Chapter 12 continues exploring diversification strategies and how companies can use them to make them more competitive if they plan appropriately. Specifically chapter 12 focuses on implementing corporate diversification. As with anything one must weigh the difference between the risks and benefits to determine if the strategy will be successful. In this case, will be competitive advantage gained by diversification be of greater value than the cost of implementing the strategy itself in the operational costs associated with maintaining the diversification.
While Monsanto is considered a GMO company, and primarily they are, they are not a GMO company that has diversified to provide chemicals and pesticides. As discussed in previous posts regarding their history, they are a chemical company that has expanded to provide other agricultural products such as seeds and GMO.
In 1901 upon opening, Monsanto's first product was saccharine. In 1945, they began producing and marketing the first agricultural chemicals. In 1964, they added herbicides. In 1975, they opened their first cell biology lab. In 1976, Roundup was released to the US market. In 1981, Monsanto becomes the first to genetically modify a plant cell and they acquire the Jacob Hartz seed company.
So as you can see, Monsanto took the profits that they made from their chemicals and reinvested it into cell biology, genetic modification, and seed production, and from a operational standpoint that really became their focus is they began to grow into this untouched territory. In the beginning, the implementation of diversification was a means to company growth. Now, chemical production and seed production are both large operations and are managed and maintained on a global scale and are for the most part separate endeavors. As a whole however, even though both categories are financially profitable and the investments in the research and development portion is very large, there are definitely some crossover and advantages that come from the diversification route they have chosen. For example, Monsanto produces herbicide. They also produced seeds that are herbicide resistant. Because they produce both, research efforts are made much easier.
This also makes me wonder if building 2 products that are reliant on each other or that creates exclusivity is unethical or just good business strategy? For example, Monsanto creates Roundup, then creates a Roundup resistant seed. This implies other seeds used with Roundup may be at risk to yield an inconsistent crop. It also implies that Monsanto Roundup resistant seed may be at risk if used with other types of herbicide. This would lock the farmer into both choices.
Even though the company carries several brands and operates with global procurement working with various and diverse suppliers and external partnerships to lead to technological innovations, it all comes back to leadership under one small group of 13 comprised of a CEO, COO, VP's and a board of directors.
http://www.monsanto.com/whoweare/pages/board-of-directors.aspx
http://www.monsanto.com/whoweare/pages/monsanto-leadership.aspx
http://www.monsanto.com/whoweare/pages/monsanto-leadership.aspx
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