Villous Monsanto aims to be the leading agricultural company in the global market. II. Objectives of the Case The case aims to: 1. Identify the core competencies of Monsanto 2. Identify the problems faced by the company, and Its mall concern 3. Enumerate alternative courses of action for the company’s concerns 4. Recommend the course of action that best fits with resources and constraints Ill. Problem Statement With the company’s large ambitions, it is faced with a burdensome debt load, and insufficient resources to balance business expansion. ‘V.
Alternative Courses of Action 1. Divest the following businesses: Nutrition & Consumer Products; and Pharmaceuticals in order to focus on Agriculture 2. Enter a Joint venture with other industry players 3. Expand business through debt financing V. Analytical Tools 1. BCC Matrix 2. SOOT Analysis VI. Recommendation Thorough study of Monsanto business recommends that it focus on its core competency – Agriculture. Focusing on agriculture, would also mean Its divesting on the other businesses In Its portfolio, both Nutrition & Consumer products, and Pharmaceuticals.
W. Implementation Plan To finance expansion, firstly in Pharmaceuticals, it is best to enter a merger with another company within 2 – 3 years. It is best to harness maximum cash inflow for a lackluster company, with the plan of divesting It In the future. In the long-run, 5 – 10 years coming in to the future, focus on agriculture, and expand business through debt financing. Cash inflows generated, may be diverted to this segment. A portion of outstanding debt may also be converted to equity, for a less risky business.
VIII. Conclusion Monsanto indeed is troubled with its growing debt load. Faced with threats coupled with both strengths and weaknesses, it is imperative that Monsanto face hem with urgency. Its ambition of a life sciences behemoth may not be achieved due to internal weaknesses and external conditions. Analytical Tool The BCC Matrix The BCC Matrix studies the three segments in Monsanto business portfolio: Agriculture, Nutrition and Consumer Products, and its Pharmaceuticals segment.
Star The nutrition and consumer products segment is a star. A star is a business segment with high relative market share in a rapidly growing business environment – should be profitable for a segment. However, it may require higher investments to keep up with the rapid market growth. This segment may consume more cash than is earned. Question Mark GO Scarlet is a question mark as it is with a relatively lower market share in a rapidly growing market – likewise an expensive venture.
Higher investments to this segment may only maintain its small market share, even when the market share is yielding low or negative profits from its operations. Cash Dog A business with a relatively low market share in a slowly growing stagnant market, is seen as a moderate supplier and user of cash. Unfortunately however, no segment in Monsanto portfolio falls in this classification Cash Cow The agriculture division of Monsanto is a cash cow. The cash cow is a business segment with a high relative market share in a lowly growing market. This is both profitable and a source of excess cash.
The slow growth of the market does not require large investments to maintain market position Success Sequence for Monsanto A success sequence in the BCC Matrix involves investing cash from cash cows, the Agriculture segment, in selected question marks, such as the Pharmaceuticals segment, to enable them to become stars by increasing their relative market shares. Analytical 1001 -rows Analysts THREAT 1. Expiring patent of leading product which composes 40% of Sales 2. Opposition to genetic modification in Europe 3. Celebrate controversies 4. Bovine compatriots resistance in legal or regulatory environment 5.
The United States prohibits the export of drugs that have not been approved for marketing by the FDA 6. Increasing protests against Smog 7. High costs and risks are involved in bringing a new drug to the market 8. Increases in domestic competition 9. Harvard researchers refused to give Monsanto access to research findings until they had been published in academic Journals. 0. Jeremy Riffing attacked Monsanto testifying that genetically altered bacteria could spread uncontrollably causing problems that have not yet been identified 11. A report was issued by the EPA regarding Monsanto safety studies test.