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Monsanto: Market Opportunity Essay

Case Summary:

Monsanto Co. is an innovative biotechnology company that is currently the world’s largest seed company. Since its inception in 1901, Monsanto has continually reinvented itself to realize growth opportunities in a wide spectrum of marketing environments. In 1981, a shift in strategic focus towards biotechnology has propelled the company to $11.7 billion in annual sales with over 20,000 people in 160 countries. As the world faces a growing population and declining natural resources, Monsanto’s technological innovations with genetically modified seeds have increased crop yields around the world. Although the company has enjoyed significant growth in recent years, concerns over the safety and environmental impact of its product continually present a challenge to long-term success.

Key Marketing Issues:

Market Opportunity- A combination of circumstances and timing that permits an organization to take action to reach a particular target market. Over the course of history, Monsanto has transformed from an industrial chemical producer during World War I, to the global leader in the seed industry at a time when the world faces declining food supplies for a growing population.

Stakeholders- Constituents who have a stake or claim, some aspect of the company’s products, operations, markets, industry and outcomes. Farmers, governments, and non-profits are one of many stakeholders in the company.

Relationship Marketing- Establishing long-term, mutually satisfying buyer-seller relationships. With farmer’s being the primary stakeholder, Monsanto uses technology such as the corn chipper to gain their support.

Customer-Centric Marketing- Developing collaborative relationships with customers based on focusing on their individual needs and concerns. Monsanto develops genetically modified seeds to meet the various demands of farmers around the world facing problems ranging from drought to invasive insects.

Green Marketing- A strategic process involving stakeholder assessment to create meaningful long-term relationships with customers while maintaining, supporting and enhancing the natural environment. One of Monsanto’s commitments is to conserve more resources through sustainable agricultural initiatives.

Performance Standard- An expected level of performance against which actual performance can be compared. Monsanto hopes to increase corn yields from the current amount of 150 bushels per acre to 300 bushels per acre by 2030.

Target Market- The group of customers on which marketing efforts are focused. Monsanto targets some products such as Roundup to retailers while marketing others to large agricultural corporations or governments.

Core Competencies- Things a company does extremely well, which sometimes gives it an advantage over its competition. In 2003, a new corporate strategy was developed to address the company’s core competencies.

Marketing Orientation- An organization wide commitment to researching and responding to customers’ needs. Monsanto spends $1 billion annually on research and development

Personal Case Analysis:

I’ve learned that Monsanto continually adapts to capitalize on marketing opportunities. Its core competencies in genetically modified seeds have allowed Monsanto to become a global leader in the seed industry. Initiatives involving non-profits are in place to improve the lives of farmers through agricultural education and sustainable practices. Although Monsanto’s innovative technology has increased crop yields, harsh resistance has been shown towards their products in Europe and in some cases Africa. In 2002, during one of Zambia’s worst famines, Monsanto’s donated corn was rejected by the population out of fear it contained genetically modified seeds. The increasing popularity of organic farming is also threatening the growth of Monsanto’s genetically modified products and has been the source of many legal challenges facing the company in recent years.

Case Questions:

1.What are the major strengths, weaknesses, opportunities and threats (SWOT) associated with Monsanto?

Monsanto’s strengths include technological innovations in biotechnology anchored by substantial investment in research and development that have produced many patents, and allow the company to react swiftly to changes in the strategic environment. Their presence in 160 countries provides favorable access to distribution networks around the globe. A major weakness for Monsanto is consumer perception that its products are unhealthy for human consumption and have negative consequences on the environment. Another major weakness for Monsanto is the expiration of their main patent in 2014 of their Roundup-ready soybean. JPMorgan estimates losses of up to $500 million in royalties that the company receives from licensing Roundup-ready soybean to competitors.

According to the United States Department of Agriculture, only 11% of global land surface is considered suitable for agricultural production. With a surging global population and increased land degradation caused by human activity, higher yielding crops with resistance to various environmental conditions will become essential to maintaining an adequate food supply for the world. Monsanto’s technological innovations in biotechnology, and specifically genetically modified seeds, present a unique opportunity to capitalize on one of the world’s great challenges in the 21st century. Growing consumer demand for organic products, discounted generic products and backlash against the high price of Monsanto’s genetically modified seeds pose major threats to the company.

2.Explain how Monsanto has utilized the marketing concept and developed a market orientation?

The marketing concept aims to satisfy customers’ needs while simultaneously allowing an organization to achieve its goals. Monsanto has continually shown the ability to realize growth opportunities and adapt accordingly. The company realized growth opportunities in industrial chemicals before the start of World War I.

As a result, Monsanto shifted its focus from food additives and food extracts to specializing in plastics and synthetic rubbers. As land suitable for agriculture continues to decline and global population increases rapidly, the demand for drought tolerant, high-yielding crops that are resistant to insects and disease continues to grow. In 1981, Monsanto shifted the company’s focus to biotechnology and now owes roughly 60% of its revenue to work in genetically modified seeds. Monsanto spends up to $1 billion in research and development per year, over 8.5% of its sales, which portrays an organization wide commitment to researching and responding to customer’s needs. Monsanto has now become the global leader in the seed industry with $11.7 billion in annual sales.

3.What is the importance of gaining the support of Monsanto’s stakeholders in achieving long-term success?

Long-term success for any company depends on the support of its stakeholders. Farmers represent Monsanto’s primary stakeholders and their support is directly related to the company’s ability to increase yields in their four main crops: corn, cotton, soybeans, and canola. Monsanto developed a laboratory in St. Louis to display the newest technological advances made by the company in hopes of impressing farmers and attracting new customers. Support from government agencies that are concerned with the health of its citizens and the conservation of natural resources is also critical for Monsanto in the long-term. Shareholders must be convinced that the return on investment in research and development will continue to drive growth in the company. Joint ventures with companies like Dole Fresh Vegetables Inc. are underway and have emphasized the absence of genetic modification techniques in attempts to produce more colorful and tastier vegetables.

Conclusions:

Over the course of its history, Monsanto has innovated itself to capture market opportunities in industries ranging from industrial chemicals to artificial sweeteners. With genetically modified seeds now representing 60% of the company’s revenue, and the fastest growth in developing countries, the company faces many global challenges. The company is trying to shred its reputation for being irresponsible by stressing sustainable agricultural practices with the use of its products. Large investments in research and development continue to drive the company forward, and are a source of pride for the company. Technological innovation and mutually beneficial relationships with customers will be key components to success for the company in the long term.

Works Cited
Sherr, Ian. “Monsanto, Dole to collaborate on veggies.” Reuters. 24 June 2009. 11 January 2012. Cummins, Ronnie. “The California Ballot Initiative: Standing Up to Monsanto.” Organic Consumer Association. 7 October 2011. 11 January 2012.

Herper, Matthew. Langreth, Robert. “The Planet Versus Monsanto.” Forbes Magazine. 18 January 2010. 12 January 2012. < http://www.forbes.com/forbes/2010/0118/americas-best-company-10-gmos-dupont-planet-versus-monsanto.html>


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