Monsanto: Good Business or Sadistic Action

Monsanto has recently come under fire for treading the fine line of good business practice and violation of antitrust laws. Whether they have in fact violated these laws is I think less relevant to how sinister this behaviour really is. The full story is below:

Monsanto's Dominance Draws Antitrust Inquiry

To summarize, as one of the world's largest chemical companies, Monsanto created and patented a product known as Roundup in the 1970s. Roundup kills just about all weeds but unfortunately also kills any crop if used after planting it. The company apparently ‘stumbled upon’ some resilient organisms that could withstand the chemical's lethal effects. Scientists isolated the resilient gene, genetically modified it and placed it into soybeans and corn creating a plant known as Roundup Ready.

Now let's step back and think about this. Monsanto creates a product that is lethal for the environment yet through this process figures out how to genetically modify resilient organisms to create new crops that can withstand this negative effect all the while obliterating the competition. Similar to the razor blade model (where you have to purchase the blades from the same company that sold you the razor), farmers are locked in to purchasing Monsanto's crops because they're the only ones that can withstand the years of herbicide use that Monsanto imposed.

This is not that different from my Nestle blog posting (Prime Time Advertisements) where Nestlé is capitalizing on the negative effects of their processed food by creating a new market of health products in France. Here, Monsanto is capitalizing on the negative effects of their herbicide by creating a solution, the solution, to withstand these negative effects. The scary thing is that no one is better positioned than Monsanto and Nestlé to figure out how to remedy the negative effects of their products. While some may say that that is a good thing, I would argue that this creates a highly dangerous and repetitive business practice of creating a problem and then finding the solution to the problem to double revenues and obliterate the competition, all the while ecological and social devastation continues unabated.

Now unfortunately that is the crux of strategic management - a firm's obligation to differentiate itself from the competition - the course all business students take in their final year of an MBA or Commerce degree. Something needs to change!