What moves should Monsanto now make? How will it meet the challenge from Du Pont?
MEMORANDUM
To: Hugh Grant, CEO
From: Gregg Steiger , Jeff Feng
Subject: What moves should Monsanto now make? How will it meet the challenge from Du Pont?
Monsanto’s greatest challenge is seemingly its greatest opportunity. As biotech companies produce “smarter” products, much of the world continues to resist the benefits. Despite the huge potential of genetically modified (GM) foods, Monsanto continues to be plagued by heavy spending, leadership changes and the high cost of marketing genetically altered crops to the world.
Of Monsanto’s two main products - genetically altered seeds and chemicals - Roundup has been Monsanto’s cash cow for years and the mainstay of the company since 1901; however, the chemical business is in sharp decline. In 2003, biotech revenues are expected to surpass chemical revenues.
In the face of this inflection point, Monsanto needs to take the position of an analyzer, by protecting its biotech position, while also searching for new product and market opportunities. Monsanto is clearly a technology company and research & development (R&D) is its future. As you’ve stated, you “can’t run a technology business on a hope and a prayer that the European situation will improve in the near-term.” The European Union (EU) postponed a vote on Monday, November 10, 2003; to begin importing GM food. With public opinion in Europe largely hostile to GM foods, it would be difficult to predict the outcome of the December 2003 vote.