Strategic Alliances and Merger and Acquisition Strategies

We've already touched on some of these concepts mentioned in chapters 13 and 14 when evaluating Monsanto.

First let's look at strategic alliance.  You've already read about the cooperation of Monsanto with Dow in developing corn seeds.  A more significant part of their daily operations however are the relationships with Monsanto's suppliers.  And operating through global procurement, there are obvious advantages for the company. One is that they have a choice in who they deal with. They have flexibility within their supply chain to partner with suppliers in areas that are convenient for them, they're able to negotiate and take bids allowing them to keep their costs reasonable, and they can keep their level of diversity without having to micromanage and produce in each step of the production process.  Furthermore, using this approach allows a more sustainable procurement for Monsanto without burdening or overusing resources in one particular area.  For small areas or economically struggling, partnering with the company may lead to more local jobs and put more money into that local economy. Thus it is a better option for all involved.

There are also advantages for the suppliers that partner with Monsanto. For many of the small companies, landing Monsanto would be a very large account.  Also they can be located anywhere in the world and still have an opportunity at venturing with them.  Because Monsanto uses a large variety and number of suppliers, there's not an unreasonable expectation for one company to mass produce. Each company contributes what they can/what they commit to.

These partnerships are known as supply agreements.

Through licensing agreements, Monsanto builds another type of relationship through its corn states branch by selling some of its licenses to smaller seed companies.  A good analogy of this may be like a resource/research thrift shop.  It gives smaller seed companies an advantage because they do not have the money needed to invest in research or production for genetic modified products.  This gives them the ability to incorporate modification needed for their area such as herbicide resistance in a mixed tailored for their local area and gives local farmers more choices based on their financial abilities.  This also benefits Monsanto in a couple of ways. It builds relationships which is always a great means of marketing, and it allows them extra income for formulas they are no longer developing or selling because they are producing the next big thing.

Monsanto has formed equity alliances with numerous partners to ensure the advancement of technology and innovation.  Currently, Monsanto is actively seeking partners to help them advance in biotechnology, biologics, seed breeding, and chemistry.

Monsanto has been a part of a number of mergers and acquisitions.  The Jacob Hartz seed company as mentioned before was Monsanto's first acquisition.  In 1996 they acquired biotech companies Agracetus and Calgene.  The following year they purchased two more seed companies.  1998 they complete the purchase of Dekalb Genetics Corp.

In 2000, they entered into a merger and changed their name to Pharmacia.  Monsanto's pharmaceuticals and nutrition business known as Pharmacia was later purchased by Pfizer, and Monsanto split to become the "new Monsanto".

In 2005, Monsanto purchases Seminis, Inc, a global leader in the vegetable and fruit the industry, forms ASI, holding company for corn and soybean seeds purchases two more seed companies.  They also acquire Stoneville cotton company.

As the years continue, they buy more and more smaller companies.  Monsanto and Dow sign a global agreement for crosslicensing.  They form of business and licensing agreement with Bayer.  They form a joint research and development relationship with BASF. In 2011, they acquired the biotechnology R&D company Divergence which focuses on parasites.


http://www.monsanto.com/whoweare/pages/sustainability-and-procurement.aspx

http://www.monsanto.com/whoweare/pages/partner-with-monsanto.aspx

http://www.monsanto.com/whoweare/pages/commitment-to-partnerships.aspx

http://www.monsanto.com/whoweare/pages/monsanto-history.aspx