Business Strategies for Monsanto Company - Case Study Example

Monsanto: Dicamba, Glufosinate and Glyphosate –Tolerant Corn Name Course Name and Code Instructor’s Name Date Executive Summary Research and development is an important requirement in numerous fields including biotechnology organisations. Monsanto Company is such an organisation and has been in operation for more than 100 years. The company started with dealing in plastics but later started producing biotechnology products. Some of these products include DDT and Agent Orange. The research and development with the organisation is commendable because the company is first in many fronts in introducing and patenting their products. One such product, which is on the pipeline, is Tolerant Corn that has numerous chemicals that includes Dicamba, Glufosinate and Glyphosate, and is aimed at preventing challenges associated with weeds. The product is still been developed and has not yet been commercialised. The operations and management strategies employed by the organisation are appropriate and have sustained the operations within the organisation. Some of the corrective measures include addressing the royalty issues and collaborating with more industry players in ensuring they access more market. Table of Contents Executive Summary 2 Table of Contents 3 Introduction 4 Company Information: History, Product, Growth 5 Research and Development 6 Product Development 7 Funding 7 Marketing Strategies 8 Business Strategies/Leadership 9 Intellectual Property Strategies 10 Strategic Recommendations/Action Plans 11 Conclusion 12 References 12 Introduction Biotechnology is the process of using organisms to improve qualities of a plant; this includes the ability to protect itself against damage or just improve its ability to grow and produce (Trigiano & Gray, 2011). Biotechnology is also referred to as genetic engineering. In this regard, plant biotechnology enables the transfer of a greater or a better variety of genetic information through an accurate, precise and controlled manner (Mohapatra, 2011). For instance, it allows the transfer of one or a few genes, which introduce new traits such, improved insect and weed control. Monsanto Company use biotechnology as one of the components in coming up with seeds that can deliver increased yields sustainability (Monsanto Company, 2013). After discovering that famers are faced with numerous challenges with regard to crop farming, Monsanto has continuously developed advanced products using biotechnology. The company has exciting biotechnology traits from the second and third generation agronomic insect and weeds control traits technologies to new yield and stress traits. Similarly, the company has positioned itself to come up with innovations in biotechnology that are aimed at creating value for famers (Trigiano & Gray, 2011). Higher yielding corn product is one of the products that the company has developed to show its commitment to offer famers seeds and trait characteristics that increase productivity as well as conserving water, land and nitrogen resources. This report provides an inherent research into the company’s R&D activities, product development processes, marketing strategies, and the intellectual property strategies that the company uses. Company Information: History, Product, Growth John Queeny established Monsanto Company in 1901 and the original main products were plastic in nature (Monsanto Company, 2013). The company, which currently is trade in United States, is a multinational agricultural biotechnology. The headquarters of the organisation is in Creve Coeur, Missouri. Some current products include herbicide glyphosate and genetically engineered seeds. Some of the accomplishments but the company includes mass production of light emitting diodes and breakthrough on catalytic asymmetric hydrogenation. Monsanto Company also manufactured some controversial products such as Agent Orange, PCBs, DDT and recombinant bovine somatotropin (Trigiano & Gray, 2011). Monsanto Company bas been a major player in modifying products but the original company diversified most of its products through spin-offs and mergers and the company focused on biotechnology (Robbins & Huzair, 2011). Monsanto Company utilised a biotechnology industry business model into the agricultural industry utilising the techniques that were developed by Genentech and other drug companies. The strategy is based on investments on research and development with the aim of recouping the expenses through enforcing the biological patents (Monsanto Company, 2013). In the 1980s, this strategy faced numerous conflicts against the customary practices whereby farmers reused, saved and developed plant varieties. The approach in which Monsanto Company commercialises its products has been seen as biopiracy; biopiracy is utilisation of advance companies of indigenous methods to gain revenues (Chandra, Lata & Varma, 2012). Research and Development Monsanto’s research and development activities for biotechnology pipeline products are aimed at delivering innovations that meet the needs of farmers in a sustainable way. The 2013 Research and Development Pipeline has a singular objective of focusing on delivering innovative and sustainable products to farmers around the globe which will help in improving their yields as well reduce their cost of production by using fewer inputs (Monsanto Company, 2013). The pipeline initiative spans across various crops and technology in different phases of development. Evolution is an unending process and hence as farmers strive to evolve their farming activities so does the research and development of pipeline. Currently, the company has discovered that the farmers face various challenges like weed control, yield improvement and cutting on the costs of inputs; with regard to this Monsanto is focused on delivering systems of products that work together in complementary way to address the mentioned challenges (Halford, 2006). Significantly important, the company has come up with viable solutions to weed management, crop stress resistance traits, together with integrated farming systems and agricultural biological. The expanded R&D platform has enabled the company to deliver various solutions to farmers thus helping them combat the farming challenges they are faced with while at the same time maximize on their yields. The company has developed numerous solutions to the marketplace to protect and enhance yield potential for corn, cotton, soybean, canola, sugarbeet, alfalfa, and vegetables. The current pipeline solutions have given Monsanto confidence in their ability to produce continuously sustainable and reliable innovations that satisfies the needs of their customers across the world. Product Development Dicamba, Glufosinate and Glyphosate – Tolerant Corn is designed to build on the Round Ready Xtend Crop technology that provides farmers with extra herbicide – tolerance options (Monsanto Company, 2013). This product contains multiple herbicide tolerance traits thus enabling the use of different herbicides with different nodes of action while at the same time expanding the farmer’s options to protect the crop from weed infestations. The development of these crops is one of the significant improvements in weed management innovations in the history of agriculture. It comes with extended advantages to the farmers including: cost saving, broad-spectrum efficacy, crop safety, and ease of use. This technology is employed by the company to protect the plant against insects and weeds, which significantly decrease the crop’s productivity. The Roundup Ready Xtend Crop System is an important initiative that is aimed at managing weeds (Monsanto Company, 2013). The aim of this product to addresses concerns associated to tough weeds and the technology can accomplish this requirement through utilisation of residual herbicides on the seed. The product would cost lower in cultivation leading to income output for the farmers. Funding Funding and financial requirements are the most important requirements for a successful research and development institution. Research and development requires huge investments and it is paramount for any organisation to determine how the investments could be recouped. Regarding Monsanto Company, the company has large presences and its numerous patents accounts to more than 70% of corn seeds in America and presence in numerous countries across the world (Monsanto Company, 2013). These developed products are registered as patented productions and the company can recoup its investments through receiving payments on the utilisation of the patents (Trigiano & Gray, 2011). The royalties received through the process funds the operations and future research and development of the organisation. Likewise, the company has numerous distribution channels and numerous products and selling of these products creates revenues that are then reinvested into the company. These numerous avenues of incomes sustains the Monsanto Company research and development sector and hence the huge presence in numerous countries. Marketing Strategies Marketing is an important requirement for a successful organisation. Monsanto Company like any other organisation understands the requirements of engaging the farmers to purchase their products (Trigiano & Gray, 2011). The marketing strategies are premised on marketing mix in ensuring more consumers and repeat consumers are encouraged to access the products. Monsanto Company’s marketing mix components include: Product – Monsanto Company products are applicable to numerous environments and address numerous problems. It is easier for a farmer to purchase a product through the numerous distributions channels that are available. The company has developed the products through analysis environmental requirements and determining approaches of fulfilling the desires and requirements of consumers. Price – Pricing is important and the pricing strategy takes two forms. The first approach is actual purchase of the seeds while the second selling strategy is receiving royalties from those farmers who reuse the seeds. The pricing strategy is based on mark up and therefore numerous farmers can easily purchase the products. Promotion – Numerous methods are utilised to inform the consumers on the products and services of the company. Outreach programs, demonstrations and media strategies have been utilised in attracting more farmers to purchase the products. Place – The seeds can be purchased easily from the numerous distribution channels that include agricultural extension offices and stores that are strategically located in regions whereby the products are sold. Business Strategies/Leadership For any successful company, leadership plays an important and crucial role. The management and leadership employed at Monsanto Company focuses on delivering products that increase the yields and reduces risks to the farmers. In addition, the leadership measures, the strong financial position and research and development pipeline plays an important role in championing operations at the company. Some of the areas that Monsanto Company has considered include: Maximisation of organisation seed footprint – Monsanto Company’s investment on traits and seeds has resulted in creation of high-value growth opportunities across its product offerings. Numerous biotechnology companies have embraced the high performing and high yielding seeds illustrating the penetration of their research and development capabilities. Strong research and development pipeline – the R&D capabilities has resulted in frequent introduction of products that addresses challenges that are faced by farmers (Altman & Hasegawa, 2012). This developed has increased the rate at which Monsanto Company’s products are purchased and distributed to meet the global requirements. Reinvestment strategies – Monsanto Company has continuously reinvested its proceeds for future growth and distributed dividends to the shareholders. These two approaches are important because the farmers are satisfied with the products while the shareholders benefits from their investments and hence a win-win situation for the involved parties. Intellectual Property Strategies Monsanto Company products are commercialized in accordance with ETS Product Launch Stewardship Guidance and in compliance with Monsanto’s Policy for commercialization of Biotechnology – Derived Plant Products in Commodity Crops (Monsanto Company, 2013). When the product is approved for import into export markets, these markets must have a functioning regulatory system (Freedman, 2008). Accordingly, any crop or material that is produced from this product is only exported to, used, processed or sold in countries where all necessary regulatory approvals have been granted. For this matter, it is a violation of national and international law to export materials containing biotech traits to countries where imports are not permitted. In this regard, farmers are advised to communicate with their grain handlers or product to confirm their purchasing position for the product. Excellence Through Stewardship is a registered trademark of Biotechnology Industry Organization. The commercialization of this product is dependent on many factors including the success conclusion of the regulatory process. However, there have been numerous concerns on the way Monsanto Company employs its intellectual property (Gregersen, 2008). Monsanto Company has demanding royalties from farmers who utilise their products when they want to replant them. The royalties are estimated to be 2% of the value of the seeds to be planted. In addition, Monsanto Company requires authorities to collect this revenue on their behalf but many farmers have complained because of either cost that is beyond the seeds manufacturer (Altman & Hasegawa, 2012). For example, a farmer needs labour to fulfil cultivation processes and employing this tactic would be seen as paying double to a product that had originally been bought. In addition, Monsanto Company maximises on indigenous and customary methods in pressuring the farmers to double pay for a product. Strategic Recommendations/Action Plans The operations within Monsanto Company and their research and development sector are commendable but there are measures to be incorporated to ensure the business continues to operate profitably. Some of the recommendations include: Address the issue of 2% royalty requirements because it champions biopiracy and can affect the business model of the organisation Create products and services that are general and applicable to specific location with the aim of increasing their sells and R&D requirements. Enter into collaboration and partnership with different organisations across the world with the aim of increasing their distribution capabilities. Conclusion Monsanto Company has been in business for a long term starting with plastics later on pursuing biotechnology development. The company has continued reporting positive financial outcomes, research and development capabilities. The Tolerant Corn based on Dicamba, Glufosinate and Glyphosate chemicals is promising and could address the challenges associated with weeds. In addition, the management strategies employed by the organisation are commendable but it would achieve more revenues if the organisation collaborated with other organisations, addresses their patent requirements and ensuring products are developed that fulfils general farming requirements. References Altman, A., & Hasegawa, P. (2012). Plant biotechnology and agriculture: Prospects for the 21st Century. London: Academic Press Chandra, S., Lata, H., & Varma, A. (2012). Biotechnology for medicinal plants: Micropropagation and improvement. New York: Springer Freedman, T. (2008). Career opportunities in biotechnology and drug development. New York: CSHL Press Gregersen, J. (2008). Research and development of vaccines and pharmaceuticals from biotechnology. London: John Wiley & Sons Halford, N. (2006). Plant biotechnology: Current and future applications of genetically modified crops. New York: John Wiley & Sons Mohapatra, S. (2011). Case studies in strategic management: A practical approach. Jakarta: Pearson Education India Monsanto Company. (2013). Home. Available at http://www.monsanto.com/Pages/default.aspx Robbins, P., & Huzair, F. (2011). Exploring Central and Eastern Europe‚Äôs Biotechnology Landscape. Washington, DC: Springer Trigiano, R., & Gray, D. (2011). Plant tissue culture, development, and biotechnology. New York: CRC Press Read More