Monsanto: from a strategic perspective

Thakur Rajendar Singh

Thakur Rajendar Singh is a Industry analysis

consultant based in Andhra
The globalization of agriculture started its roots in the 1990s in the Asian countries, when
Pradesh, India.
GATT and WTO along with the support from the USA involved themselves with the
agricultural practices in these areas. New technologies started to evolve in the production of
the agriculture (Alan Bullion, 2003).
Between 1996 and 2003 the transgenic crops increased to almost 40 fold, from 1.7 million
hectares in 1996 to approximately 67.7 million hectares in 2003. During this period,
especially in the 1990s regime, transgenic crops in planted to herbicide-tolerant transgenic
soybean and others like maize, corn, cotton, but only few food crops were permitted for food
use and many countries were still not in full support of use of technology in food items
(Halford, 2004).
India, China and the European regions started involving the genetically modified (GM) crops
in the agricultural production, but went through many oppositions during their transition
period especially during the period of 1990 till 1997. Some parts were successfully using the
GM crops, whereas few others were opposed due to cultural, health and sustainability
issues. By 2003 most of the parts in India were still using the old ways of producing crops, as
they cited that the GM crops may have many risks which cannot be foreseen in a short run,
but may have long term effects (Bakshi, 2003).
The GM and chemicals market grew by almost 45.3 percent in 2008 to reach a value of about
$176.3 billion and the volume being 142.5 million tonnes. These chemical companies
generated the 82.1 percent of the total revenues. And the significant impact or contribution is
by the Asia-Pacific countries which contributed for the 51.4 percent of the market value. The
global figure constitutes of Americas, Asia-pacific and Europe (see Figure 1).
With four key leading companies in the GM seeds area, most of the parts of the world which
was divided into three regions like said earlier, Americas, Europe and Asia-Pacific was
covered.

Monsanto – key success factors

In order to overcome its difficulties in the region of the GM crops especially in India and
Europe Monsanto in 1999 came up with the ‘‘New Monsanto pledge’’ which was committed
to ‘‘New way of doing business’’. This slowly started building a good image on Monsanto in
these two regions and the GM seeds production was also progressed after this.
The pledge has been modified time and again to meet the changing needs of the world and
also as a part of strategy. The current Pledge consists of six key themes which are:
1. integrity;
2. dialogue;

PAGE 90 j BUSINESS STRATEGY SERIES j VOL. 11 NO. 2 2010, pp. 90-99, Q Emerald Group Publishing Limited, ISSN 1751-5637 DOI 10.1108/17515631011026416
Figure 1 Global fertilizers and agricultural chemicals market volume: tonnes million,
2004-2008

3. transparency;
4. sharing;
5. benefits; and
6. respect.
The other key factors which helped Monsanto in its success was its bioengineering
capabilities. Being financially strong and with acquisitions of worth $10 billion during the
1995 to 2000 period it had gained a monopoly status in few areas and being a dominant
player in the market (see Table I for key facts).
Diversified operations both in terms of locations and products offered is also one of the
biggest advantages which Monsanto gained. With its presence in almost 40 countries 2000
end and with 63 countries currently, and diversification into seeds and traits, fruits, vegetable
seeds, crops and cotton seeds, Monsanto’s GM technology gained predominance in this
market.

Monsanto – products
This is one of the areas where Monsanto has the competitive edge over others, with its huge
diversity of products. Some of the brands offered by Monsanto are Genuity, Deklab, Asgrow,
Roundup Ready, Vistive, Deltapine, Seminis, Roundup, Yieldgard and others.

Table I Key facts

Head Office Monsanto Company
800 North Lindbergh Boulevard
St Louis
Missouri 63167
USA
Phone 1 314.694.1000
Fax 1 314.694.1057
Web address www.monsanto.com
Revenue/turnover (USD Mn) 11365.00
Financial year end August
Employees 21,700
New York Ticker MON

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 A total of nine brands with which Monsanto deal, and the areas/products which deals with
this brand are seeds and traits, wherein the best possible germplasm, or improved genetics
are being applied for higher yield. In terms of agricultural productivity the Roundup brand is
used with concentration on herbicides and working as environmentally responsible control
programs.
These brands categorise into different aspects of the chemical technologies applied in
agriculture and seeds, and represents features like drought tolerance, nitrogen use
efficiency, grain sorghum, corn hybrids, herbicides to kill weeds, low-linolenic soybeans and
others (www.monsanto.com/default.asp).

Competition
The key competitors for Monsanto were Syngenta AG, Bayer AG, BASF AG. The agricultural
and chemical industries were large companies with fewer companies in total. Because of the
immense size of them, there were a number of distributors acting as key suppliers of the
chemicals. These companies enter into long-term contracts with the suppliers, which vary in
size and due to their huge bargaining power, they were able to make scale economies. In
some of the regions companies have adapted the forward vertical integration in order to
reach the end customers. These four big players, usually do not depend on any single
supplier for any raw material, but utilise the capabilities of several suppliers and also
manages this with internal resources. Laws and regulations especially those related to
environment and food affects the companies to undergo changes in strategies and
sometimes they have to make more investment or incur huge costs for their operations in that
particular country. The most significant aspect of this market is that, due to the huge impact
of the big players in the market and due huge R&D investments and country specific
regulations and policies, the fear of new entrant is scarce (Datamonitor, 2009).

Syngenta AG (www.syngenta.com/en/about_syngenta/)
Syngenta AG is a European company with its origin in Switzerland with its presence in the
market since 1758. Syngenta is among the world’s leading businesses dealing with crop
yields and food quality with its operating base in approximately 120 countries. Different
brands under which Syngenta operates are Dividend, Apron XL, Cruiser, Maxim, Celest,
Golden Harvest, Unipel, S&G and others. Most of its R&D takes place in the regions of
Switzerland and UK.
The seed portfolio includes over 100 product lines and approximately 5,000 varieties of own
proprietary genetics. One of the strategies which helped Syngenta grow apart from its
diversification of products is through alliances and collaborations with different players in the
markets across the globe. Also it has collaborations with the universities where some of its
research activities are carried out.

Bayer AG (www.bayer.com/en/homepage.aspx)
Bayer is a holding company of the Bayer group with approximately 320 consolidated
companies worldwide which started in 1863. It has categorized the business into three
groups namely HealthCare, Material Science, and CropScience. Bayer groups also has its
presence in the pharma industry has involvement with hematology/cardiology, oncology and
few other healthcare related aspects. In regards to pharmaceuticals it develops and
manufactures prescriptions for various healthcare related areas. The CropScience deals
with the crop protection segments and develops, produces and markets a variety of genetic
and chemical technologies in this area. Because of wide diversity Bayer group has its
presence in almost all the countries with a wide variety of brands. A big player in the GM
seeds and agricultural industry.

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 BASF AG (www.basf.com/group/corporate/en/)
BASF is the world’s largest chemical company and one of the biggest competitors for
Monsanto. BASF has its subsidiaries in more than 80 countries. There are five segments
through which BASF operates and they are:
1. chemicals;
2. plastics;
3. performance products;
4. agricultural products and nutrition; and
5. oil and gas.
The agricultural products and the nutrition segment is operated into two divisions, namely
agricultural products and fine chemicals. Like others it also deals with fungicides,
insecticides and herbicides part from developing and manufacturing of GM crops and
chemicals in other crops.

Growth prospects
Monsanto and Syngenta are companies with complete focus on the agricultural and seed
traits. Monsanto has had a presence in India since the 1990s and still has a good market
share. Some of the growth opportunities that Monsanto can avail itself are:
B Emerging Indian market – Monsanto with its long presence in India has learned the Indian
culture after it went through many hassles in the early years and now its operations align
with government policies. India has the largest cotton area cultivation of about 9.3 million
hectares, 25 percent, still it is being ranked as second. There is a need of hybrid cotton
cultivation and this is where Monsanto can play a major role. There is lot more potential in
this sector and Monsanto have to do lots of homework in order to cater this.
B Soybean – China is the largest consumer of Soybeans and emerging markets in this
sector like India are likely to be the largest importers of soybean oil. The forecast
estimates continues to 2018. Also keeping the health aspects in mind the soybean
products have become popular and is growing rapidly in the food industry. Monsanto
through its Roundup received approvals in different markets for the technology in the
soybean seeds and is still growing.
Expected growth of global fertilizers and agricultural chemicals market by 2013 both in
terms of market value and volume growth. The graph on the right in Figure 2 shows that the

Figure 2

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 market value by 2013 will be approximately $177.3 billion, which is an increase of 5.9
percent since 2008.
The graph on the left in Figure 2 gives the forecast on the volume. There is an approximate of
12.3 percent increase in the market volume to 160.1 million tonnes from the 2008 figure of
142.5 million tonnes. Which shows the potential in the market growth. Apart from this there is
continuous growth in Monsanto’s revenue stream and irrespective of the economic
slowdown the financial performance of Monsanto is still booming and the speculated market
growth along with Monsanto’s performance is supposed to increase in the coming future
(see Table II and Figure 3).

Monsanto – Indian products

Monsanto moved into India in the 1950s but its real time activities came to light from 1990
onwards when Monsanto sought approval for the commercial release of Bt Cotton variety.
Later this was rejected due to high fees of technology transfer. Later in 1998 Monsanto
formed an alliance with Mahyco (Maharashtra Hybrid Seed Company), by having 26 percent
stake. The products which it moved to India are the Roundup brand and the Seed Traits
(Newell, 2006).
Roundup. Through this Roundup brand Monsanto deals with agricultural herbicides, for
crop protection. The Roundup Ready provided the practice of conservation tillage, which

Table II
Metric 2004 2005 2006 2007 2008

Revenues 5,423.0 6,275.0 7,294.0 8,563.0 11,365.0

Net income 267.0 255.0 689.0 993.0 2,024.0
Profit margin (%) 4.9 4.1 9.4 11.6 17.8
Total assets 9,164.0 10,579.0 11,728.0 12,983.0 17,991.0
Total liabilities 3,906.0 4,966.0 5,203.0 5,480.0 8,617.0
Employees 12,600 16,500 17,500 18,800 21,700

Note: All in $ millions, except for employee numbers and margins

Figure 3

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reduced the erosion of soil. The crop protection extended to corn, soybeans, cotton, wheat,
trees, nuts, and vines. Few of the technologies adopted by Monsanto with specific names
are BULLET, Field Master and others. Also the Dekalb brand was for the hybrid Maize with
superior quality. It also has the Asgrow for high quality hybrid seeds and also sunflower
respectively.
Seed traits. Through its seeds and traits network, Monsanto provided best germplasm,
improved genetics for new variety and high yield. It is been used for cotton, oilseeds which
are soybeans and canola and also vegetable seeds.
The Mahyco-Monsanto variety was known as Bollgard, which was being tested and
approved by the Indian Government in 2003, which was being inspected by the Indian
committees for the bio-safety aspects of Bt Cotton.

Monsanto India – difficult times

Since the time Monsanto started its GM crops during the 1990s it was under many attacks
from the culture groups, local administrators.
India was among the first countries to cultivate cotton and to develop weaving and spinning.
Cotton is one of the most important crops for the small farmers. The quality of Indian cotton in
the world market was poor and was not up to the international standards. When the
technology of Monsanto came into picture into the use of Bt Cotton, the locals popularised
the slogan ‘‘Cremation Monsanto’’ during the 1998 and set fire to the trials produced by
Monsanto (Yamaguchi et al., 2003). The claim made was that Bt Cotton contaminated all the
nearby crops and has contaminated the biodiversity of the area.

Cultural and religious problems

Farming in India has been a significant tool for both the political and spiritual leaders which
revealed a sense of unity in terms of diverse ethnic, religious and cultural backgrounds.
Political parties and local administrators in small towns started the ‘‘Back to basics’’
philosophy which was more towards, self-reliance and self-governance political
development. Monsanto faced many strikes and boycotts from this community influenced
by politicians during the period of 1990 till 2000. For Indian farming is to do with tradition,
Indianness and indigenous farming. Monsanto took a very long time to penetrate into the
minds of this community and react to them. Mahyco started GM crops in 1998 but the final
approval came in 2003.

Monsanto smallholder program problem (SHP)

Monsanto started a program by name SHP, Monsanto Smallholder Program in 1999 which
ended in 2002. The program went on for only three years. This program was more diverted
towards the corporate social responsibility (CSR) area. Financial and market pressures
resulted in the premature end of the SHP program. Monsanto’s management wanted the
company to be attractive to the investors, and through its SHP Monsanto was incurring more
of expenses than that of revenues, though the agenda of Monsanto was on a philanthropy
basis.
When it was under huge pressure from the investors in the GM technology it took a drastic
step. The SHP program was severely affected by the investors, stakeholders and
biotechnology critics, which made it difficult for the company to carry on the activities and by
the end of 2002 the program was abandoned. Though many of the locals benefitted from this
program, they were equally shocked and lost trust in Monsanto when the program ended.
This has raised furious questions on Monsanto and to the business world in general whether
CSR activities can be carried out in the long term or will companies do once in a while to
attract customers (Glover, 2007).

Sustainability problems
The serious question which raised from 2002 after the closing of SHP was, whether
Monsanto technology is sustainable? Whether farmers need to incur more costs due to

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 Monsanto in future? This affected Monsanto business a lot in India and also this became a
heated issue in the European region too.
When the SHP program was abolished in 2002, farmers in India had no source of information
and only few were aware of using the GM technology in the lands. States like Andhra
Pradesh started going to their old practices, because there is no more education going on
by Monsanto and also the Monsanto associates were readily available when there is a need.
Due to lack of information, education and knowledge about the chemical technology in
crops, farmers had no other option but to abandon the Monsanto technology and get back to
basics.
Also during the SHP Monsanto helped the farmers in selling their crops, by talking to various
distribution channels and other means. These also stopped raising the costs to farmers, as
most were dependent on Monsanto to sell their crops (Simanis and Hart, 2001).

Education and social problems

Most of the farmers in the rural India were not educated and it became a big challenge for
Monsanto to promote their practices and products to the farmers. One of the means through
which companies can get their work done, was by talking or convincing the head of the
village, popularly known as ‘‘Sarpanch’’. The convincing used to go sometimes beyond the
legality agenda. Local authorities also avoided or neglected the GM products and started
provoking the rural people by bringing culture, religion aspects.
When Monsanto started educating the local people it took considerate amount of two to
three years for them to accept the new technology. Many officers were employed to assist
the farmers and few of them voluntarily started helping farmers to adopt technology. All
these happened with the SHP programs. When the officers were forced to increase sales
and generate more revenues by the Monsanto head office in the USA, they were under
pressure and could not meet the targets. The education program came to end with
concentration only on sales (Glover, 2007).

Other strategic problems

The strategy of ‘‘one-size-fits-all’’ followed by the then CEO Robert Shapiro, became highly
incompatible in regards to his vision of growing enough food to feed the expanding world
and to achieve sustainability in the agricultural practices. This global strategy followed by
Robert Shapiro has defamed the image of Monsanto, which was regained in 2000 with the
Monsanto’s new pledge.
Monsanto was highly dependent on the Roundup project in India and till 2000s it was
focusing only on the Roundup program. During the same period Monsanto under Shapiro’s
regime went on for huge acquisitions rounding to almost $10 billion which increased the debt
load and in turn increased the market pressure for Monsanto to grow the biotech use in the
crops and seeds. This is also one of the reasons the SHP came to an end. Also during the
same period the vertical integration of the agricultural supply chain also resulted in higher
costs due to low efficiencies resulting from lack of supplier competition (Simanis and Hart,
2001).

Approaches by Monsanto, India

When Monsanto was bombarded with heavy problems on its sustainability and GM issues, in
order to build a strong brand image Robert Shapiro came with the ‘‘The New Monsanto
Pledge’’, which was announced on 27 November 2000. The five major commitments of this
pledge were:
1. dialogue;
2. transparency;
3. respect;

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 4. sharing; and
5. benefits.
It went on with the strategic alliance with the Maharashtra Hybrid Seed Company (Mahyco),
to gain access to the local markets. By 2002 it had 26 percent stake in this company. Though
Monsanto faced many problems but due to the growing demand of Indian exports and
Monsanto’s huge financial capacity made it possible to spread its products to various parts
of India.
It considered the cultural aspects after a long period and then went on making policies in
accordance with the Indian Government regulations. Thus it slowly began to have a ‘‘Think
global, act local’’ philosophy (though not fully incorporated) in its approach which made it
acceptable in the Indian community.
The SHP program, more towards CSR was in itself was strategic approach taken by
Monsanto in 1999 in order to have positive brand image and increase its supply or sales
through this program. At a very late stage Monsanto started to diversify its strategies both
product wise and geographically. By 2008 it had approx. 56 percent of its revenues from
seeds and genomics. With its involvements in crops, seeds and traits, cotton seed and traits,
vegetables and fruit seeds contributed a great margin to Monsanto. The rest of the 44
percent it derived from the agricultural productivity. The major contribution in this was from
its Roundup and the rest from other herbicides.
Earlier their main concentration was in the four biggest states of India, which includes
Maharashtra and Andhra Pradesh. But later, after 2002, it started to penetrate into other
states and rural areas and currently has offices in around ten states, with its presence in the
majority of India (www.monsanto.com/who_we_are/locations/india.asp).

Strategy deployment for market entry – What Monsanto can do or would have done
CAGE Framework
In the case of Samsung, they used one of the Push strategies by visiting the USA, to see how
their products are treated. The visit from the top line management will always show that they
are genuinely concerned in the host country involvement.
Also keeping this as reference if we refer to the Hofstede’s Power Distance Index, India index
score is 77 with the rank of 10-11. This implies that there is impact of a leader in the Indian
culture. Using the Push strategy and also filling the GAPS of Administrative Distance,
Monsanto can make the Indian farmers feel that their products are useful for both farmers
and consumers (see Table III).

Transnational approach for ban on GM crops

Adopting a global approach where cultural issues are predominant can be vulnerable to the
company’s existence. Thus Monsanto should follow the approach of a mix of strategies
which best fits the situation, in other words the transnational strategy.

Table III Push strategy

Cultural distance Administrative distance Geographic distance Economic distance

Different religions
Different social norms
Product affects the cultural or
national identity of consumers
Absence of political association Weak transportation or
communication links
Government policies Differences in climate
Government involvement is high Communication and
connectivity
Information or knowledge and
infrastructure
Companies need to be
responsive and agile

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 Figure 4 shows the movement or revolution in the today’s generation consumers. Monsanto’s
chemicals are being produced through lab experiments and are derived from plants and
other natural resources. The more transparent and committed Monsanto will be, the more
people will accept it.
The generation is moving towards the ‘‘Show me’’ philosophy, rather than companies telling
‘‘Trust me’’. This approach brings in respect and global acceptance for the products and
services offered. Having a global approach of ‘‘One size fits all’’, can never succeed esp.
irrespective of country with diverse cultures, when it comes to chemical technology in the
food which we eat.
Applying home strategy in foreign markets will hamper Monsanto’s growth. When
technology feeds in to the culture there are many complications and companies many a
times depending on the local culture, traditions and demographies should opt for few of the
strategies like ‘‘Think global act local’’ or ‘‘Think local act local’’.

Competing in foreign markets

One of the strategies for competitive advantages to compete in a country like India is
through the social investment in a competitive context. This will help Monsanto
compete both with the local players apart from global players. And this can be done
through the education programs for the farmers in terms of products and their usage
and others.
Joint ventures are considered as the ‘‘One stop solution’’ for many problems, and Monsanto
need to find partners in this at the earliest to make India its profit sanctuary.
Multinational strategy looks into the national differences in order to achieve its objectives.
Companies which adopt this approach, look into revenue side by differentiation. Depends
on local-for-local innovations. International strategy exploits the home-country innovations to
develop competitive positions. Global strategy follows the philosophy of ‘‘Think global, act
global’’.
But transnational strategy is the best fit of the above three strategies. It adjusts itself
according to the requirements, keeping the business goals in projection. It believes in
developing global efficiency and worldwide learning. This is where Monsanto need to
focus to capture the markets and to stay ahead of competitors. Figure 5 explains how
dispersed a company like Monsanto dealing with chemicals in food can be and also how
acceptable it will be (Market dispersion need not necessary mean running business for
profits).

Figure 4

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Figure 5

References
Bakshi, A. (2003), ‘‘Potential adverse health effects of genetically modified crops’’, Journal of Toxicology
and Environmental Health Part B, Vol. 6, pp. 211-25.

Bullion, A (2003), ‘‘Globalization, South Asian agriculture and the WTO’’, South Asia Economic Journal,
Vol. 4 No. 1.

Datamonitor (2009), ‘‘Global fertilizers and agricultural chemicals’’, Datamonitor, April.

Glover, D. (2007), ‘‘Monsanto and smallholder farmers: a case study in CSR’’, Third World Quarterly,
Vol. 28, pp. 851-67.

Halford, N.G. (2004), ‘‘Prospects for genetically modified crops’’, Annals of Applied Biology, Vol. 145,
pp. 17-24.

Newell, P. (2006), ‘‘Biotech firms, biotech politics, negotiating GMOs in India’’, The Journal of
Environment & Development, Vol. 16, pp. 183-206.

Simanis, E. and Hart, S. (2001), The Monsanto Company: Quest for Sustainability, World Resources
Institute, Management Institute for Environment and Business, Washington, DC, p. 47.

Yamaguchi, T., Harris, C.K. and Busch, L. (2003), ‘‘Agri-food biotechnology discourse in India’’, Science
Technology Society, Vol. 8, p. 47.

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