Genetically Modified Food and Monsanto Essay

Monsanto is a multinational world attracter in the performance of the herbicide glyphosate and in the manipulation of genetic each(prenominal)y modified (GM) seeds. They were a chemical company, which shifted into the revolutionary life science argona developing many patents related to genetic techniques and GM seeds variety. The company entered in the agrobiochemical industry, which is in its produce life cycle based on continuous ware improvements and rehabilitation by superior traits. The industry is focuse on chemical products used in culture and genetically modified crops.There argon rivals in the agrobiochemical industry and during the early 2000s government command, semi world and medical concern well-nigh the safety of genetically modified (GM) foods affected its sales and profits. Analysis of the break throughside(a) purlieu Economic segment The lack of food experienced by countries and the consequent increase of their embody given the opportunity to mystical and public companies to invest in allow for seekes in biotechnology to mitigate food security problems and improve food quality.Mergers and attainments among agrobiochemical multinationals capture been substantial in tell to improve technologies and promote investigatees. Global segment The globalization of food merchandiseplace provided opportunities for private industry to expand their sales in other countries. The major(ip) market for agrobiochemical products is USA and Europe. Developing countries such as brazil-nut tree, and India have started to increase their production acreage and to invest in biotechnological products. Political/legal segment quick-witted 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 sum of money (EU). These limitations could provide a market opportunity for more advanced or racyer assess replacement products. Socio-cultural segment pixilated negative comprehension of consumer just about safety of GM foods threatens the overbold technologies applied in agrochemical industries in particular in Europe and USA. However thither is a lack of appropriate research and tests on it.Demographic segment High technically change 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 passing the traditional methods of farmers work. For firms with wide innovation capabilities this represents an opportunity to target different ecological niche market. certainty New developing countries such as brazil and India beseech big opportunity for the industry.The research and development of new biotechnologi es applied to the agriculture crapd many new lucrative possibilities to enterprises however, a negative consumer comprehension 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 competitory advantage. This advantage is difficult to understand and to imitate. Patent laws and apt holding change withal firms to maintain and extend their leadership.Barriers to entry for new competitors New entrants that necessitate to compete on the fertilizers and GM crops market must have soused financial resources to invest in pose to face companies such as Monsanto. New competitors require skilful 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 to a fault need governmental ap proval to enter the market.Generally in the agrobiochemical industry there are low switching be among products however leaders such as Monsanto tent to lock in their guests with licensing fees and agreements. There are exalted entry barriers and this constitutes a low threat for the existing companies in the industry negotiate motive of suppliers In the industry the suppliers goods are censorious to buyer marketplace success. There are few major suppliers. approximately of them, including Monsanto, have vertically integrated companies for the production of seed and for supply rude materials. It increased their power market.The fact that there are few major suppliers yields them to have a gamey bargaining power. It constitute a eminent threat Bargaining power of buyers Highly specialized farmers are the prevalent buyers in this industry. They have a greater amount of information about the manufacturers products and costs through the Internet. They have a high bargaining p ower 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 gestural with the companies that supplies their products.Threat of substitute products collect the high costs of technology, patents and government regulations there are no combative substitute in the market. The only substitutes are the traditional pesticides and crops, which are still on the market with a percent 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 snarled with research and development increased the contest 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 integration in which the firm i s 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 psychoanalysis The main competitors in the industry are Monsanto, DuPont, Novartis and American Home Products. Monsanto is the leader in biotechnology on the marketplace. Due 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 customer. Monsantos strategic deed often undertaken to maintain militant advantage is decrease costs of the products cod their high margin profits. DuPont is a large company that produces a Monsantos product imitation.They how ever 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 cypher for research in biotechnology. Due their financial resources Novartis are more apparent to launch competitive action when Monsantos license will expire. AHP introduced an substitute to Monsanto main product. Strongly focused on market research they constitute 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 strengthened cod the high cost involved in R&D and the slow egression of the market caused by licenses and intellectual properties. Monsanto certifications its first mover position in the marked licensing patents to others firms. However companies such as AHP started to threaten them through competitiv e actions. Internal analysis of Monsanto Resources Tangible Intangible Financial resources Monsanto has the faculty to flummox internal funds They generate high profits especially from Roundups sales and GM crops.Investment and acquisitions Compliance activities Human Resources Managerial susceptibility especially in developing consolidation strategiesLong term quite a littleCommunication skill across all level of the organisation in order to retain talent and maximize human synergies. Physical resources Monsanto raise extensive backward integration to access easily to raw materials works and equipments for bioengineering researchesInnovation ResourcesHigh scientific capabilities cogency to innovate Technological resources They subscribe license patent agreements with competitors and customers.Patents and trademarksTraining system Reputational Resources hefty national and internationalistic reputation with customersBrand name linked to R&D marketing Long-term recounting wi th suppliers. Good sexual relation with governmental entities such as FDAGoodwill Organisational resourcesDistribution channels To create a sustainable competitive advantage Monsanto must focus on their cap index and explore those which are rare, valuable, costly to imitate and non substitutable.Valuable capabilitiesCapability to beef up long-term relation with suppliers and customersCapability to develop new technologies in bio-engineering and plant genetic Ability to nurture their intellectual propertyDistribution channel and service activities exalted to imitateCapacity to create human synergies especially after acquisition and merger 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 technologiesAbility to protect their intellectual propertyDistribution channel and service activities No substitutableCapability to stre ngthen 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 safe research and development program and the ability to protect their intellectual property gave them a competitive advantage on the market. Research and Development (R&D) and intellectual properties are core competencies that are unrealistic to imitate in short and medium term. They are rare, because Monsanto possess them, and valuable. found 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 future. SWOT Analysis StrengthWeakness Capability to produce high competitive productsStrong Research and Development base and quality Hu man ResourcesGood customer servicesAgreements Economies of scale due to acquisitions Intellectual ProprietiesPatentsStrong presence in international market and recognition as market leaderGood network with universities and sedulousnessatoriesAlliance and join venturesMissing links between parley 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 going awayNew products on the markets Adverse public opinion on GM foodsShifts in buyer needs for products Costly new governmental regulations hassle in achieving synergies Strategies Business Level outline present and future In order to gain competitive advantage and above average sound reflection Monsanto focused on differentiation system targeting a group of super 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 blusher 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 infrastructure 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 intimately on customers needs. In the future Monsanto could apply their research to breed animals and explore new industry segments.Corporate level strategy present and future In order to gain market power and develop economies of chain of mountains, Monsanto, used a related constrained variegation strate gy. 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 expensive 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 Based on their strong basis in bi otechnologies Monsanto strengthen relations with governments of new developing countries such as Brazil and India, where there are basic 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 engaged 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. ConclusionThe biotechnological products developed by Monsanto have future until they can produce an above-average return and gain e conomies 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 recover investments, they should focus more on consumer products demand and engage in strategic alliance that permits to increase the product life cycle and draw and quarter 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. conflict & Globalization. South-Western College