Firm Performance and Competitive Advantage

This week we focus on firm performance and competitive advantage.  The complexity of the advantages and disadvantages is what drew my interest to putting Monsanto on the disection table.  The article found at the link below is a great summary of some of the competitive disadvantages the company faces and some speculations why.

http://modernfarmer.com/2014/03/monsantos-good-bad-pr-problem/

Monsanto was founded in 1901,  So neither business nor public criticizism are new concepts to the industrial agricultural giant.  It's original focus was chemicals.  " Monsanto was one of a handful of companies that produced Agent Orange, and its main poison, Dioxin. It sold DDT, PCBs, the controversial dairy cow hormone, rBGH, and the cancer-linked Aspartame sweetener."  Of course, while these products may have turned a profit, they did not set well in the public eye.

Now, as a GM company (Genetic Modification), that produces "super seeds".  Society often criticizes them for "playing God".  

From an economic perspective, however, the company continues to be profitable despite looking like the villain, even when their competitors suffer much less scutiny.  This report by Monsanto, http://news.monsanto.com/press-release/financial/monsanto-first-quarter-milestones-reinforce-foundation-growth-fy15-and-confi, confirms that continued growth is foreseen for 2015.  Net sales for the first quarter this year is $2.9 billion.  This is down slightly from last year, but Monsanto operates globally, so when activity is projected to decrease in certain markets, they diversify their capital allocation within their portfolio to ensure they stay on track.  

Their stock prices are among the most expensive of their competing GM's.  Around $118 per share is right up there with Terra Nitrogen and Agrium, while CF Industries sell for $305 per share and all other competitors reign in at $65 and below. (http://www.nasdaq.com/symbol/mon/competitors) Ownership is composed of 90.50% institutional holdings. (http://www.nasdaq.com/symbol/mon/ownership-summary)

Overall, Monsanto focuses it's strategies on development and performance.  Public relations and marketing should be given more consideration if they desire to optimize their profitability.  While their intentions to help farmers produce at the highest capacity possible, they are often seen as the creators of "Frankenfood" focused on $$$.  When coming under fire during the Mad Cow epidemic in Europe some years back, they did not approach the scrutiny with concern or compassion, and the image they maintain as the bad guys continues. http://modernfarmer.com/2014/03/monsantos-good-bad-pr-problem/