Monsanto SWOT Essay

Monsanto partnership (Monsanto or the connection) expands farming(a) harvest-homes to farmers. Its products include seeds, biotechnology trait products, and herbicides. Monsanto has operations in the US, Canada, Europe, South America, Asia, and Africa. It is headquartered in St. Louis, Missouri and employs about 26,100 people, of which more than 5,500 people are temporary employees. The caller recorded taxations of $11,822 million during the financial year ended August 2011 (FY2011), an plus of 12.8% everyplace FY2010. The ope judge profit of the caller-up was $2,502 million in FY2011, an outgrowth of 56.1% over FY2010. The net profit was $1,607 million in FY2011, an step-up of 46.6% over FY2010.SWOT ANALYSISMonsanto offers boorish products to farmers that include seeds, biotechnology trait products, and herbicides. The political party has a atomic number 82 trade position in assorted geographies found on product portfolio of salutaryhead recognized tag name. Ho wever, increasing instances of misdemeanour of cerebral home rights spate result in the companys de betment dilution and loss of tax revenue. StrengthsStrengthsLeading market place positionMonsanto is a leading global provider of agricultural products for farmers. The companys strong brand portfolio allows it to contri preciselye a commanding position in confused countries. Its just about popular brands include Roundup, Dekalb, Asgrow, De Ruiter, Deltapine, and Seminis. Roundup is the companys flagship brand. It is alike one of the about popular herbicides in the world. Asgrow, Deltapine, and Dekalb are genetically altered seeds (cotton, corn, soybean, and gageola), which tolerate widows mountains and resist bugs. Seminis and De Ruiter are strong brands in the vegetable seeds backup.Monsantos offerings of mellowed yielding variety seeds under well recognized brand names makes it a leading player in most of the countries where it operates. Monsanto enjoys easy market penetration in new geographies rootd on its product portfolio which comprises well recognized brand. The companys strong brand portfolio enhances its market leadership position. Strong focus on seek and training (R&D)Over the long time Monsanto has become a leading supplier to farmers for their agricultural needs because of its exponent to deliver innovative products suiting their requirements. The company has developed competencies in applying biotechnology to farming. Moreover, Monsantos traits technologies enable it to develop herbicides and seeds with superior traits such as weed resistant, drought resistant, and modify yield. The company invests a substantial portion of its revenue towards research and development (R&D) per year. In FY2011, the companys investment in R&D amounted to $1,386 million, an increase of 15% over FY2010.Monsanto has also entered into a number of strategic quislingismisms to expand its R&D capabilities further. For instance, in promenade 2011 , Monsanto and Sapphire Energy (Sapphire) announced an agreement to enter into a multi-year collaboration that would supplement Sapphires algae-based research platform to discover genes that could be applied to agriculture, particularly in the field of yield and stress. In the uniform month, Monsanto and BASF r distributivelyed an agreement to collaborate on the advancement of dicamba tolerant cropping systems. Further, BASF has agreed to supplement formulated dicamba herbicide products to the company.To further raise its R&D capability, the company has established two new R&D centers, one each in China and the US. The research center in China allow for initially participate in early-stage of bioinformatics and genomics research, and will serve as a base for collaborations with Chinese scientists. The other research center in Texas, the US will focus on cotton research and will characterization as the central point for the companys breeding and interrogatory programs in the H igh Plains region. Monsantos focus on applying bioengineering to agriculture not only gives it a competitive edge but also enables it to re merryize its product portfolio. Moreover, its continuous focus on delivering seeds with new and improved traits helps it to offer to changing consumer preferences by offering value driven products to customers. large customer base Monsantos business operations have been well diversified be it in the terms of products offered or the geographical reach. The products offered by its seeds and genomics and agricultural productivity particles complement each other well and offer a complete solution to farmers and other customers. In FY2011, Monsanto derived 72.6% of its revenues from the seeds and genomics segment, while the agricultural productivity segment accounted for the remaining 27.6% of the total revenue. Geographically, in FY2011, the US, Europe-Africa, and Brazil accounted for 53.9%, 12.8%, and 10.8% of the companys revenue, respectively. The remaining areas that contributed to the revenues of Monsanto were Asia-Pacific, Argentina, Canada, and Mexico, among others. Diversified operation dilutes the companys business risk and helps Monsanto to cater to a wider customer base. It further insulates the company from stinting fluctuations in any one region and thereby helps it to generate match earnings.Legal proceedingsMonsanto is involved in various legal proceedings. For instance, in January 2011, the Arkansas Teacher Retirement System filed a complaint alleging that Monsanto break the federal securities laws by making false and misleading statements between January 7, 2009, and may 27, 2010, regarding its earnings guidance for fiscal 2009 and 2010 as well as the pass judgment future performance of its Roundup business and the seeds and genomics business.They also claim that these statements artificially amplify the price of the air and that purchasers of the stock during the relevant period were damaged when the s tock price later declined. The company has also faced similar example in 2007.Further, in May 2011, the US Environmental Protection position (EPA) issued a Notice of Violation to the company, alleging violations of federal environmental release reporting requirements at Monsantos phosphorous manufacturing plant in Soda Springs, Idaho. The EPA has maintain that the alleged violations may subject the company to civil penalties. Misrepresentation of vital information and lack of precautionary measures results in penalties and disrupt the companys operations. Moreover, distortion of information adversely affects the piece carriers confidence and the profitability and credit rating of the company in the long run.OpportunitiesGrowing demand for food products with lessen staring(a) fat and trans-fat Due to the increased awareness regarding the health issues caused delinquent to the consumption of trans-fat, people in the US and in many European nations have been opting more healthi er options. Increased consumption of trans-fat lowers blood levels of high-density lipoprotein (the good cholesterol) and leads to the elevation of LDL (considered the bad cholesterol). This ultimately leads to the hardening of the arteries and divergent coronary problems. Bowing to human beings pressure and litigation by various anti-trans-fat organizations, many food companies (Nabisco and Kraft Foods) in the US have interpreted active steps to remove trans-fat from their offerings. Companies like Taco Bell, KFC (Kentucky Fried Chicken), Wendys, Arbys, and McDonalds have also been trying to substitute high trans-fat cooking anoints with other well alternatives.Keeping this trend in mind, Monsanto has been actively working on the development of seeds that will advance the growth of foods with reduce saturated fat and reduced or no trans-fat. The US Food and Drug Administration (FDA) has issued a response letter to Monsantos Generally Recognized as invulnerable (GRAS) notifica tion. The FDAs letter supports the use of oil from Vistive Gold soybeans (seed type make by the company) to have less saturated fat and trans-fat.The new product would help the farmers to benefit from the premium pricing for their harvest once the oil from Vistive Gold soybeans is mercenaryized. Monsanto has already completed the US regulatory submissions to the US subdivision of Agriculture and FDA for the sale of Vistive Gol soybean. It has also made numerous regulatory submissions to the entrance regulatory agencies around the world for the products commercialization. Once the necessary regulatory offshoot is completed, Monsanto will be able commercialize its product.Through leveraging its expertness in developing seeds with novel traits and wide spread distribution network, Monsanto can become a leading supplier of seeds that produce crops with low saturated fat and trans-fat. It will help the company to expand its revenue base and gain a competitive edge over its peer grou p.strategic agreements and acquisitionsMonsanto has entered into a number of agreements and acquisitions in order to boost its market share and profitability. For instance, Monsanto acquired Divergence, a privately-held St. Louis-based biotechnology research and development company, in February 2011. In show 2011, Monsanto and Sapphire Energy announced an agreement to enter into a multi-year collaboration that would leverage the latters algae-based research platform to discover genes that could be applied to agriculture, particularly in the field of yield and stress. In the homogeneous month, Monsanto and BASF reached an agreement tocollaborate on the advancement of dicamba tolerant cropping systems.Further, BASF has agreed to run formulated dicamba herbicide products to the company. Further, in June 2011, Monsanto entered into collaboration with Amvac Chemical, a subsidiary of American Vanguard, to broaden its Roundup Ready PLUS weed management platform in the US. In September 2 011, Monsanto and GrassRoots Biotechnology agreed to extend their actual three-year research collaboration for an additional two years through January 2014. In November 2011, Monsanto and Evogene announced a one-year extension to their five-year research and development collaboration focused on identifying key plant genes related to yield, environmental stress, and fertilizer utilization in corn, soybean, cotton, and canola. In March 2012, BASF signed a leave agreement with Monsanto for fungicide seed treatments for cotton and soybeans in North America.These strategic agreements and acquisitions will help Monsanto to build a stronger platform for the promotion of its brand image. It will strengthen the companys market share and boost revenue growth. Strategic collaborations will also enhance Monsantos research capabilities and add to its market competitiveness.Growing community, specially in Asia Currently, the world population is more than 7 billion, as of October 2011 and is expected to reach 10.6 billion by 2050. As the population grows the demand for agricultural products is also going to rise. jibe to MarketLine (a unit of Informa) estimates, the Asia-Pacific agricultural products market (the agricultural product market consists of sextet segments cereals fruit, vegetables, roots, and tubers oil crops and pulses sugar crops and sweeteners spices and stimulants and nuts) grew by 4% in 2010 to reach a value of $915.4 billion. In 2015, the Asia-Pacific agricultural products market isforecast to have a value of $1,228.4 billion, an increase of 34.2% since 2010. The Indian agricultural products market, which accounted for 13.8% of the Asia-Pacific agricultural products market in 2010, grew by 14.8% in 2010 to reach a value of $126 billion. In 2015, the Indian agricultural products market is forecast to have a value of $217.5 billion, an increase of 72.6% since 2010. Monsanto is a leading player in most of the countries where it operates. Thus, it can lev erage its expertise, distribution network, and product portfolio comprising well known brand names to cater to the development demand for high yielding variety (HYV) seeds. Monsantos revenue and profit margins can tremendously increase as the demand for HYV grows, especially in Asia.Threats Infringement of intellectual property rights Protecting its intellectual property rights is very important for Monsantos business, particularly in the seeds and genomics segment. The company obtains and protects its intellectual property rights in jurisdictions in which the products are produced or used and in jurisdictions into which the products are imported. However, even if protection is obtained, competitors, farmers, or others in the chain of doctor may raise legal disputes to its rights or illegally infringe on the companys rights, including through means that may be problematic to prevent or detect. In addition to this, due to the rapid cubic yard of technological change, and the conf identiality of patent applications in some jurisdictions, competitors may be issued patents from applications that were unsung to the company prior to issuance. These patents could reduce the value of the companys commercial or pipeline products.Therefore, protecting inventions is critical for Monsanto to meet the growingchallenge of infringement of intellectual property rights. A failure to do so could mean substantial loss of revenue and market share, and brand dilution.genetically modified organism (GMO) regulationsMonsantos revenues could be negatively bear uponed in view of bans imposed on its genetically modified crops. The degree of public acceptance or perceived public acceptance of its biotechnology products can affect its sales and results of operations by affecting planting approvals, regulatory requirements, and customer purchase decisions.Public care can affect the measure of the judicature approvals in different countries. Even if the approvals are granted, publi c concern can lead to increased regulation or litigation against government regulators concerning prior regulatory approvals. Recently, the European Commissioner approved the cultivation of GMO potatoes in Europe, but the decision has come under stiff criticism and protest from various groups working against the GMO crops.Similar regulatory controls could affect the companys market position in various countries. As the regulations around the use of GMO crops intensify, Monsanto would face difficulty in expanding its market and growth of its revenue.Seasonal nature of sales of the seeds and genomics segment Monsantos business is greatly affected by seasonal changes mainly in the seeds and genomics segment. In FY2011, approximately 72% of the seeds and genomics segments sales occurred in the second and third quarters. This segments seasonality is primarily affected by the purchasing and growing patterns in North America.The seeds and genomics segments contribution to the overall reve nue of the company has been steadily growing in the past few years. In FY2011, the segment accounted for 72.6% of the companys revenue, up from 56% in FY2009. Hence, seasonal disturbances can adversely impact the overall sales of the company.Monsanto Company MarketLinePage 9Copyright of Monsanto Company SWOT Analysis is the property of Datamonitor Plc and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holders express written permission. However, users may print, download, or email articles for item-by-item use.