CASE 1
Monsanto 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,
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. Critics accuse Monsanto of attempting to control the world’s food supply, destroying
4. 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.
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,
Case 1: Monsanto Attempts to Balance Stakeholder Interests 79
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
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
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
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, then farmers are making better use of their
resources.
At the same time, stakeholders must weigh the benefits against potential negative consequences.
Long-term research on the health effects of GM food is inconclusive. Europe banned many GM
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. While Monsanto will likely not
have difficulty developing new chemicals, it will always only be a matter of time before pests form a
Additional issues with the Monsanto case:
1. The seed police, farmer rights, and patents
2. Farmers in developing countries
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