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  1. 1. Monsanto Monsanto Jeff Selter
  2. 2. Monsanto Introduction Publicly traded American multinational agricultural biotechnology corporation, Monsanto had several alternatives when faced with the decision regarding one of its most successful products, RoundUp. As Samuelson and Marks state, “even when the choices are limited, there may be more alternatives than first meet the eye” (Samuelson and Marks, 2012, p. 9). One issue Monsanto face was pursuing venture outside of its normal operations that ultimately lead to its demise. Secondly, patents were a key advantage to success that effected price protection. Like reliance on patents, a third issue was the reliance on low price point driving large amounts of sales. Analysis Sticking To its Roots When in the process of deciding to add seed and genomics companies, Monsanto could opted to not spin off the base chemicals business, which formed its foundations. While increased future profits in the seed and genomics markets provided a lure of huge potential profits, there was also high risk involved. When making a drastic change such a pursuing a new sector, this should be done slowly with caution, or a separate legal entity created, so if the new venture fails, the operations of the previous organization are not effected. Patents One key comparative advantage Monsanto enjoyed in the chemical herbicide market with their most successful product ever, RoundUp, was patent protection, which gave the company effective monopoly in the Unites States. The problem with patent
  3. 3. Monsanto protection is answering the question of, what will happen when the patent expires? “A SWOT analysis guides you to identify the positives and negatives inside your organization (S-W) and outside of it, in the external environment (O-T). Developing a full awareness of your situation can help with both strategic planning and decisionmaking” (Renault, 2013). Any executive could see after performing a SWOT analysis that RoundUp would be vulnerable to decreased market share when the USA and other international patents expired, because a massive barrier to entry would effectively be eliminated. The alternative answer to this would be to invest if research and development (R&D), as other major chemical and pharmaceutical companies do. R&D enables these organizations to consistently produce to new innovative products so success will not rely on one patent protected wonder, but rather a constantly improving line of products. As Samuelson and Marks state, “Most managerial decisions involve more than a once-andfor-all choice from among a set of options.” (Samuelson and Marks, 2012, p. 9). This supports the notion of relying on putting a great deal of effort into RoundUp while simultaneously working to product more future successful products. Furthermore, choosing a less risky sector to expand to is also an alternative that seed and genomics companies which led to the eventual demise of the agricultural biotechnology corporation, Monsanto. In this case risk was specifically attributed to patent protection, which gave it monopolies in specific international markets that a valid patent was held. Price Point Low price point was one strategically advantage Monsanto enjoyed. Originally the organization could keep prices higher as it enjoyed patent protection in companies
  4. 4. Monsanto such as the United States of America. Over the course of five years they lowered prices to sell more units because of price elasticity. Investopedia defines price elasticity as, “A measure of the relationship between a change in the quantity demanded of a particular good and a change in its price” (Investopedia. 2013). In this case price elasticity is illustrated when price is lowered and as a result consumers buy more goods, because their demand is affected in price fluctuation. When Monsanto lowered prices, sales drastically increased. As these patents expired in different nations, prices were lowered as other competitors were able to enter the market, with the barrier to entry removed. When it comes to exploring the alternatives, Samuelson and Marks state about the factor of price point, “prices will largely determine the numbers of vehicles the firm can expect to sell in each market” (Samuelson and Marks, 2012, p. 9). I believe alternatives to price point being Monsanto’s niche is the market should have been explored. However, make revenue based on lower prices is permissible, but should only be a strategy to achieve a boost in revenue over a finite period of time. Conclusion Facing the issues accompanying venturing into new sectors, patent protection, and price points, Monsanto failed to overcome and survive. Every business faces difficulty from within, and barriers from outside. Elliott H. Stone tells us, “trying to deal with complicated legal matters on your own takes you away from other essential tasks.” ( In the case of Monsanto, the organization failed to diversify its product line and thus rely on RoundUp. There was no contingency plans, so when RoundUp suffered, Monsanto failed.
  5. 5. Monsanto References Stone, E. (n.d.). In California Consumer Law Center, Elliott Stone. Retrieved November 9, 2013, from