978-1337614436 Cases Monsanto

Unlock access to all the studying documents.

View Full Document

78 Case 1: Monsanto Attempts to Balance Stakeholder Interests

CASE 51

Monsanto: A Growing Controversy Attempts to

Balance Stakeholder Interests

CASE NOTES FOR INSTRUCTORS

This deals with the themes of management and marketing. A major issue in the Monsanto case is whether

genetically modified products (GM) are safe both for the environment and for human consumption.

Monsanto faces two other major issues: patent protection and insect resistance. The following are some

major points discussed in the Monsanto case:

1. Monsanto is a monopoly, or at best an oligopoly, within the GM market for soybeans, cotton,

corn, and canola. Bayer’s proposed merger with Monsanto has drawn scrutiny from both

European and American legislators due to concern that it will gain too much power in the seed

and pesticide industry. Monsanto must manage its market power advantage so that it avoids

abusing market practices and leveraging its position to engage in anti-competitive practices.

2. Proponents of Monsanto claim that its seeds increase crop yields and that its chemicals—for

example, Roundup—decrease labor cost and crop damage.

3. Monsanto actively enforces its patents over its products and hires investigators to investigate

farmers that it suspects are violating its patents. Farmers found to be in violation face fines. Some

accuse Monsanto of using bullying tactics to examine farmers’ fields. For hundreds of years,

farmers have used seeds from previous seasons for planting—something that is not allowed with

Monsanto’s seeds.

4. Critics accuse Monsanto of attempting to control the world’s food supply, destroying biodiversity,

and inserting genetically modified seeds into the environment that could potentially damage the

world’s ecosystem and create negative long-term effects on the human race.

5. Pests are beginning to gain a resistance to the herbicide Roundup and Roundup Ready crops.

Some farmers are turning to older pesticides and herbicides. Monsanto will have to be careful that

its products do not lead to the creation of superbugs or superweeds.

6. Monsanto has contributed many resources toward farming and socially responsible causes, and it

has been nominated as one of the best corporate citizens and most admired companies.

Monsanto’s stated business mission is to create solutions to world hunger by generating higher crop yields

and hardier plants. A big part of the company’s means of addressing hunger problems is its line of GM

products. Monsanto gains much of its revenues from GM corn, cotton, soybeans, and canola. Instructors

may urge students to look over the firm’s website at http://www.monsanto.com/. After their review, the

instructor may start a discussion of what kinds of information the website provides on the company’s

ethical stance, including what is missing. The instructor may point out that businesses design websites, at

least theoretically, for all stakeholders. If this is the case, students should think about what is missing or

hard to locate. Missing information can clue in stakeholders as to how the company seeks to mold its

image.

As this case underscores, Monsanto has faced many legal battles over the years. An important one

for the company was in 2003, when the Anniston, Alabama PCB verdict awarded $700 million to 20,000

residents for decades of ground water contamination. To counter nervous investors after this ruling, the

company brought in Hugh Grant as CEO. He split up Monsanto into various SBUs such as Pharmacia,

Seminis, and Solutia, possibly to diffuse stakeholder concerns with the Monsanto name. Discussion and

research about Grant and Monsanto’s Board of Directors before and after 2003 may lead students to a

better understanding of corporate politics.

distributed with a certain product or service or otherwise on a password-protected website for classroom use.

79 Case 1: Monsanto Attempts to Balance Stakeholder Interests

The issue of the firm’s “seed police” can lead students into a discussion of whether patents on

food are ethical or legal from a global perspective. Within the United States, patent infringement lawsuits

have become more common, especially within pharmaceuticals and gene therapy.

Starting in the 1990s, profitability in the farming industry began to decline with increased costs

for inputs, more unpredictable weather, and rising wages. Large commercial farms expose farmers to a

greater degree of market volatility. Farming a large quantity of one or two crops leaves farmers more

vulnerable to price fluctuations than farming smaller quantities of many crops. Monsanto seeds, which

claim to require less water and are more pest resistant, can be attractive to farmers. However, even

Monsanto’s seeds are not a sure thing, and their introduction into developing countries has led to

accusations that Monsanto is disrupting centuries-old farming practices. ; for instance, the genetically

modified seed Bt was marketed in India and was endorsed by the local government. Monsanto said it was

resistant to boll weevil—the main cotton pest—and required just two sprays of insecticide for every crop,

instead of the usual eight. However, the GM seed sold for about four and a half times the cost of normal

seed. Many farmers purchased the seeds. Most believed the seeds were indestructible and would provide a

higher yield. They were devastated when many of the Bt cotton plants were afflicted with another disease

that destroyed much of the crop and left the farmers with unusually high debts. Monsanto’s decision to

market its products in the developing world to farmers with fewer resources should yield a fruitful debate

over ethics.

A marketing strategy that has increasing cache around the world is claiming that products are

“green.” Even Monsanto has tried this strategy. The Monsanto “green” strategy for the past couple of

decades has been to promote how its products allow farmers to increase productivity on the same amount

of land. The negative aspect for farmers is that they become dependent upon Monsanto and other

manufacturers for seed, fertilizers, and chemicals. Opponents argue that farmers can grow their

operations, but the increased costs of inputs means that they do not necessarily become more profitable.

Organic farming generally takes more thought than switching seed. Farmers must take into account the

natural advantages and disadvantages of crop rotation, soil chemical make-up, and taking care of the land

instead of maximizing output.

QUESTIONS AND DISCUSSION

1. Does Monsanto maintain an ethical culture that effectively responds to various stakeholders?

Monsanto remains controversial because of the strong feelings that many stakeholders have about the

biogenetic engineering of agricultural products. This is a very debatable area because in many

developing countries, food crops such as rice, corn, and soybeans have been able to increase yields to

help feed hungry people. With populations increasing in less developed countries (LDCs), food

demands are growing rapidly. If GM seeds can increase crop yields with few negative effects, then

Monsanto will be able to meet stakeholders’ needs. On the other hand, many question Monsanto’s

2. Compare the benefits of growing GM seeds for crops with the potential negative consequences of

using them.

The benefits of GM seeds include the potential to grow crops that survive in hostile conditions and on

degraded land and generate higher yields. An issue that Monsanto constantly addresses is the need to

distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Case 1: Monsanto Attempts to Balance Stakeholder

Interests 80

increase crop yield. While the global demand for food continues to increase, land suitable for farming

has been decreasing. If GM seeds can create higher yields and are more resistant to weather

fluctuations, then farmers are making better use of their resources.

At the same time, stakeholders must weigh the benefits against potential negative consequences.

3. How should Monsanto manage the potential harm to plant and animal life from using products such

as Roundup?

The Roundup issue is a difficult topic. Genetics suggest that Roundup resistant weed strains will

necessitate increasing the strength of or changing Roundup’s formula. A recent lawsuit is accusing

health implications to Roundup, although the Environmental Protection Agency maintains that its

ingredient glyphosate is not toxic at recommended does.

1. The seed police, farmer rights, and patents

ADDITIONAL RESOURCES

Have students click to the following NPR discussion about organic farming in India:

http://www.npr.org/templates/story/story.php?storyId=104708731. This article demonstrates that

the popularity of organic farming is not limited to the United States. The rise in organic farming

can constitute a significant threat to Monsanto.

The following article link attempts to examine the real dangers of GMOs. Of interest is the fact

that the more pressing concern seems to be harm on the environment rather than human harm:

http://college.usatoday.com/2015/08/13/are-gmo-foods-harmful/.

The 2004 documentary “The World According to Monsanto,” outlines the problems associated

with Monsanto’s Roundup herbicide. Instructors may wish to show parts of this documentary to

students. http://topdocumentaryfilms.com/the-world-according-to-monsanto/.The following link

questions whether GM crops really increase crop yields:

https://www.nytimes.com/2016/10/30/business/gmo-promise-falls-short.html.



distributed with a certain product or service or otherwise on a password-protected website for classroom use.

81 Case 1: Monsanto Attempts to Balance Stakeholder Interests

The following link helps present both sides of the controversy regarding Monsanto:

http://www.reuters.com/article/2009/11/11/us-food-monsanto-idUSTRE5AA05520091111.

Read the following discussion of Monsanto’s Feed the Future Initiative: The following link

discusses Monsanto’s corporate social responsibility policy:

http://www.monsanto.com/newsviews/pages/feed-the-future-initiative.aspx/.

http://www.monsanto.com/newsviews/pages/feed-the-future-initiative.aspx. This discussion

portrays Monsanto in a more positive light and discusses its efforts to combat hunger.

distributed with a certain product or service or otherwise on a password-protected website for classroom use.