The key strategic characteristics of Monsanto’s competitors
What are the key strategic characteristics of Monsanto’s competitors? Which of these competitors do you see as posing the most significant strategic threat to Monsanto? Why does this competitor pose the most significant threat? Monsanto’s major competitors are companies such as Novartis, Syngenta, American Home Products and the DuPont firm called Pioneer. All these organisations are capable of protecting crops and areas of land using effective methods that provide minimal damage to the surrounding ecosystems.
Monsanto has spearheaded the crop protection industry and organisations have reacted differently to maintain their own profits. Pioneer markets and sells genetically modified products that directly compete with Monsanto’s products. This organisation also uses Monsanto’s Roundup Ready Corn 2 gene under a license provided by Monsanto. (Pioneer2002) Novarits impacts on the revenues obtained by Monsanto but there main focus is health sciences. They contribute to the crop protection industry and provide farmers with alternative sources of products.
Syngenta produces both selective and non-selective herbicides that provide crop and other surface protection for customers. American Home Products has previously threatened Monsanto with the creation of a substitute herbicide called EXTREME capable of preventing weed growth for up to 6 days. DuPont is a company with a specific subsidiary
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” (Pioneer2002) The success of this organisation has stemmed from its international sales by way of subsidiary companies, joint ventures and sales representatives who actively promote and distribute the products directly threatening Monsanto’s market share. Up until the year 2000 DuPont was licensed to produce products using Monsanto’s glyphosphate innovation but in recent times they have been in direct competition with Monsanto producing herbicides of their own. The fact that DuPont has developed a subsidiary that focuses on advanced plant genetics indicates that they have adopted a ‘focus strategy.
‘ This means that the company is focusing on a specific area of the market in an attempt to gain a competitive advantage. Pioneer provides a majority of its products for crop users which can be considered a selective part of an biotechnology industry. Novartis is not as intensely competitive with Monsanto in the field of agricultural protection and innovation. Novartis promotes its main company focus as “market[ing] innovative products to cure diseases, to ease suffering, and to enhance the quality of life” (Novartis AG 2005) while Monsanto displays itself as an advanced agricultural organisation.
Novartis does provide agricultural assistance and claims that these products are provided to “enhance the production of safe, healthy and high quality foods, food ingredients, feed, plants and plant derivatives. ” (Novartis Fact and Figures 1999/2000) With a medical focus Novartis distances itself from Monsanto. It gives its attention to improving all qualities of life rather then concentrating on improving crop yields. It is using a strategy that differentiates the company from Monsanto by advertising different business objectives and achievements.
This is appealing to a growing number of consumers as debates erupt concerning genetically modified foods and. Novartis also has the advantage of a broader market range. It provides products to a number of medical industries giving them several sources of revenue. With ‘growing concerns’ about links between Monsanto’s herbicide treatment and a form of cancer this is an important source of income for Novartis. Their differentiation from Monsanto may provide a future competitive advantage. Syngenta is an organisation that more directly competes with Monsanto in the crop protection industry.
Initially it was deterred by the strength and dominance of Monsanto that stemmed from its glyphosphate patents but more recently it was supplied a court ruling permitting it to enter the crop protection market using similar chemicals. Syngenta is now a company that is “designed to make growers and ranchers more successful. ” (Syngenta 2005) They are an agricultural organisation that provides a direct source of competition to Monsanto. The products of Syngenta are a good way to see the changing trends in today’s farming trends.
The non-selective herbicides have been reduced in total sales since then introduction of selective herbicides. The total revenue collected from non-selective herbicides is $US616 million while the increasing value of selective herbicides has reached $US1717 and is continuing to increase. This increasing market and popularity of selective herbicide products creates intense rivalry among competitors and the need to adopt effective strategies. In the past Syngenta and other firms competing directly with Monsanto have adopted cost-leadership strategies, meaning they are selling products of similar quality at lower prices.
This competitive strategy combined with the expiry of Monsanto’s patents has allowed Syngenta to successfully compete directly with Monsanto. It has the R&D, revenues and international connections “that would compete directly with Monsanto’s ‘Roundup Ready. ‘” (Corey Gillam 2004) It’s innovative and competitive nature has led to Syngenta to “introduce corn that gives growers both glyphosate-resistance and protection against a destructive European corn borer pest. ” (Corey Gillam 2004).