Genetically Modified Food and Monsanto Essay

Monsanto is a international world leader in the return of the herbicide glyphosate and in the utilization of genetically modify (GM) seeds. They were a chemical ships company, which shifted into the bran- stark naked life wisdom atomic number 18a ontogeny numerous unvarnisheds related to genetic techniques and GM seeds variety. The company entered in the agrobiochemical intentness, which is in its growth life cycle based on continuous intersection point improvements and replacement by superior traits. The effort is concentrate on chemical ingatherings used in agriculture and genetically modified crops. in that respect argon foes in the agrobiochemical manufacturing and during the early 2000s governing body mandate, universe and medical concern about the safety of genetically modified (GM) foods alter its sales and profits. abstract of the external environment Economic ingredient The need of food experienced by countries and the consequent increase of their co sts assumption the chance 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 choose been developed in found to improve technologies and promote researches. Global element The globalization of commercialize provided opportunities for private industry to expand their sales in other countries. The major grocery store for agrobiochemical products is USA and Europe. Developing countries much(prenominal) as brazil nut, and India have started to increase their production acreage and to invest in biotechnological products. governmental/legal surgical incision Intellectual properties and patents laws be 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 medicine Administration (FDA) and the European Union (EU). These limitations could provide a merchandise opportunity for more advanced or deoxyadenosine monophosphatelyer value replacement products. Socio-cultural atom knockout negative information of consumer about safety of GM foods bratens the bracing technologies applied in agrochemical industries especially in Europe and USA. until now in that respect is a lack of appropriate research and tests on it.Demographic segment gamey technically specialized farmers and farming communities producing cotton, soybean and houseola. Technological segment Private companies more than public companies developed new complex technologies in the area of genetic. These affected spunkyly the traditional methods of farmers work. For firms with good innovation capabilities this represents an opportunity to target different niche market. endpoint New developing countries such as Brazil and India offer big opportunity fo r the industry.The research and ripening of new biotechnologies applied to the agriculture created many new lucrative possibilities to enterprises but, 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 master(prenominal) capabilities that produce a agonistic favour. This advantage is difficult to apprehend and to simulate. unornamented laws and quick-witted home enable also firms to maintain and extend their leadership.Barriers to compliance for new competitors New entrants that want to repugn on the fertilizers and GM crops market must have untroubled financial resources to invest in order to face companies such as Monsanto. New competitors require intellectual situation right and patent licenses to market their product. They can choose to obtain them through with(predicate) and through leader companies, although these are very selectiv e and often base their decisions on economies of scale. Biotechnological products also need governmental approval to enter the market.Generally in the agrobiochemical industry in that respect are low switching costs among products however leaders such as Monsanto tent to lock in their guests with licensing fees and agreements. There are postgraduate entry barriers and this constitutes a low threat for the b jeopardy companies in the industry Bar make watering power of providers In the industry the suppliers goods are critical to buyer marketplace success. There are few major suppliers. Some of them, including Monsanto, have goodly integrated companies for the production of seed and for supply raw materials. It increased their power market.The fact that there are few major suppliers permits them to have a towering talk terms power. It constitute a high up school threat Bar piping power of buyers exceedingly specialized farmers are the predominant buyers in this industry. Th ey have a great amount of information about the manufacturers products and costs through the Internet. They have a high bargaining power especially in the pesticide sector where switching costs are low. They constitute a high threat. One-reason farmers decrease their power, though, is often the agreements signed with the companies that supplies their products.Threat of transfigure products receivable the high costs of technology, patents and government regulations there are no warlike substitute in the market. The only substitutes are the traditional pesticides and crops, which are still on the market with a percentage of 53%. They could constitute a high threat if patent and intellectual properties are banned. Rivalry among existing competitors government regulation and patents laws have a major role in this market. The high cost involved with research and development increased the rivalry among competitors for market share.High exit barriers also increase rivalry. An exiting barrier experienced by the firms is the high fixed cost of technology agreements. The degree of vertical desegregation in which the firm is involved consists a barrier as well. Conclusion In the agrobiochemical industry buyers and suppliers have high bargaining power and there are no good products substitutes. The industry is unattractive particularly because patents laws and government requirements increased the monopolies of few companies and the rivalry for market share. The industry also requires high financial resources.Competitor abridgment The main competitors in the industry are Monsanto, DuPont, Novartis and American Home Products. Monsanto is the leader in biotechnology on the marketplace. delinquent their intellectual properties and R&D capabilities Monsanto had the opportunity to gain market share and power. The benefit of being a first mover permitted them to gain the loyalty of the node. Monsantos strategical live up to often undertaken to maintain competitive advantage is decrease costs of the products cod their high margin profits. DuPont is a large company that produces a Monsantos product imitation.They however depends on Monsantos licenses to access traits. Novartis is pointed out as one of the potential rival of Monsanto and DuPont. It is a company with but has the highest capital-spending budget for research in biotechnology. Due their financial resources Novartis are more likely to launch competitive action when Monsantos license will expire. AHP introduced an alternative to Monsanto main product. Strongly center on market research they posed a significant threat to Monsanto. They invested in marketing survey and developed a quality product that better satisfy the needs of the consumers.Conclusion In the agrochemical industry the competitive rivalry among the firms is strong due the high cost involved in R&D and the slow growth of the market caused by licenses and intellectual properties. Monsanto supports its first mover po sition in the marked licensing patents to others firms. However companies such as AHP started to threaten them through competitive actions. Internal analysis of Monsanto Resources Tangible Intangible Financial resources Monsanto has the expertness to generate internal pecuniary resource They generate high profits especially from Roundups sales and GM crops.Investment and acquisitions Compliance activities Human Resources Managerial capacity especially in developing consolidation strategiesLong term visionCommunication acquisition across all level of the organisation in order to turn back talent and maximize human synergies. Physical resources Monsanto create extensive converse integration to access easily to raw materials Plant and equipments for bioengineering researchesInnovation ResourcesHigh scientific capabilities Ability to bring out Technological resources They signed license patent agreements with competitors and customers.Patents and trademarksTraining frame Reputati onal Resources pricey national and international reputation with customers smirch name linked to R&DMarketing semipermanent relation with suppliers. Good relation with governmental entities such as FDAgood will Organisational resources scattering channels To create a sustainable competitive advantage Monsanto must decoct on their capability and explore those which are rare, valuable, pricy to imitate and non substitutable.Valuable capabilities susceptibility to strengthen long-term relation with suppliers and customers might to develop new technologies in bio-engineering and plant genetic Ability to foster their intellectual propertyDistribution channel and service activities Rare to imitateCapacity to create human synergies especially after acquisition and jointure strategiesCapability to develop new technologiesAbility to protect their intellectual property Costly to imitate Capability to strengthen long-term relation with suppliers and customersCapability to develop new t echnologiesAbility to protect their intellectual propertyDistribution channel and service activities No substitutableCapability to strengthen long-term relation with suppliers and customersCapability to develop new technologiesAbility to protect their intellectual propertyDistribution channel and service activities Conclusion The ability of Monsanto to innovate due their strong research and development program and the ability to protect their intellectual property gave them a competitive advantage on the market. question and Development (R&D) and intellectual properties are core competencies that are impracticable to imitate in short and medium term. They are rare, because Monsanto possess them, and valuable. base on an analysis of the value chain however it is possible to accent that Monsanto has effective marketing and service activities, which permit to maintain a strong connection with the customers.These capabilities, if better explored could become a core competence in the next. SWOT Analysis StrengthWeakness Capability to produce high competitive productsStrong Research and Development base and quality Human ResourcesGood customer servicesAgreements Economies of scale due to acquisitions Intellectual ProprietiesPatentsStrong presence in international market and recognition as market leaderGood network with universities and laboratoriesAlliance and join venturesMissing links between chat and research Lack of market researchLack of flexibility due at vertical integration Dependence on government regulation and patents laws Opportunity ThreatExpanding to new geographic areas such as India and BrazilVertical integrationsMerge or Acquisition of rivalsOpening to explore new technologies due on their well developed R&D Patents outletNew products on the markets Adverse public opinion on GM foodsShifts in buyer needs for products Costly new governmental regulationsDifficulty in achieving synergies Strategies Business Level strategy present and ear ly day In order to gain competitive advantage and above number return Monsanto focused on differentiation strategy targeting a meeting of highly skilled and technologically well-developed farmers. Monsanto offers to their customers, quality, training and a trusted system of distribution.This strong marketing ability, the service and the high quality of the product are the key for differentiation. However, Monsantos focus on R&D caused them to miss out on market research narrowing the customer perception of products value. It created an opportunity for competitors. They should reorganize their firm theme activities and create value developing an information system to better understand customers purchasing preferences. They could outsource agencies to implement marketing surveys and focus more closely on customers needs. In the future Monsanto could apply their research to breed animals and explore new industry segments. incorporated level strategy present and future In order to gain market power and develop economies of scope, Monsanto, used a related confine diversification strategy. They create value and synergies through operational relatedness, sharing both primary and support activities of the value chain. It is underlined by backwards and forwards vertical integration that they use. Due patent expiration, vertical integration, however in the future, can constitute a threat because decrease their flexibility especially in reducing prices. In the future in order to support the dearly-won costs of R&D and explore new industry segments, Monsanto could merge with Novartis.They could create value through corporate relatedness using a related linked diversification strategy. It can produce private synergies by sharing resources and capabilities. ground on high financial resources of Novartis and Monsanto R&D they could bring improved products to market faster. New researches on GM food could be developed also to improve the negative perception of the customers. International strategy and Cooperative strategy present and future ground on their strong basis in biotechnologies Monsanto strengthen relations with governments of new developing countries such as Brazil and India, where there are radical resources but lack biotechnological research.Monsantos scope is to extent their leadership and the product life cycle in order to recoup heavy investments in R&D. Monsanto also to consolidate costs and rationalize industry capacity affianced in mergers and acquisition with other companies such as Cargill Seeds Business, which reduced their costs and their time to entry in international market.Based on the slow cycle of the market, due the high costs involved, Monsanto could engage in strategic alliance or franchises in new developing countries markets in order to hold down labor costs and compete more effectively in the global market. It permit them to share costs, resources, and risk and overcome problem of integration. Concl usionThe biotechnological products developed by Monsanto have future until they can produce an above-average return and gain economies of scale. Based on their ability to innovate Monsanto have the capacity to explore new markets and new geographical areas however, high R&D costs, negative consumer perception and patents expiration are stated to threaten their leadership position on the market.To see investments, they should focus more on consumer products demand and engage in strategic alliance that permits to increase the product life cycle and absorb the high costs of R&D. References Hanson D. , Dowling P. J. , Hitt M. A. , Ireland R. D and Hoskisson R. E (2008). Strategic Management. scrap & Globalization. South-Western College