A Report on

Corporate Structure of Monsanto

Submitted in partial fulfillment of the requirements for the weekly report submission of

Corporate Strategy
Submitted to:

Prof. (Dr.) Parthasarathi Banerjee

Submitted by:

GROUP 11

Sayan Mitra (17PGDM047)

Shashwat Suryavanshi(17PGDM049)

Shikhar Saxena (17PGDM050)

Somrit Basu (17PGDM053)

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Monsanto Company was an agrochemical and agricultural biotechnology corporation. It was
headquartered in Creve Coeur, Greater St. Louis, Missouri. Monsanto developed Roundup,
a glyphosate-based herbicide in the 1970s, and became a major producer of genetically
engineered crops.
Monsanto was one of four groups to introduce genes into plants (1983), and was among the first
to conduct field trials of genetically modified crops, (1987). It was one of the top 10 U.S.
chemical companies until it divested most of its chemical businesses between 1997 and 2002,
through a process of mergers and spin-offs that focused the company on biotechnology.
Monsanto was one of the first companies to apply the biotechnology industry business model to
agriculture, using techniques developed by biotech drug companies. In this business model,
companies recoup R&D expenses by exploiting biological patents
In September 2016, Bayer announced its intent to acquire Monsanto for US$66 billion. After
gaining US and EU regulatory approval, the sale was completed on June 7, 2018.
Originally owned by Pharmacia (merger between Pharmacia Corp. & Upjohn) Monsanto is the
pioneer of Genetically Modified crop production, their technology touches the production of
90% of the worlds GM crop production. They are also the leading producers of herbicide
glyphosate which is marketed as Round Up Their size gives them considerable clout in the
industry and ability to influence market dynamics, which makes strong corporate oversight
necessary to prevent abuse and ensuing litigation. The company aims to build the future of
agriculture and shape the global food chain.

However, the company's general strategy involves active political lobbying, promotion of GM
food crops, introduction of bio-tech in agriculture & "strong-arming" of the seed industry has
been a source of controversy generating strong opposition from social and environmentalist
groups around the world and a primary target of the alter-globalization movement. They also
have extended history of manufacturing perceived hazardous chemicals, their product line
including chemical warfare agents (Agent Orange), and bovine growth hormone, industrial
materials (PCBs) & food additives (NutraSweet). Monsanto came under investigation by the
U.S. Justice Department in 2009

INDUSTRY AREAS
 GM crops,
 Agro-chemicals,
 Bovine Growth Hormone

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 MONSANTO: PRODUCTS AND PROJECTS

Herbicide tolerant crops Monsanto’s RoundUp Ready (herbicide tolerant) crops are the most
widely used GM crops in the world. RoundUp Ready crops include maize, soya, canola (oil seed
rape), cotton and sugar beet. Pipeline RoundUp Ready food crops include rice, wheat and potatoes.
Beyond food crops, Monsanto has forged alliances with forestry companies to develop GM RoundUp
Ready (herbicide-tolerant) trees.

Bromoxynil tolerant cotton has been marketed by Monsanto’s Calgene subsidiary. Another
Monsanto subsidiary DeKalb have marketed Phosphinothricin (glufosinate ammonium) herbicide
tolerant maize.

Insect Resistant Crops Monsanto have engineered a range of insect resistant crops. These crops
include Bollgard Cotton, Bollgard with Roundup Ready Cotton, Ingard Cotton, NewLeaf Potatoes
and YieldGard Insect Protected Corn. Calgene have marketed a GM cotton with both Bt insect
resistance and Bromoxynil herbicide resistance. DeKalb have marketed a Bt insect resistant maize.

Pipeline Monsanto insect resistant crops include rootworm-protected maize, insect-protected

tomatoes, and boll weevil-protected cotton. There will also be a second generation of Bollgard
insect protected cotton where the mode of action of these cotton plants will be different than that
currently used (i.e. not using the Bt. toxin).

Other GM Crops Monsanto have produced a tomato with altered ripening characteristics. A
similar product, the FlavrSavr tomato, has also been marketed by Monsanto’s Calgene
subsidiary. Calgene have also produced an oil-seed rape with altered fatty acid properties. A
further Monsanto subsidiary, Asgrow, have marketed a multi-virus resistant squash.

Pipeline Monsanto disease resistant crops include maize resistant to fungal and viral diseases,
potatoes resistant to fungal diseases, wheat resistant to fungal and viral diseases and virus
protected tomatoes

Monsanto are also developing a range of crops with altered nutrient value including altering the
oil composition of oilseed rape and soybeans, altering soybean protein for use as meat
substitutes, altering potatoes to reduced discolouration from bruising for commercial storage and
also for lower moisture content thus absorbing less oil during cooking

 UK GM Crop Trails Monsanto GM crops currently undergoing field trials in the UK

include RoundUp Ready oilseed rape and sugar/fodder beet [6].
 Bovine Growth Hormone Monsanto also market Bovine Growth Hormone (rBGH or
BST) called Posilac. Posilac is a genetically engineered growth hormone injected into
cows to increase their milk production

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  Agricultural Chemicals Monsanto also markets a number of agricultural chemicals. The
best known of these products is RoundUp, a glyphosate based broad spectrum herbicide.
 Functional Foods Monsanto is likely to be one of the key players in the introduction of the
second generation of GM crops, so called functional foods, engineered to have beneficial
output traits.

Their products account for 80% of the total area of global farmland planted with GM crops in 1999.
Monsanto are also the second largest seed company in the world with global sales of $1,700 million
[3]. RoundUp, manufactured by Monsanto, is the world’s biggest selling herbicide.

HISTORY
Monsanto has been by far the most prominent and controversial corporation promoting the
introduction of biotechnology in agriculture. The company has a long and messy history of
manufacturing hazardous chemicals. Their products have included chemical warfare agents
(Agent Orange), industrial materials (PCBs), food additives (NutraSweet), agrochemicals and
pharmaceuticals. Monsanto was the first major agrochemical and pharmaceutical company to
pursue the ‘life sciences’ concept. During the 1990s it shed many of its chemical concerns and
embarked on a spending spree investing heavily in biotechnology research, and spending nearly
$10 billion worldwide acquiring seed companies. In the late 1990s Monsanto was the first
company to widely market first generation GM crops. This was accompanied by an aggressive
public relations campaign aimed at persuading a concerned public that GM crops were a safe and
desirable innovation. The campaign backfired, resulting in Monsanto becoming the primary
focus of a rapidly growing global resistance to GM crops (to a large extent drawing attention
away from the likes of Aventis (Agrevo) and Syngenta (Novartis/AstraZeneca) who were quietly
getting on with introducing similar products). By late 1998 a combination of Monsanto’s status
as an international bogeyman, and a need for returns on their extensive investments resulted in a
loss in market confidence in the company and their share price plummeted. Stability was
regained through a merger with pharmaceutical giant Pharmacia/UpJohn in April 2000. As a
result of this merger the combined company, known as Pharmacia, has taken over Monsanto’s
pharmaceutical wing Searle. The infamous agrochemical and biotechnology division, still known
as Monsanto, has been spun off as a nominally separate company with Pharmacia retaining an
85% share.

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MONSANTO: WHO, WHERE, HOW MUCH?
COMPANY STRUCTURE/OWNERSHIP

Pharmacia (Majority share holder) Pharmacia Corporation

COMPANY PROFILE OF MONSANTO INDIA, NSE,

INDIA
Date of Incorporation 08-Dec-1949

Date of Listing 20-Jan-2000

Management

Name Designation

Bangla Bose Radha Krishna Mallipeddi Additional Director

Sekhar Natarajan Chairman

H C Asher Independent Director

Pradeep Poddar Independent Director

Shilpa Shridhar Divekar Managing Director

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First, a "global" philosophy is characterized by seeing the world as one more-or-less monolithic
market with similar tastes and preferences. In contemporary parlance this is opposite to a
"multidomestic" (or multinational or multilocal) philosophy by which one sees the world as
made up of many more-orless unique markets, each with its distinct tastes and preferences. A
position between these two extremes is called regionalism, whereby one sees the world as being
made up of a small number of quite homogenous regions. These constructs can be applied to
industries, firms, and organizational structures, and it is informative to understand how global
thinking at industry and strategic levels apply.

For example, George Yip sees globalization as a function of the degrees to which the global
marketplace is fragmented, local customer needs are distinct, local sourcing imperatives exist,
costs are heterogeneous, and trade barriers are significant to cross-border commerce. Thus
Randall Schuler, Peter Dowling, and Helen De Cieri and other scholars refer to some industries-
like commercial aircraft, copiers, generic drugs, most electronics and computer hardware-as
global industries; while retail, the food industry, and most services are considered substantially
multidomestic.Multinationals-and other large firms, for that matter-generally are divided into
several parts, units, or divisions that reflect some aspect of their strategy. This link between
structure and strategy was made famous in the classic book Strategy and Structure by Alfred
DuPont Chandler. For example, a firm with five product categories may have been structured
into five divisions, each division mandated to manage one of the product categories. Chris
Bartlett and Sumantra Ghoshal build on this logic as they focus on organizational responses to
global and local forces; and they describe four organizational types (or mentalities) for the global
organization that represent organizational and strategic responses to various industry
contingencies. For example, they describe the global firm that views the world as its market,
assumes that national tastes are more similar than different, and that believes in standardized
products; and these strategic approaches require structural integrative mechanisms that are to
coordinate worldwide activities, production, marketing, research and development (R&D), and
planning

Reference:
Organisational chart: - https://www.theofficialboard.com/org-chart/monsanto

Board of directors: Monsanto Global

 Dwight Mitch Barnes (CEO & Director at Nielsen holdings)

 Gregory H. Boyce (Retired executive chairman & CEO at Peabody energy)
 Janice L. Fields (Former President of McDonald’s USA)
 Hugh Grant (Chairman of the Board and Monsanto CEO)
 George H. Poste (CEO at Health technology networks)
 Laura K. Ipsen (SVP and general manager at Oracle)

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  David L. Chicoine, Ph.D (Interim Dean at University of Wyoming college of Business)
 Marcos M. Lutz (CEO at Kosan Limited)
 C. Steven McMillan (CEO at Sara Lee Corporation)
 Jon R. Moeller (Vice Chairman and CFO at Proctor & Gamble)
 Patricia D. Verduin, Ph.D (CTO at Colgate-Palmolive)
 Robert J. Stevens (retired chairman and CEO at Lockheed Martin)

COMPANY LEADERSHIP

 Hugh Grant, Chairman and Chief Executive Officer

 Brett D. Begemann, President and Chief Commercial Officer
 Pierre Courduroux, Senior Vice President and Chief Financial Officer
 Dr. Robert T. Fraley, Executive Vice President and Chief Technology Officer
 Michael J. Frank, Vice President, International Row Crops and Vegetables
 Tom D. Hartley, Vice President and Treasurer
 Janet M. Holloway, Senior Vice President, Chief of Staff and Community Relations
 Steven C. Mizell, Executive Vice President, Human Resources
 Kerry J. Preete, Executive Vice President, Global Strategy
 Nicole M. Ringenberg, Vice President and Controller
 David F. Snively, Executive Vice President, Secretary and General Counsel
 Gerald A. Steiner, Executive Vice President, Sustainability & Corporate Affairs
 Dr. Michael K. Stern, Vice President, Americas Row Crops

Monsanto Chemical has attributed their success to the matrix structure, which, in their opinion,
helped them respond rapidly to customers’ needs. On the other hand, they can offer a way of
enabling people to work flexibly across functional boundaries which can result in some
productivity benefits for the organization and outweigh the potential disadvantages. In a matrix
structure, each person has two reporting lines:

(i) To the functional head; and

(ii) To a project, product, service or region manager.

These dual reporting lines are permanent. Advocates of matrix structures believe that they
combine the advantages of both functional and product or service structures.

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 A
typical matrix type structure

There is a Finance function and everyone in it will report to the Finance Director. However, each
product (1, 2, 3, and 4) will have its own independent finance team who also will report to the
relevant product or service manager. Hence each group has two people to whom they report – a
functional manager and a product/service manager.

Problems associated with a matrix structure

 Heads of reporting lines may need to meet regularly to decide how to apportion
each person’s time. What happens if the Finance Director and the Service 1
manager disagree about what the Service 1 finance team should be doing?
 Staff may feel uncomfortable with the change and uncertainty implicit in a matrix
structure. In practice, matrix structures can be very difficult to manage.
 Dual reporting can lead to conflict, confusion, and overlapping responsibilities.
This can then result in loss of accountability.
 Matrix structures can suffer from low responsiveness, slow decision making and
high levels of internal political conflict. For instance, there could be a number of
people who are responsible if Service 1 budgets are delivered late. The person
responsible could be the Finance Director who changed the format, or the Service
1 manager who would not agree a sales budget, or the Service 1 finance team who
took advantage of the conflict between the Finance Director and the Service 1
manager to get more time to do the task

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PESTLE analysis: MONSANTO
Political

 Product labeling and other requirements in Agricultural Chemicals Political factors play a
significant role in determining the factors that can impact Monsanto Company's long
term profitability in a certain country or market. Monsanto Company is operating in
Agricultural Chemicals in more than dozen countries and exposes itself to different types
of political environment and political system risks. The achieve success in such a
dynamic Agricultural Chemicals industry across various countries is to diversify the
systematic risks of political environment. Monsanto Company can closely analyze the
following factors before entering or investing in a certain market-
 Political stability and importance of Agricultural Chemicals sector in the country's
economy.
 Risk of military invasion
 Level of corruption - especially levels of regulation in Basic Materials sector.
 Bureaucracy and interference in Agricultural Chemicals industry by government.
 Legal framework for contract enforcement
 Intellectual property protection
 Trade regulations & tariffs related to Basic Materials
 Favored trading partners
 Anti-trust laws related to Agricultural Chemicals
 Pricing regulations – Are there any pricing regulatory mechanism for Basic Materials
 Taxation - tax rates and incentives
 Wage legislation - minimum wage and overtime
 Work week regulations in Agricultural Chemicals
 Mandatory employee benefits
 Industrial safety regulations in the Basic Materials sector.

Economic
The Macro environment factors such as – inflation rate, savings rate, interest rate, foreign
exchange rate and economic cycle determine the aggregate demand and aggregate investment in
an economy. While micro environment factors such as competition norms impact the
competitive advantage of the firm. Monsanto Company can use country’s economic factor such
as growth rate, inflation & industry’s economic indicators such as Agricultural Chemicals
industry growth rate, consumer spending etc to forecast the growth trajectory of not only --
sectoryname-- sector but also that of the organization. Economic factors that Monsanto Company
should consider while conducting PESTEL analysis are -

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  Type of economic system in countries of operation – what type of economic system there
is and how stable it is.
 Government intervention in the free market and related Basic Materials
 Exchange rates & stability of host country currency.
 Efficiency of financial markets – Does Monsanto Company needs to raise capital in local
market?
 Infrastructure quality in Agricultural Chemicals industry
 Comparative advantages of host country and Basic Materials sector in the particular
country.
 Skill level of workforce in Agricultural Chemicals industry.
 Education level in the economy
 Labor costs and productivity in the economy
 Business cycle stage (e.g. prosperity, recession, recovery)
 Economic growth rate
 Discretionary income
 Unemployment rate
 Inflation rate
 Interest rates

Social
Society’s culture and way of doing things impact the culture of an organization in an
environment. Shared beliefs and attitudes of the population play a great role in how marketers at
Monsanto Company will understand the customers of a given market and how they design the
marketing message for Agricultural Chemicals industry consumers. Social factors that leadership
of Monsanto Company should analyze for PESTEL analysis are -

 Demographics and skill level of the population

 Class structure, hierarchy and power structure in the society.
 Education level as well as education standard in the Monsanto Company ’s industry
 Culture (gender roles, social conventions etc.)
 Entrepreneurial spirit and broader nature of the society. Some societies encourage
entrepreneurship while some don’t.
 Attitudes (health, environmental consciousness, etc.)
 Leisure interests

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Technological
Technology is fast disrupting various industries across the board. Transportation industry is a
good case to illustrate this point. Over the last 5 years the industry has been transforming really
fast, not even giving chance to the established players to cope with the changes. Taxi industry is
now dominated by players like Uber and Lyft. Car industry is fast moving toward automation led
by technology firm such as Google & manufacturing is disrupted by Tesla, which has stated an
electronic car revolution.

A firm should not only do technological analysis of the industry but also the speed at which
technology disrupts that industry. Slow speed will give more time while fast speed of
technological disruption may give a firm little time to cope and be profitable. Technology
analysis involves understanding the following impacts -

 Recent technological developments by Monsanto Company competitors

 Technology's impact on product offering
 Impact on cost structure in Agricultural Chemicals industry
 Impact on value chain structure in Basic Materials sector
 Rate of technological diffusion

Environmental
Different markets have different norms or environmental standards which can impact the
profitability of an organization in those markets. Even within a country often states can have
different environmental laws and liability laws. For example in United States – Texas and
Florida have different liability clauses in case of mishaps or environmental disaster. Similarly a
lot of European countries give healthy tax breaks to companies that operate in the renewable
sector.

Before entering new markets or starting a new business in existing market the firm should
carefully evaluate the environmental standards that are required to operate in those markets.
Some of the environmental factors that a firm should consider beforehand are -

 Weather
 Climate change
 Laws regulating environment pollution
 Air and water pollution regulations in Agricultural Chemicals industry
 Recycling

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  Waste management in Basic Materials sector
 Attitudes toward “green” or ecological products
 Endangered species
 Attitudes toward and support for renewable energy

Legal
In number of countries, the legal framework and institutions are not robust enough to protect the
intellectual property rights of an organization. A firm should carefully evaluate before entering
such markets as it can lead to theft of organization’s secret sauce thus the overall competitive
edge. Some of the legal factors that Monsanto Company leadership should consider while
entering a new market are -

 Anti-trust law in Agricultural Chemicals industry and overall in the country.

 Discrimination law
 Copyright, patents / Intellectual property law
 Consumer protection and e-commerce
 Employment law
 Health and safety law
 Data Protection

The PESTLE analysis is an important tool that executives can rely on to organize factors within
the general environment and to identify how these factors influence industries and the firms
within them. The analysis reflects the names of the six segments of the general environment:
political, economic, social, technological, environmental, and legal. The political and
technological environmental impacts at Monsanto are as follows.

POLITICAL: Monsanto is committed to participating in the political process; as such

participation is essential for long-term success. They support voluntary labeling of foods derived
from genetically modified seeds and have participated in efforts to maintain voluntary labeling
and prevent the imposition of mandatory labeling requirements. They are proud of the quality
and safety of their products and have opposed bills, ballot initiatives, and ordinances that have
tried to ban them. Monsanto participates in a Good Government Fund, Citizenship Fund, Trade
and Industry Group Expenditures, and Federal Lobbying Disclosure Act Compliance.

TECHNOLOGICAL: Monsanto is the world’s largest company in selling agricultural herbicides.

They are a global provider of technology-based solutions and agricultural products that is
focused on enabling both small holder and large-scale farmers to produce more from natural
resources such as water, energy, and soil.

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 SWOT analysis for Monsanto.

STRENGTHS

 Wide customer base spanning the regions of North and South Africa, Asia,
Australia, and Europe.
 Market leader in the production of agricultural seeds.
 Strong research and development capabilities.
 Strong brand portfolio covering corn, soybean, cotton, wheat, and a variety of
other crops.

WEAKNESSES

Limited market share due to the stiff competition in the sector.

OPPORTUNITY

 Growth prospects are high for emerging economies such as Asia-Pacific and African
regions.
 The focus on soybean and GM corn seeds, especially in Latin America and India, can
enhance revenues as these regions are highly agriculture-oriented.

THREATS

 Customer loyalty decreasing due to lawsuits against the company and harmful
effects of their products.
 Increased competition due to accessibility and increased awareness among
farmers.

Market penetration strategy

o By offering steep discounts to small seed producers who entered contracts to keep
Monsanto as their primary supplier, Monsanto was able to achieve market
penetration.

o The intent of the company is to continue to gain market share globally in the
agricultural biotech industry.

o Monsanto’s product strategy focuses on grain yield, quality, environmental stress

tolerance, pest control, herbicide tolerance, disease resistance, and more.

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Monsanto global strategy

 A global strategy stresses the need to gain economies of scale by offering essentially the
same products or services in each market.

 Monsanto has operations in the Americas, Europe, Middle East, Asia Pacific, and Africa.
The company has 404 facilities in 66 countries which includes administrative and sales
offices, manufacturing plants, seed production facilities, research centers, and learning
centers.

 They employ over 20,000 employees globally.

Monsanto: first mover advantage

 Monsanto was one of the first companies to commercialize biotechnology traits in the
mid 1990’s, and since then they have continued its first mover advantage.
 They are the first company to launch stacked traits and second generation traits.
These traits are so valuable that the company DuPont has agreed to a series of
licensing deals with Monsanto to pay over $1.75 billion to the rights to Monsanto’s
soybean technologies.
 Also contributing to being a first mover is Monsanto’s creation of the artificial
sweetener saccharin. They supplied the product to beverage companies and were
Coca-Cola’s main saccharin supplier

Monsanto: Business strategy

 Monsanto seems to use a differentiation strategy, which attempts to convince customers

to pay a premium price for its goods or services by providing unique and desirable
features.
 Because of Monsanto’s investment in research and development and development of new
technologies, they have achieved a differentiation strategy.
 They have a competitive advantage over their competitors due do their “roundup ready”
seeds. Farmers are willing to pay more for these seeds because it is a product that meets
their needs.

Monsanto: organizational structure

 The new structure is designed to create focus and accountability

 Three near-term objectives: providing sustainable, efficient cash generation from
Monsanto’s chemistry businesses, optimizing income growth of seeds and traits
businesses, and renewing the focus on biotechnology acceptance.

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  In order to optimize the cost structure as the company’s business models are redefined,
the commercial accountability for the company’s business will be focused under two
geographic leaders
 Monsanto’s business decisions are guided by the core tenets described in the Monsanto
Pledge, the corporate governance guidelines, as well as the charters of the Board and its
committees
 Hugh Grant is the chairman and chief executive officer of Monsanto. In this dual role,
Grant is able to utilize the in-depth focus and perspective gained in running the company
to effectively and efficiently guide the board. He fulfills his responsibilities in chairing
the board through close interaction with the lead director

Mosanto’s Organisational Structure has 2 separate branches

1. Seeds and Genomics

2. Herbicides
Each division functions independent of the other
But it is important for Mosanto to maintain complete communication between the two divisions
to enhance coordination, productivity, synergy and overall value of the enterprise.

Mergers & Acquisition Strategy

In order to expand its operations internationally and cater to global consumer demand ,
Monsanto follows a joint venture approach. They either purchase companies and their
subdivisions or merge with them by creating subsidiaries to deploy mutual resources and achieve
synergy.

 1985 - Mosanto acquired G.D.Searle and Company, a life sciences company specializing
in pharmaceuticals, agriculture and animal health. This acquisition significantly boosted
Mosanto’s pharma capabilities and led to the discovery of blockbuster drug
“Cerebrex”.The drug was then patented.Such was the positive response to the drug, it led
to pharma major Pfizer acquire the pharma division of Mosanto’s business in 2002.

 Searle’s aspartame division was converted into a seperate subsidiary and is renowned for
the artificial sweetner “Nutrasweet”

 1996 - Mosanto acquired Agracetus, a genetics and biotechnology company which was
credited with the development of world’s first transgenic cotton , soyabean and othe
crops. It’s “Flavr-savr” tomato were an instant hit.Mosanto has been licensing technology
from Agracetus since 1991. Mosanto went on to build the world’s largest soyabean
transformation laboratory at Agracetus generating $11.5 billion in revenues in 2008. The
campus existing in 4.5 acred contains 100000 sq. feet of laboratories employing 21700
employees worldwide.

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  In 1996 itself Mosanto entered the maize seed business and acquired 40% of Dekalb
genetics instutute and remainder it was acquired in 1998.

 1999- Mosanto sold off its brand Nutrasweet and then merged with Pharmacia & Upjohn
in a deal valued at $27 billion at that time. The new subsidiary became known as
Pharmacia . The agricultural products division became the new subsidiary of Pharmacia
(Mosanto’s new medical research division) including products such as Cerebrex.

 2005 - Mosanto acquired Emergent Genetics (third largest cotton seed producer in USA)
and Stoneville, NextGen Cotton. Mosanto purchased Seminis Inc., leading global
vegetable, fruit Seed Company. It’s the world’s largest developer,marketer and grower of
fruits and vegetables.Mosanto completed the deal by paying $1.4 billion in cash plus an
additional $125 million for performance based payments. This acquisition made Mosanto
, world’s largest conventional seed company.

 2007 - Mosanto acquired Delta and Pine Land company (USA) , a mammoth cotton seed
breeder for $1.5 billion . It divested from various other businesses like the pig breeding
business, Stoneville and Nextgen cotton businesses as a condition of approval for the
acquisition

 2008- Mosanto purchased De Ruiter seeds for 546 million euros, this acquisition gave
Mosanto considerable foothold in the european cotton seed market. European markets are
crucial to Mosanto agronomics business expansion strategy as 7 out of top 10 food
importers in the world are from Europe.

 2013 - Mosanto acquired US based ClimateCorp for $930 million. ClimateCorp makes
weather predictions for the farm community based on previous data and data modelling.
ClimateCorp used to compensate farmers if predictions were wrong.

The ones above are examples of entry strategies employed by the company to enter different
markets keeping in line with their fundamental inorganic growth strategy. At its core Monsanto
is an agriculture company with a very significant foothold in a specific market, the acquisitions
compliment this core business and promise more effective use of the firm’s technology, capital
and expertise. As from the examples above, this strategy allowed Monsanto to easily horizontally
expand into multiple seed types by integrating the capabilities of the acquired organization.

Despite the size of their huge domestic market, there is still more lucrative demand for
agricultural products internationally. This requires that Monsanto tailors their offerings to meet
the needs of specific geographies being served (given vast variations in soil type, climatic
conditions, etc). One example of how Monsanto does this is Monsanto’s Intacta RR2 PRO
Soybean, developed specifically for farmers in Brazil to provide added insect protection.

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In 2013 Mosanto acquired US based ClimateCorp for $930 million. ClimateCorp makes weather
predictions for the farm community based on previous data and data modelling. ClimateCorp
used to compensate farmers if predictions were wrong

Monsanto bought a weather predicting technology to manage supply chain risks.

Impact on Monsanto

Monsanto is a Missouri-based agricultural biotechnology company that produces genetically

engineered seeds. It has a 18 month supply chain cycle, which means that in Q1 of Year 1, the
company needs to plan for the customer seed demand in Q3 of Year 2 (taking into account the
time to grow and harvest the seeds for selling). Because of this long supply chain process,
demand forecasting is critical to its planning and risk management processes. [1]

Weather is one of the biggest drivers of demand forecast accuracy, in addition to acres and
seeding rate. More than 70% of a farmer’s decisions are influenced by weather. [2] For example,
if the growing season encounters drought, it’d in Monsanto’s interest to drastically increase seed
planting in anticipation of supply shortages. Climate change in the recent years has severely
impacted the company’s ability to predict demand accurately, which translates into increases in
cost. With the growing competitive pressure in the agricultural inputs business, customers are
becoming less willing to accept costs that result from inadequate supply chain management. [1]
As such, Monsanto has taken active steps to respond to both the rapidly changing market
conditions and the growing supply chain risk that comes along with climate change.

Monsanto’s acquisition

In 2013, Monsanto spent $ 1 billion to acquire Climate Corporation, a company that uses
machine learning to forecast weather and other demand factors in the agri-food industry. Since
its launch in 2006, Climate Corp has developed a platform based on data combining
meteorological and performance data to predict the impact of weather conditions on crop yield
forecasts. When Monsanto first examined this acquisition, skeptics expressed concerns about the
viability of the weather forecast. However, Monsanto has seen a climate change future and has
taken swift action to manage future supply chain risks. In recent years, a growing number of
agricultural companies have taken similar steps to better exploit big data (including weather
forecasting technology) to manage the supply chain risks associated with climate change. [3]
The acquisition of Climate Corp marks one of Monsanto's milestones in the analysis of massive
data. For supply chain efficiency and maximum productivity over the life cycle of the company,
Monsanto has continued to invest in a series of Big Data tools (for example, SmartForecasts
Enterprise) to improve demand forecasting and inventory optimization.

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What else should Monsanto consider?

While the acquisition of data analytics tools is a smart move, tools alone are insufficient.
Monsanto needs to adjust its culture and organizational structure to ensure its managements can
appropriately use these tools in decision making. In fact, cultural inertia can be one of the biggest
roadblocks to operations improvement via big data. [5]
First, executives who are used to relying on business judgement in decision making may
embrace the tools on the surface but stubbornly resist using big data in real decision making.
Second, management and working teams may have this belief that predictive platforms needs to
be 100% or they cannot be trusted. As we saw in IBM Watson case, the standard for errors is a
lot higher for machines than humans. Lastly, if predictive analytics tools (e.g., Climate Corp,
SmartForecasts) were to be used to improve supply chain, organizational structure needs to be
considered to integrate analytics and traditional supply chain departments. In sum, Monsanto
cannot neglect the amount of change management required to ensure that its acquired predictive
tools are truly used and embraced by its management / working teams. [6]

Ethics of Monsanto’s big data usage

Monsanto’s move into big data undoubtedly improves its supply chain efficiency by allowing the
company to better predict and track its customers’ demands. However, it also creates a power
asymmetry between this large agribusiness and its customers (the farmers). Monsanto’s ability to
amass huge quantities of data to generate insights creates informational advantage over farmers
and allows it to gain more negotiation power over them. [7] For example, not only does
Monsanto plan to use the weather predictive tool for internal supply chain management, it also
plans to commercialize the technology by selling to farmers to enable them to grow crops in
changing climate. This then allows Monsanto to collect a massive amount of data from its
farmers. [8]

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The Future: Strategies for Reaching Global Markets, Bayer’s acquisition of Monsanto

Monsanto has had to recently change their strategy for reaching global customers. Monsanto
specializes in biotechnology, which means that they specialize in genetically modified
organisms, or GMOs. GMOs are currently banned in many European countries due to health
concerns, (Just Label It, 2012). Due to the current ban and numerous protests in Europe against
Monsanto, the company has decided to withdraw applications to introduce GMO crops.
(Cressey, 2013) Instead, the company will invest in its non-GMO seed crops in Europe to boost
sales.

Monsanto is already infamous around the globe for their genetically engineered food sources.
Protests are staged worldwide, both against GMOs and against Monsanto itself. Monsanto wants
to sell its products world so that they can dominate the industry and of course increase profit
gains. There haven’t been any competitors that I have been able to find, other than the anti-GMO
movement. In Europe and Asia as well, genetically modified crops are banned from farming as
well as from import. This would have to make their main competitors the side of the agriculture.

The main barriers Monsanto has to establishing its global market would appear to be agricultural
in nature. There is an ongoing debate worldwide as to the side effects of consuming man-made
crops. In countries where GMOs are banned, Monsanto could attempt to lobby for the sales of
GMO crops or educate the world market on their stance of GMOs.

On 7th June 2018, the German chemical company Bayer Chemicals acquired Monsanto Global.
The operation is currently worth 63 billion dollars if Monsanto’s debt is taken into account. It’s
the first time in history that a German company carries out such a large acquisition. As stated in
Bayer’s note, the day after the announcement the company secured a 57 billion dollar bridging
loan that has already been partially refinanced. As reported by Reuters, on the 3rd of June Bayer
announced a capital increase that included the emission of 74.6 million new shares in around two
weeks. Each one costing 81 euros, for a grand total of 6 billion euros. The emission was made
possible by a tight deal with 20 large banks, and it also includes a 22 per cent discount for
current shareholders. Bayer added that it plans to emit senior bonds (money that a company must
repay first if it goes out of business) for a total of 20 billion euros.

Bayer cashed in a few billion when it sold Covestro, a polymer and plastic producer, and from
transfers towards BASF, a huge chemical company based in the German city of Ludwigshafen,
imposed by antitrust authorities in order to avoid a monopoly on certain products.

Impact of the acquisition

 Bayer would be deviating from its (expected) pure—play pharma strategy, which it

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 pursued by reducing exposure to its material sciences business (Covestro) through an
IPO. There was also talk of Bayer selling its CropSciences unit.
 Instead Bayer is now planning to split its business post—acquisition into two divisions:
Healthcare (49% of revenue) and crop sciences with Monsanto (49%). Currently, crop
sciences are generating 30% of revenue.
 Rationale for the merger includes that focusing on pure—play pharma would put Bayer
at risk of becoming an acquisition target. This is in line with Bayer’s broader push
towards establishing itself as a “life science” company and not just a pharma company.
 Bayer would expand its geographic presence in the Americas, Europe, and
Asia/Pacific. (Bayer Press Release)
 R&D knowledge exchange between Bayer and Monsanto
 Bayer’s PR department will expand 10x to deal with Monsanto.
 For Monsanto the deal makes sense: the bid will compensate investors for the slump in
the agri—market (due to slumping crop prices) post financial crisis. Monsanto’s
shareholders would be happy. Monsanto has been looking for a way to bolster its
position among industry consolidation and after their failed bid for Syngenta, this is the
next best thing.
 Other options aren’t logical: Monsanto could attempt to buy Bayer’s crop sciences
unit, but that makes no sense given Bayer’s strategy shift. A counterbid by BASF on
Monsanto (after Monsanto considered buying their crop sci. division) wouldn’t make
sense either because BASF is probably not able to finance the deal.

ONE-STOP SHOP

 Bayer's move to combine its crop chemicals business, the world's second largest after
Syngenta AG, with Monsanto's industry leading seeds business, is the latest in a series of
major tie-ups in the agrochemicals sector. The German company is aiming to create a
one-stop shop for seeds, crop chemicals and computer-aided services to farmers.

 That was also the idea behind Monsanto's swoop on Syngenta last year, which the Swiss
company fended off, only to agree later to a takeover by China's state-owned
ChemChina.

 Elsewhere in the industry, U.S. chemicals giants Dow Chemical and DuPont plan to
merge and later spin off their respective seeds and crop chemicals operations into a major
agribusiness.

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  The Bayer-Monsanto deal will be the largest ever involving a German buyer, beating
Daimler's tie-up with Chrysler in 1998, which valued the U.S. carmaker at more than $40
billion. It will also be the largest all-cash transaction on record, ahead of brewer InBev's
$60.4 billion offer for Anheuser-Busch in 2008.

 Bayer said it expected the deal to boost its core earnings per share in the first full year
following completion and by a double-digit percentage in the third year.

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References:

1. Stephen C. Graves et al, “Optimizing Monsanto’s Supply Chain Under Uncertain

Demand“, Semantic Scholar (1997)
https://pdfs.semanticscholar.org/9c35/5c0f080f60a361c477e5aa35b63cc1fda455.pdf
2. [2] Eugene S. Takle et al, “Climate Forecasts for Corn Producer Decision Making“, U.S.
Department of Agriculture: Agricultural Research Service (2014)
http://digitalcommons.unl.edu/cgi/viewcontent.cgi?article=2416&context=usdaarsfacpub
3. [3] Megan Stubbs, “Big Data in U.S. Agriculture“, Congressional Research Service
(2016)https://fas.org/sgp/crs/misc/R44331.pdf
4. [4] John Comando, “Monsanto Selects Smart Software’s SmartForecasts to Improve
Forecasting Process“, BusinessWire (2004)
http://www.businesswire.com/news/home/20040225005095/en/Monsanto-Selects-Smart-
Softwares-SmartForecasts-Improve-Forecasting
5. [5] Murli Buluswar et al, “How companies are using big data and analytics“, McKinsey
& Co (2016) https://www.mckinsey.com/business-functions/mckinsey-analytics/our-
insights/how-companies-are-using-big-data-and-analytics
6. [6] Randy Bean, “Why Cultural Change is Necessary for Big Data Adoption“, Forbes
(2016) https://www.forbes.com/sites/ciocentral/2016/11/08/another-side-of-big-data-big-
data-for-social-good-2/#690032c86628
7. [7] Isabelle M. Carbonnell, “The Ethics of Big Data in Big Agriculture“, Journal on
Internet Regulation, Policy Review (2016)
https://policyreview.info/articles/analysis/ethics-big-data-big-agriculture
8. [8] Dan Mitchell, “Why Monsanto Spent $1 Billion on Climate Data“, Modern Farmer
(2013) https://modernfarmer.com/2013/10/monsanto-spent-1-billion-climate-data/
9. Cressey, Daniel. "Monsanto Drops GM in Europe." Nature.com. Nature Publishing
Group. Web. Retrieved 10 September 2013. http://www.nature.com/news/monsanto-
drops-gm-in-europe-1.13432.

10. Just Label It, Just Label It Campaign. (2012) “Labeling Around the World.” Web.
Retrieved September 5, 2013, from http://justlabelit.org/right-to-know/labeling-around-
the-world/

11. https://sites.google.com/a/email.vccs.edu/bus100jyen/home/strategies-for-reaching-
global-markets

12. https://monsantoblog.wordpress.com/

13. https://rctom.hbs.org/submission/monsanto-predicting-weather-crazy-or-crazily-smart/

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 14. https://monsanto.com/news-releases/bayer-closes-monsanto-acquisition/

15. https://phys.org/news/2018-05-bayer-monsanto-takeover-lucrative.html

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