Evaluating Firm Strengths and Weaknesses: The Resource-Based View

Applying the VRIO Framework to Monsanto:

VRIO: Value, Rarity, Imitability, and Organization

When evaluating the resources and capabilities of the firm, it is essential to strategize in a way that exploits the environmental strengths and minimizes environmental threats as much as possible.

Using the VRIO framework approach, one asks the question, "Is the resource or capability...valuable? rare? costly to imitate? exploited by organization?"

Applying this principle, where does Monsanto lie?

Their products are unique.  They are relatively rare, because they take a significant amount of time and money to develop.  The research that goes into development of genetically modified seeds rival that of drugs and vaccines.  Also, it would be both costly and difficult to imitate.  They definitely capitalize on this quality.

They are global.  This capability is not extremely rare overall.  However, it is valuable and they definitely exploit this capability.  If there are production issues in certain countries or areas, there are numberous other locations that could potentially meet there needs.  This would be costly to imitate for other agricultural companies.

Clients gain more than a product.  If a farmer invests in seeds that are modified by Monsanto to produce bigger, better crops, they also come with an innate defense against certain pests.  This type of insurance without having to add poisonous chemicals/pesticides to the crops and guaranteeing a ROI by the increase in producation is definitely valuable.  Is it rare?  Potentially.  Rare because competition is relatively scarce.  Also, because so many variables go into farming.  The quality of the land and most of all the weather are big determinants of success in addition to the quality of the seed. One way that Monsanto exploits the knowledge of these variables is by providing data to the farmers to help them prepare for the season and giving them expert advice based on the data gathered from state of the art equipment.  This is a great perk to a farmer without the means to invest in that type of research based investment.

It would appear that they are pretty wise about what it takes to stay competitive in this market when it comes to the basics.