modified Food and Monsanto

Topics: Genetically modified food, Strategic management, Genetic engineering Pages: 8 (2252 words) Published: October 12, 2008
Monsanto Case Study

Monsanto is a multinational world leader in the production of the herbicide glyphosate and in the manipulation of genetically modified (GM) seeds. They were a chemical company, which shifted into the new life science area developing numerous patents related to genetic techniques and GM seeds variety. The company entered in the agrobiochemical industry, which is in its growth life cycle based on continuous product improvements and replacement by superior traits. The industry is focused on chemical products used in agriculture and genetically modified crops. There are rivals in the agrobiochemical industry and during the early 2000s; government regulation, public and medical concern about the safety of genetically modified (GM) foods affected its sales and profits. Analysis of the external environment:

Economic segment
The lack of food experienced by countries and the consequent increase of their costs given the opportunity to private and public companies to invest in appropriate researches in biotechnology to mitigate food security problems and improve food quality. Mergers and acquisitions among agrobiochemical multinationals have been developed in order to improve technologies and promote researches. Global segment

The globalization of market provided opportunities for private industry to expand their sales in other countries. The major market for agrobiochemical products is USA and Europe. Developing countries such as Brazil, and India have started to increase their production acreage and to invest in biotechnological products. Political/legal segment

Intellectual properties and patents laws are important issues in the agrobiochemical industry; they consent to control all products and process. Many of the agrochemical products and genetically modified foods are influenced by policy environment and government regulations, as the Food and Drug Administration (FDA) and the European Union (EU). These limitations could provide a market opportunity for more advanced or higher value replacement products. Socio-cultural segment

Strong negative perception of consumer about safety of GM foods threatens the new technologies applied in agrochemical industries especially in Europe and USA. However there is a lack of appropriate research and tests on it. Demographic segment

High technically specialized farmers and farming communities producing cotton, soybean and canola. Technological segment
Private companies more than public companies developed new complex technologies in the area of genetic. These affected highly the traditional methods of farmers work. For firms with good innovation capabilities this represents an opportunity to target different niche market. Conclusion

New developing countries such as Brazil and India offer big opportunity for the industry. The research and development of new biotechnologies applied to the agriculture created many new lucrative possibilities to enterprises however, a negative consumer perception on GM foods, started to threat the industry profits. Analysis of Industry Environment

In the agrobiochemical industry, research and development are the main capabilities that produce a competitive advantage. This advantage is difficult to understand and to imitate. Patent laws and intellectual property enable also firms to maintain and extend their leadership. Barriers to entry for new competitors

New entrants that want to compete on the fertilizers and GM crops market must have strong financial resources to invest in order to face companies such as Monsanto. New competitors require intellectual property right and patent licenses to market their product. They can choose to obtain them through leader companies, although these are very selective and often base their decisions on economies of scale. Biotechnological products also need governmental approval to enter the market. Generally in the agrobiochemical industry there are low switching costs among products...

References: Hanson D., Dowling P.J., Hitt M.A., Ireland R.D and Hoskisson R.E (2008). Strategic Management. Competitiveness & Globalization. South-Western College
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