MONSANTO CASE STUDY Essay Example
Monsanto is a leading company in the production of GM products in the world, dealing with products such as cotton, canola, corn and soybeans. The Monsanto case touches on issues of marketing and management. Productivity in the agriculture industry started to decrease with increased expenses for inputs, increased wages, and more unpredictable weather in the early 1990s. Agriculturalists are exposed to higher level of market unpredictability by large profit-making farms. Farming a big amount of a single or two crops makes farmers more susceptible to price instabilities than farming at smaller amounts of several crops. Monsanto has encountered several legal battles in its course of doing business. The major legal battle happened on 2003 when 20,000 residents were awarded $700 million for years of ground water contamination (Ferrell, Fraedrich, and Ferrell, 2015). The company was forced to bring in a new CEO, Hugh Grant, in efforts to counter worried stakeholders after such a verdict. Hugh Grant divided Monsanto into several SBUs including Solutia, Pharmacia, and Seminis, perhaps to diffuse stakeholder worries with the Monsanto brand.
Monsanto remains debatable due to the strong feelings which most stakeholders have as regards the biogenetic engineering of farming products. This is a quite controversial issue since in most developing nations crops like corn, soybeans, and rice have the capacity to increase production to help alleviate starvation. Food demands are increasing at an alarming rate with the rapid increase in populations in developing nations. Monsanto can only be able to meet the needs of stakeholders if its GM seeds can produce more harvests with few undesirable effects. However, the true intentions of Monsanto are not forthright. It is not evident whether the company operates with the desires of the stakeholders at heart or whether it is only concerned with its own interests. Monsanto holds that its crops can attain both ends: benefits the farmers and at the same time help it maximize its profits (Kilman, and Burton, 1999).
The Monsanto case touches on issues of marketing and management. The other issues that Monsanto has to deal with include seed sterility and patent protection. The company is accused of trying to control the food supply all over the world, harming biodiversity and introducing GM seeds that have the potential to destroy the eco-system and generate negative permanent effects on the humankind. The seed police and the sterile seed technology raise the issue of whether government grant on food is lawful or ethical from an international perspective. Monsanto manages its market control advantage in order to evade engaging in market practices that are ill-advised and leveraging its market position to employ practices that are not competitive (Gorman et al, 2001).
The company holds that its seeds increase crop production and that its chemical, such as Roundup, reduces crop damage and labor expenses. The objective of Monsanto is to develop solutions to world starvation through generating higher crop production and hardier plants. The company sees the GM products as the best solution to this problem. Monsanto earns 60% of its profits from the production of GM products. However, the company has recently experienced a substantive fall in stock prices as the discussion over GM crops started to heat up. Although the company contributes billion dollars every year to charity, its contributions amount to only 1% of its yearly profits. This is quite a small amount compared to what other companies including small companies that earn little revenues compared to Monsanto, contributes. Some companies contribute as high as 6% of their annual profits to charity (Gorman et al, 2000).
The decision of Monsanto to market its crops to farmers with limited resources in the third world raises critical issues of ethics. Monsanto had taken the ‘’green» marketing strategy of its GM crops arguing that they enable farmers to grow many productive crops on a small piece of land. This has had a negative impact on farmers by making them reliant on Monsanto and other producers of chemicals, fertilizers, and seeds. The increased expenses of inputs make it difficult to become more cost-effective. Generally, organic farming calls for more thought compared to switching seeds. Farmers need to consider the natural benefits and demerits of soil chemical composition, crop rotation and using better methods and tools to cultivate the land rather than maximizing output. Moreover, the past ethical lapses of Monsanto, as well as its seed investigators, may interfere with an ethical organizational culture. As with most big firms, the past and processes of Monsanto have ethical as well as unethical areas (Gorman et al., 2000).
The GM seeds have several benefits such as the capacity to cultivate crops that endure harsh conditions and do well on degraded land and produce more yields. Monsanto seeds that claim to not require more water and are resistant to pest may be desirable to agriculturalists. For example, Monsanto said that the GM seed Bt was unaffected by the boll weevil (the main cotton pest) and only needed the insecticide to be sprayed twice for every crop rather than the normal eight. Though the GM seed is sold at about 5times the price of a normal seed, many farmers prefer to purchase it as they thought it was imperishable and would produce a higher return. However, the Bt plants were stricken by a different disease that completely destroyed it, leaving farmers with extraordinarily high debt (Kleinman, 1991).
The main objective of Monsanto is to increase crop production given the increased international demands for food that is accompanied by decreasing land suitable for agriculture. However, these benefits are weighed down by the negative consequences of GM seeds. Research studies have demonstrated that GM crops have negative effects on the health of human beings. GM plants have shown to contaminate traditional plants and generated unexpected genetic mutations. Moreover, GM seeds pose a risk to the farming practices that agriculturalists have been employing for centuries. Furthermore, relying exclusively on GM seeds can result in crops that are all genetically modified. Thus depending only on GM seeds poses a major risk in cases where the GM plants get contaminated as this can have serious consequences on the food supply of the country affected as well as on the global food supply (Kilman and Burton, 1999).
The advancement in technology allowed Monsanto to develop seeds having the herbicide Roundup that kills unwanted plant yet spare the crops. The issue of Roundup is quite controversial. Monsanto claims that Roundup doesn’t penetrate to the ground water and thus t it won’t get the ground water contaminated. The company argues that Roundup is safe and does not disturb aquatic species. The company is trying it best to take actions in order that farmers may feel safe using Roundup. However, research studies have shown that glyphosate contained in RoundUp actually does find its way into the groundwater. Thus, Roundup poses a great threat to both the environmental and human health. It has been linked to conditions such as cancer and infertility given its genotoxic nature. Moreover, the use of Roundup results in resistant weeds, leading to crop destruction and bankrupted farmers. The use of Roundup compromises the health of microorganisms, such as mycelium and fungi and this may cause serious harm to the planetary biosphere. These microorganisms play a crucial role in soil formation and composition. Humankind depends on the soil to survive and hence interfering with the soil microorganisms equates to destroying human life (Ferrell, Fraedrich, and Ferrell, 2015).
Monsanto will need to increase the strength of Roundup or completely change its formula so as to avoid generating resistant weeds. Monsanto may find it very difficult to come up with new chemicals but the worse is that the weeds will also grow resistant to the new products with time. Thus, Monsanto may need to provide additional motivations and training about the correct use of Roundup to inspire farmers to involve in activities that can decrease weeds that are resistant.
Ferrell, O.C., Fraedrich, J. and Ferrell, L. (2015). Business Ethics: Ethical Decision Making and Cases, 10th Edition, Cengage Learning.
Gorman ME, Hertz M, and Magpili LP. (2000). Combining ethics and design: Monsanto and genetically modified organisms. In: Paper presented at the American society for engineering education.
Gorman ME, Simmonds J, Ofiesh C, Smith R, and Werhane PH. (2001). Monsanto and intellectual property. Teach Eth, 2(1):91–100.
Kilman S, Burton TM. (1999). Monsanto boss’s vision of ‘life sciences’ firm now confronts reality. Wall Street J, 1–10
Kleinman, D. (1991). «Aiming For the Discursive High Ground: Monsanto and the Biotechnology Controversy.» Sociological Forum. 6.3: 427-447.
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