The paper 'Monsanto’ s Dramatic Restructuring' is a perfect example of a management assignment. Monsanto underwent dramatic restructuring between 1996 and 1997 to redefine itself in two ways. First, it aimed to establish itself as a leader in segments of the life sciences field in a range of areas including agricultural biotechnology. The company also aimed to establish a global strategy, rather than one dominated by the US market – what the writers call transformational management. The company’ s CEO Robert Shapiro noted that in recent years, the needs of the chemical and life sciences had become quite different, and it was in the best interests of the customers, employees, and shareholders that the company took appropriate steps to allow the business to reach its maximum potential.
The company weighed several options, including separation into two public companies, one that would focus on life sciences while the other focused on chemicals. There was also a possibility of combining the chemical businesses with one another or with other companies or keeping the chemical businesses and restructuring them. The management thus analyzed how the Life Sciences and Chemicals segments of the company differed and how each was able to address the needs of their markets and customers.
It was suggested that the Life Sciences segment would identify unmet needs, brand their products for the consumer market, set prices for their goods to capture value, have a new product launch and cycle management, and redefine or invent their distribution channels. On the other hand, the chemicals segment would focus on predicting and meeting customer specifications, setting prices to manage share and assets utilization, and managing the cost of doing business. Monsanto’ s purpose was reinforced by several acquisitions including that of DeKalb Genetics Corp in March 1996 and the Agracetus Division of W. R.
Grace & Co in April 1996. Monsanto also fully acquired Calgene in May 1997 so as to build its technology base and set the pace for future growth. Monsanto’ s transformational management strategy was premised on remaking the firm into a set of activities that could be manageable by way of fitting in a coherent whole, but which could predict the future market and technological situations in the core business.
The company noted that there were significant changes in the fields of agricultural chemicals, food ingredients, and pharmaceuticals, and hence, there was a need to transform it to be able to meet the changing needs of the market. The initial step was to define a new competitive environment in which the company was going to operate. By using the life sciences model, the company realized that products and services are based on research in genetics and applied to areas of human and animal health and feeding. Thus, by defining the kind of operating environment in which it would be, Monsanto was able to exclude from its core activities the commodity chemical segments that had been its mainstay in the past. Having defined its future, the company was able to position itself to enjoy maximum advantage from that future.
For instance, the management realized that by producing seeds that were herbicide-resistant, the company reduced the need for chemicals; and by genetically engineered seeds, the need for fungicides was reduced. Most importantly, Monsanto understood the need to make its customers and potential customers to believe in the same view of the changing world, and thus to introduce products and services that would meet their future needs.
Hence, by having an overview of what the market would need in the future, Monsanto was able to prepare itself by having the appropriate technologies and products; and its customers by progressively making them understand these changes.
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Grosse, R. & Shamsi, A. (1997). ‘Global strategy in the life sciences: Monsanto Corporation.’ The American Graduate School of International Management.
Grosse, R. E. (ed) (2000). Thunderbird on Global Business Strategy. New York: John Wiley and Sons.