Monsanto Europe CASE STUDY

The European past, present and future of the world leader in Genetically Modifi ed foods

Annik a Hohendahl , Géraldine K äs l in , Sebast ian König, Sebast ian Schmidt , Sebast ian Olényi

Content 2

Mission statement Monsanto 3

Introduction / About Monsanto 4/5

Stakeholders: Customers 6-9

Stakeholders: Environment and Society 10-13

Stakeholders: Politics 14-16

Porters Five Forces-Analysis 17

Conclusion, Open Questions and References 18

Europe - full of mistrust: GMO-Free Map 19

Content

“We want to make the world a better place for future generations. As an agricultural company, Monsanto can do this best by providing value

through the products and systems we off er to farmers.With the growth of modern agricultural practices and crops that generate

ever-increasing yields, we are helping farmers around the world to create a better future for human beings, the environment, and local economies.

Increased yields are the core of this agenda. As agricultural productivity increases, farmers are able to produce more food, feed, fuel,

and fi ber on the same amount of land, helping to ensure that agriculture can meet humanity’s needs in the future. Moreover, increased productivity allows farmers to produce more with the same – or fewer –

inputs of energy and pesticide. This results in more responsible use of natural resources, better ecosystem health, increased soil fertility, increased farm income, and more opportunities for farmers and their communities.”

Monsanto “Our Pledge”, www.monsanto.com

Monsanto EuropeMonsanto Corp is an important global player in the agronomic market, the world’s largest seed pro-ducer and technological market leader in the fi eld of genetically modifi ed crops. The purpose of this case study is to investigate and critically evaluate the entrepreneurial decision of Monsanto Corp to expand their genetically modifi ed crops business to the European market in the mid-90ies.

After a short general introduction to some more generic properties of the company, we will ap-proach this problem from three general perspec-tives: role of customers, interplay in political dimension, and the relation towards environment and society. Apart from the more schematical ap-proach with the Porter’s Five Forces diagram that is a classical mean of evaluating the decision for a market entry, we will concentrate on those particu-lar aspects and point of views that seem us to be most important.

By inductive reasoning, we want to encircle the respective attitudes and power of the named stakeholders and thereby expose possible man-agement misconceptions that may have led to an overall failure of Monsanto’s European approach.

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The Stakeholder-AnalysisThe most important stakeholders of Monsanto are presented in the diagram on the right. Their respective relative infl uence upon Monsanto’s policy in the expansion to Europe, as we presume Monsanto judged it when considering the European enterprise, has been represented by scaling; thus it does not neccessarily represent the factual situation, but its presumable assessment by the Monsanto management.

The most important stakeholder groups are stockholders and customers; the latter are discussed in detail in the section „customers“, along with suppliers (being of minor infl uence). We judged the stockholder’s role and infl uence as important, as the main impetus for the European expansion was presumably the promising, profi table European market; the stock-holders’ drive towards such a decision was high.

Just as apparent is the mutual impact of such a fundamental corporate decision on Monsanto’s employees. Moreover, sev-eral cooperations are (at least indirectly) aff ected by this decision, yet their infl uence was not too large.

The stakeholders politics and environment/society are discussed in detail in the respective sections.

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Customers

Monsanto Europe has little direct consumer relations. Only some of the traded herbicides, notably RoundUp, are available on the end consumer market in Europe, but these are of minor importance with respect to the over-all trade portfolio. The trade with Genetically Modifi ed Organisms (GMOs) being the main object of this report, this small range of immediate relation of Monsanto to end-consumers, being largely negligible, will not be taken into account. The company’s primary customers are farmers: seeds, herbicides and further agricultural products are the main trade.

With respect to these two customer groups a double strategy for entering the European market can be estab-lished for Monsanto (see fi gure „Targeting“ p.8) for the time when the original scheme for expanding to Europe was developed. Two forms of trade relations between Monsanto and European customers can be seperated into diff erent groups: European farmers are primary customers that directly (or via defi ned intermediate relays) buy products from Monsanto. End-consumers, however, indirectly purchase goods (food) from Monsanto. The fi nal consumer product is a manufactured good to which production processes Monsanto products have only contrib-uted. Neither is the intermittent chain of production steps defi ned nor homologous (e.g. soy beans grown from diff erent farmers may fi nd their way to the end-product). An example of this „indirect“ targeting of the European market is the arrival of the ship „Ideal Progress“ in Hamburg in 1996 (Wesley D et al., „Monsanto Europe“,p.1); it carried soy beans that had been grown by US farmers and were now the object of trade between food traders. This distinction of direct and indirect approach always has to be borne in mind when evaluating Monsanto’s strategy for Europe. However, according to the central issue of this particular report, the focus will be set mainly on the immediate („direct“) connection between Monsanto and European customers.

As specifi ed above, Monsanto’s main customers are farmers. Accordingly, the terms „customers“ and „farmers“ will be used synonymously and interchangeably in the following discussion, unless specifi ed diff erently.

European farmers generally make up a relatively homogenous customer group, considering individual fi nancial power and the slightly varying (cultural, political, climatical) conditions for agricultural production among Eu-rope. Summing up the vast similarities among the individual customers and contrasting them with the delicate, yet exceedingly important, diff erences will be purpose of the following paragraphs. In a subsequent second part, an evaluation of the farmer’s attitude towards and overall potential infl uence on Monsanto’s product policy in Europe will be sketched.

“What you are seeing is not just a consolidation of seed companies, it’s really a consolidation of the entire food chain”

Robert Fraley, co-president of Monsanto’s agricultural sector 1996, in the Farm Journal.

“People will have Roundup Ready soya whether they like it or not” Ann Foster, spokesperson for Monsanto in Britian, as quoted in The Nation magazine from

article “The Politics of Food” by Maria Margaronis December 27, 1999 issue.

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As reports of violent opposition by „Eco-warriors“ emerged and the

general public’s opinion started disfavouring genetically modifi ed

crops, farmers revised their opinions.

Finally, all these aspects will be summed up in a critical judgement on Monsanto’s customer relations strategy in the course of the expansion to the European market.The agricultural market is heavily dependant on seasonal and annual fl uctuations; cyclical alternation of high-yield and low-yield harvests is the economically measurable eff ect. As an immediate consequence, the long-term fi nancial power of a farmer can be evaluated as not reliably high. Two major factors cushion the potentially instable fi nancial situation of farmers in the European case: (i) European climate, at least in vast parts, considerably stable and the overall technical equipment in European agricultural industry largely advanced; (ii) iEuropean policy exceptionally friendly towards farmers, eff ectively due to subsidies. These two factors largely grant a fi nancial stability to European farmers that is higher than that of their counterparts in other parts of the world.

This does, however, not necessarily imply that their fi nancial power is also to be judged as being high. In spite of their relative fi nancial reliability, European farmers may nevertheless have to borrow to buy a year’s sowings. Moreover, although there are national diff erences among the European countries with high agricultural production, in general, European farmers are neither working with exorbitant turnovers nor profi ts. Especially compared to the huge farms forming the agricultural industry in the Midwest of the USA the European agricultural production appears scattered to lots of small and disparate parcels. Thus, the individual fi nancial power of the average European farmer towards their provider, in our case namely Monsanto, can be estimated as low. They are individually in no strong position for bargaining about prices, even more so considering national disparities and even economical rivalries among Europe-an countries which result in the lack of a functional Europe-wide cooperative. Rather weaker national cooperatives or even regional collectives negotiate prices with providers; the actual economic potency of such cooperatives is subject to large national and regional variation. (A very recent example for the weakened position of agronomic producers due to lack of collective organisation could be observed in Germany (2008), where big public commotion was trig-gered by the bargaining of milk sales prices.

Concordantly, contracts between Monsanto and such described cooperatives are generally over relatively low quanti-ties. The major advantage of Monsanto products is deemed „cost benefi ts to the food industry“ (Wesley D et al., „Mon-santo Europe“, p.10, citing The Daily Telegraph, June 6 1998), explicitly comprising cost benefi ts for the agricultural producers. Particularly in the fi eld of genetically modifi ed crops Monsanto was leading at the time when the deci-sion about an expansion to Europe was taken. In this fi eld, farmers would have no serious alternatives to Monsanto products; e.g. with the combination of RoundUp® herbicide with RoundUp Ready® crops, Monsanto was expecting to provide a product portfolio that was unparalleled. Thus, particularly according to their experiences in the US American market, Monsanto presumably expected a rapidly growing acceptance and success of their products with the Euro-pean customers, mainly due to the „technological progress“ and increased cost effi ciencies they promised. Based on the customer side, Monsanto had qualifi ed reasons for setting up a Europe strategy.

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After this general estimation of the farmers’ position from Monsanto’s point of view, it will be subject of the following paragraphs to examine this group’s infl uence on a „softer“ scale: how (and how much) can the customer’s attitude towards Monsanto aff ect the company’s market position? How can this attitude be evaluated properly?

The overall customers’ attitude towards Monsanto is not easily judged upon. There is generally a certain cultural het-erogeneity among Europe: e.g., British farmers are obviously more prone to Anglo-Saxon economical and agricultural tradition, thus being closer to the US farmers’ appreciating approach towards technological innovations as geneti-cally modifi ed crops; by contrast, continental European famers, e.g. especially in Germany, may tend towards a certain technological scepticism in favour of more „ecological“ and sustainable agriculture. However, apart from these rough cultural classifi cations, serious opposition towards the introduction of genetically modifi ed crops or, more generally, Monsanto products to the European market was not observed on the customers’ side. The promise of increased ef-fi ciencies and yields most probably was tempting, and the brand „Monsanto“, being one of the big players in interna-tional agricultural industry, assumably implied smooth and profi table business relations for the (potential) customers in Europe. Sure enough, UK farmers took part in several early fi eld trials with GMOs. However, as reports of violent opposition by so-called „Eco-warriors“ towards these fi eld trials emerged (see Wesley D et al, „Monsanto Europe“, p.13) and the general public’s opinion started to trend to disfavouring genetically modifi ed crops, these farmers rapidly revised their opinions.

When acting as a homogeneous entity, a customer group’s eff ect and infl uence on a given provider’s product policy is naturally inherent in the capitalistic system: they simply can either accept and buy the provider’s products or refuse them. According to this market-mechanistical consideration, the customer’s infl uence on Monsanto’s policy would have to be judged as high. However, two major restraining points have to be made. (i), as has been specifi ed above, there were no seriously rivalling products in the fi eld of crop GMOs. In an „ideal“ scenario, Monsanto would rapidly get into a strong (or most likely dominating) market position, given a true competitive advantage of their products; such a situation weakens the customers’ position. (ii), as has been already elaborated upon, European farmers are not col-lectively organised to negotiate purchase prices which as well weakens their position with respect to Monsanto.

In eff ect, Monsanto presumably rated the European farmers as their potential customers as being neither opposing nor in a strong position to do so. Due to their strong product portfolio which had proven very successful in the US and to the company’s good (or at least mediocre/indiff erent) reputation among European farmers, Monsanto had justifi able reason to expect a successful market entrance where the customers were concerned. Based on the previous paragraphs, these evaluations were justifi ed. The customer relations were not causative to the problems Monsanto was confronted with when expanding their business to Europe. Only after other parameters, notably the NGO infl u-ence and public opinion on the GMO issue, began to have an impact did the farmers become wary about buying and planting Monsanto seeds.

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Environment and Society

In Europe the general view of biotechnology was much more pessimistic than in the United. States. According to the last survey of Eurobarometer carried out in 2006 only a few countries have a higher percentage of approval for GM food than for disapproval. But this mostly concerns the green biotechnology, so agriculture products like GM food. In red or white biotechnology the general view is far more optimistic. Depending on the purpose of the GM food a product can also be regarded a bit more optimistically, i.e. products with a seemingly positive impact on health. Thus, the consumer’s benefi t has a high priority for the European population. Whether GM food is approved by the relevant authorities or is cheaper is not really convincing. Also the risk attached to GM food was regarded as unacceptable whereas for gene therapy it was tolerable. When Monsanto tried to conquer the European market, they had to face a far more mistrustful consumer and the ship Ideal Progress, which was carrying genetically modifi ed soybeans from America to Europe for the fi rst time in 1996, was even stopped by Greenpeace. Also the argument against the world hunger does seems not seem to convince when also the European consumer is supposed to use these products. This rejection by the Europeans could not be ignored, especially since Germany was an important importer of U.S soy-beans and thus an essential part of the market. Many at Monsanto believed that after informing the public properly about the benefi ts of GM products the general disapproval would vanish immediately. In America reluctance really always disappeared after “convincing people that this is a good and useful technology.” However, Europe stayed mis-trustful.

The Europeans were mostly concerned about the food safety especially after the spreading of mad cow disease in Great Britain. In addition the European consumer demanded the labelling and separating of GM food from conven-tional food, an advice that was also given by Henrik Kroner, secretary of Eurocommerce (The offi cial E.U. retail and trade association) before the shipping of Ideal Progress. But labelling was not that easy for the agriculture industry since it would have required a separating of the soybeans at their source, what was regarded as impossible with the current infrastructure. Monsanto failed to follow this advice to label their products. The opposition in Europe was now even growing even more. Especially Germany and Austria showed highest disapproval concerning GM food, which was shown by an E.U-wide survey in 1997. Governments started to impose restrictions or even banned the import and sale of GM food as a response to the overwhelming concern of the European public. The concerns of food safety were especially due to the fear of an increase of allergy, the fear of GM food infl uencing the consumer’s genome, and the mistrust against potential monopoles that could get be established. Around 35 per cent of the respondents had the opinion that GM food contains genes, whereas conventional crops do not. Furthermore, the fear of GM seeds infi ltrat-ing conventional ones was also a concern especially for European farmers. The reputation was on stake. The press had a great infl uence in Europe above all in the United Kingdom, where the concern was fi rst quite low compared to other European countries. After publishing negative press reports about the safety of GM food, even there the public started to mistrust this technology and also more information and advertisement did not seem to improve this view. The opponents got more and more radical and especially Greenpeace was trying to convince the public of the hazardous-ness of GM products . For scientists it was getting more and more frustrating to work in Europe on this technology and many left for the United States in expectation of getting more respected positions. An in 1998 launched advertis-ing campaign in the UK with the aim to better inform the public only resulted in increasing the number of launched campaigns by the opponents. Even Prince Charles, Prince of Wales, released a devastating essay against GM products. The demand for organic food was increasing.

The latest attack against Monsanto was a movie “The World According to Monsanto” produced by the French journalist Marie-Monique Robin and released in 2008. Robin aggressively accuses Monsanto of having lied in many ways and of having manipulated most research results for GM products created by Monsanto. She contacted Robert Shapiro, the ex- CEO of Monsanto, ex-employees, farmers in America and India and researchers of America and Europe and ques-tioned them. One point she stated was that the Bt-cotton in India had a negative impact on the market there, since this modifi ed cotton caught a disease the conventional cotton normally did not have catchso far and many farmers were now deep in debts. Robin even linked several events of suicide by indebted farmers to this Bt-cotton provided by Monsanto. In 2002 Monsanto was fi ned of having brought toxic chemicals (PCB, polychlorinated biphenyl) in the environment causing many illnesses and health troubles to American’s population living nearby the Monsanto facto-ries at the time Monsanto still produced chemical products. According to Ken Cook , contacted by Robin, Monsanto’s reason not to properly inform or doing more research was simply because they did not want to loose one single dollar more. In addition the local authorities would have supported Monsanto and not the concerned citizens. Monsanto was sued for having caused these health problems in 2001. In addition, Monsanto was sued for false advertising in New York in 1996 and in France in 2006. The movie shows only very negative aspects of Monsanto’s products and is for sure not helping Monsanto at all to improve their reputation in Europe. Monsanto did clearly not enough to decrease the mistrust in Europe and this company would defi nitely need a better strategy to convince the European population of the safety of their products.

“What I saw generically on the pro-biotech side was the attitude that thetechnology was good and that it was almost immoral to say that it wasn’tgood because it was going to solve the problems of the human race and feed the hungry and clothe the naked. And there was a lot of money that had been invested in this, and if you’re against it, you’re Luddites, you’re stupid. There was rhetoric like that even here in this department. You felt

like you were almost an alien, disloyal, by trying to present an open-minded view on some of the issues being raised. So I pretty much spouted the

rhetoric that everybody else around here spouted; it was written into my speeches.”

US Secretary of Ag, Dan Glickman, under the Clinton Administration,post-departure.

“For any scientist who wants a good job and a nice home with mortgagepayments, he’s not going to choose the Union of Concerned Scientists.’”

Hugh Gusterson, MIT, quoted in Science Good, Nature Bad: The Biotech Dogma.

‘For some, talk of sustainable agriculture sounds like a luxury the poor canill-aff ord. But in truth it is good science, addressing real needs and

delivering real results. For too long it has been the preserve ofenvironmentalists and a few aid charities. It is time for the major

agricultural research centres and their funding agencies to join therevolution.’

New Scientist, 3 February, 2001.

Greenpeace, Friends of the Earth and others

The incident with the ship Ideal Progress was only one among many. Monsanto was confronted with Greenpeace, Friends of the Earth and other environmentalists, especially when the environment became more and more important for the public. Already in the 1960s environmentalists became critical of Monsanto and especially the pesticides pro-duced by Monsanto were criticised to have negative impact on the environment. Monsanto pledged to improve the re-search and development in this fi eld but also under the vision of creating a better level of new product developments and marketing. In Britain the biotech industry also tried to engage environmentalists in an open dialogue and invited the Friends of the Earth group to inspect fi eld trials. Instead of taking this as a chance to investigate the fi elds, environ-mentalists burned all the trial fi elds after Friends of the Earth published the locations in the internet. Such incidents counteracted getting valuable research data and were fatal drawbacks for the biotech industry. More and more the farmers were reluctant to cooperate with Monsanto, also because of the fear of violence of the so called “Eco-warriors”. Nevertheless, one of the most aggressive associations against any GM crop or product was and still is Greenpeace. Repetitively they tried to stop Monsanto of from producing and importing GM products in Europe. In 2005 Greenpeace accused Monsanto of having bribed the senior Indonesian environment ministry offi cial to avoid an environment assessment on its GM cotton. Greenpeace further claims that Monsanto records show US$700,000 of “questionable or illegal” payments from 1997-2001 to current and former Indonesian government offi cials and their family members. Greenpeace also worked against the cultivation of the genetically modifi ed corn called MON863. In June 2005 they obtained the research fi les of Monsanto after the blood analyses of the test rats were published. Although experts claimed having found severe analysis defi ciencies MON863 is still permitted. Although Greenpeace has always been very aggressive against GM products, Monsanto did not seem too concerned about the infl uence of Greenpeace on the public and on politics. Only with the repetitive accusations of Greenpeace against Monsanto’s product the compa-ny tried to defend itself by trying to draw back the analysis results. In spite of the bad reputation in Europe, Monsanto stated in 2006 the intention to use again the terminator-technology for crop production again, which was decided not to be approved by the Convention on Biological Diversity in 2000. Monsanto was also accused several times for not having followed patent laws, among others by Syngenta. Still, Monsanto does not seem to act very strategically and appropriately for the European market , although Europe could still be a signifi cant market place for a crop producer. The strategy of Monsanto seems to work for the US but for Europe they should start to create a new one in order not to fall into deeper mistrust.

Evaluation of Greenpeace being a potential cooperator or being a thread for Monsanto. Monsanto set the power of environmentalists too low in Europe.

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Politics

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If Elizabethan England had the sort of regulatory system we have now, there is no way the potatp would ever have been introduced into this country”

Mo Mowlan, UK Government Co-ordinator on GM Foods

When it comes to GMO policy, America and Europe have been following a totally diff erent strategy: while in the US, 25% of total agriculture production were GM seed already by 1999, there is until today practically no commercial agriculture with GMO plants for food production in Europe. This is not only due to the reluctance of the consumers and farmers, as previously described, but also the few plants that got admission to be planted in Europe at all. Out of 111 plants that are currently in the admission process, 35 have been granted to be imported into the EU, but only two of them were also granted for growing them. Except for Spain with 108.000ha in 2008, there is no European country growing any agricultural GMO on a commercial scale (as of January 2009, EFSA-databank). France withdrew the allowance in 2008 for MON810, in Germany 3173ha were grown.

There is a long story of national and European legislature on GM food, still there is a lot of criticism towards the cur-rent procedure. Nowadays, European legislation is what provides the framework about what is imported and can be grown in the EU or not. There is one exception to this: members states can oppose if their scientists can prove new and serious concerns about certain plants. To give a simple overview about the process, applications have to be fi led with the European Commission, who passes the requests to the European Food Safety Authority (EFSA) to perform studies on health and ecological issues. They give a recommendation to the European parliament whether or not to oppose the allowance. Only more than two thirds of the member states can reject the admission. If the quorum is not reached (which has always been the case so far), it is upon the European Commission to decide about the admission. So in the end, it is politics and not science, that decides. There are various laws that regulate these procedures:

• Regulation (EC) 1829/2003 of the European Parliament and of the Council of 22 September 2003 on genetically modifi ed food and feed

• Regulation (EC) 1830/2003 of the European Parliament and of the Council of 22 September 2003 concerning the traceability and labeling of genetically modifi ed organisms and the traceability of food and feed products produced from genetically modifi ed organisms” and amending Directive 2001/18/EC

• Commission Regulation (EC) 65/2004 of 14 January 2004 establishing a system for the development and assign-ment of unique identifi ers for genetically modifi ed organisms

• Commission Regulation (EC) 641/2004 of 6 April 2004 on detailed rules for the implementation of Regulation (EC) 1829/2003 of the European Parliament and of the Council as regards the application for the authorisation of new genetically modifi ed food and feed, the notifi cation of existing products and adventitious or technically unavoidable presence of genetically modifi ed material which has benefi ted from a favorable risk evaluation

• Directive 2001/18/EC of the European Parliament and of the Council of 12 March 2001 on the deliberate release into the environment of genetically modifi ed organisms and repealing Council Directive 90/220/EEC

European Union approval of GM species often takes years, and even approved ones are sometimes banned by some of its members states, as happened e.g. with MON810 corn. The maximum amount of GMO-food that is allowed in European food is at 0.9% - and only GMO plants that are allowed in the EU are also allowed as contaminants.

“Monsanto should not have to vouchsafe the safety of biotech food. Our interest is in selling as much of it as possible. Assuring its safety is the FDA’s

job.” [The FDA is the US government’s Food and Drug Administration, re-sponsible for food safety]

Philip Angell, Monsanto’s director of corporate communications, “Playing God in the Garden”, New York Times Magazine, 25 October 1998

“Ultimately, it is the food producer who is responsible for assuring safety.”US Food and Drug Administration (FDA), “Statement of Policy: Foods Derived from New Plant

Varieties” (GMO Policy), Federal Register, Vol. 57, No. 104, 1992, p. 229

“It is not foreseen that EFSA carry out such [safety] studies as the onus is on the applicant to demonstrate the safety of the GM product in question.”

“Frequently Asked Questions on EFSA GMO Risk Assessment”, The European Food Safety Author-ity (EFSA), 15 May 2006, p. 7

How did this strict legislation come into play?Politicians are in this case susceptive to three powerful infl uents: the public opinion, industry and farmers. The scientif-ic lobby itself is very weak and usually exploited by one of these three groups by picking scientists or designing stud-ies fi tting best to their opinion. Communication channels of these three groups are mainly through the media (which is also infl uenced by these groups), and lobbyism, namely through NGOs such as Greenpeace, industry and farmer representatives and trade associations.

While in the early 1980’s, the fi rst years of pharmaceutical production with genetically modifi ed organisms, the regulation framework about GMOs was weak, politicians did quickly come up with regulations when GMOs reached the state of commercialization. In 1985, European commission established a Biotechnology Regulation Inter-Service Committee (BRIC) with DG XI (environment) and DGIII (Internal Market and Industrial Aff airs). In the next year, DG XI handled the biotechnology issue in the same way it previously did with hazardous chemicals. Up to today, no other breeding method is regulated (not even irradiation, also changing DNA), but genetical engineering is. And labeling of GMO products includes today even totally Gene-free products, such as Ethanol that has been derived from GM corn.

Early reactions of the politicians were still positive and the European Union’s Environmental Ministers Council gave Monsanto permission to import and grow genetically modifi ed soybeans throughout Europe in 1996. Previously, genetically modifi ed soybeans could only be sold on U.S., Canadian, and U.K. markets. The ruling allowing genetically modifi ed soybeans into Europe signifi cantly increased the product’s potential market and allowed the 1996 plantings to be imported into Europe without additional testing or labeling.

It was mainly the pressure by the NGOs that forced politicians to act then diff erently and to raise the regulation bar-riers. This was supported by a shift in the public opinion, also caused by the many perceived food scandals in the EU such as the mad cow disease. According to EU parliamentarian Ruth Breyer and other industrial lobbyists we inter-viewed, it was also a lack of communication of independent scientists but also few lobbying of Monsanto and the bio-technology industry caused the parliamentarians to take over Anti-GMO positions. Other than in the US, Monsanto’s connections to politicians were weak and they still are. While the nuclear lobby has invested a lot of money in recent years for European public communications, causing a profound shift in the public and political opinion, biotech in-dustry has not really invested so far. It even seems like Monsanto has given up the European market when they sold or closed facilities throughout Europe in 2003. One of the main reasons is said to be the costs associated with retaining a research presence in markets where it is excluded from conducting a large part of its business - namely the selling of genetically modifi ed crops.

It might be history that shows to which extent anti-GMO-feelings and the strict regulation network will persist. Or if the advances in research, especially for GM plants that have also advantages for the general public and not only for the farmers, like plants with additional nutritional value (“Golden Rice”) and the growing GMO-domination and positive experiences outside of Europe can change public opinion and those of its political leaders. The fi rst studies show already that optimism has been coming back about biotechnology in general - now it will be interesting to see, to which extent this development will go on and if and when the fi rst GM food comes to the European market. If GM food availability became part of every days life, consumer’s acceptance is likely to grow. Maybe it will not be Monsan-to’s success, but a European enterprise with an other history. But even for Monsanto, there could be a second chance.

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The model of the Five Competitive Forces was developed by Michael E. Porter in his book „Competitive Strategy: Techniques for Analyzing Industries and Competitors“ in 1980. Since that time it has become an important tool for analyz-ing an organizations industry structure in strategic processes.

Porters model is based on the insight that a corporate strategy should meet the opportunities and threats in the organi-zations external environment. Especially, competitive strategy should base on and understanding of industry structures and the way they change.

Porter has identifi ed fi ve competitive forces that shape every industry and every market. These forces determine the intensity of competition and hence the profi tability and attractiveness of an in-dustry. The objective of corporate strategy should be to modify these competitive forces in a way that improves the posi-tion of the organization. Porters model supports analysis of the driving forces in an industry. Based on the information derived from the Five Forces Analysis, management can decide how to infl u-ence or to exploit particular characteris-tics of their industry.

Here, the analysis can simplify the complexity of the decisions and the infl uences on these Monsanto was faced with.

Porter’s Five Forces

Analysis

As a general conclusion, we want to highlight some major points. From a more profi t-oriented point of view, Monsanto’s decision to enter the European market was taken upon rightful reasoning: there was a huge market to enter with a so far successfull product line-up that was unparalleled and likely to be paralleled by competi-tors in the foreseeable future (see also the Porter’s Five Forces slides p.17).

However, the failure of the European entreprise is mainly due to two reasons. The fi rst reason was beyond Mon-santo’s control : The temporary accumulation of food scandals in the EU at the very time when market entry was started. As has been demonstrated, the resulting shift in the public opinion was then further nourished, ampli-fi ed and used by NGO lobbiysm. It is at this point that Monsanto’s second and major mistake in management occured: they suff ered from a severe underestimation of the complex relations and mechanisms that distin-guish the European from the North-American market. They failed to appreciate the NGOs’ knowledge and to get in the lead of these mechanisms, notably of political and media channels, by which an pposition towards GMO crops as such was created, a common frontline that united societies, governments and even customer groups in opposition towards Monsanto.

These processes have caused a generally severe drawback for GMO food technology in Europe; to which precise extent this may be due to these mistakes in Monsanto’s management can hardly be assessed. In the course of the future years, further shifts in public opinion, followed by shifts in the political opinion and hopefully regula-tion, are as well imaginable as likely to happen.

Open questionsUntil today, Monsanto has unfourtunately not answered our open questions yet, so this study remains kind of unfi nished.

• When you decided to expand with Monsanto to Europe, what were the most important goals, the expected turnover and market share within the fi rst 5 years on the European market?

• To which extent were these goals acheived, what is the turnover and the market share today?

• Which new products that you have in the pipeline do you consider being most important, and which of them are also aimed for the European market?

• What are your business expectations for the next fi ve years, especially concerning the European market?

• What is your communication strategy towards the stakeholders: General public, potential clients, policy makers, NGOs especially in Europe and what are your most important communication tools?

• How do you explain the negative image GMOs have in most European countries?

• Do you work on changing this picture, and if so, how?

• Nuclear industry has changed its public image in most European countries in the last years with a lot of campaigning. Did you ever think about doing so as well?

Referencesp. 1 picture: “Jan Strohdiek” / www.jugendfotos.de, CC-License (by-nc)

p. 7 ff . Quotes: http://www.organicconsumers.org/ge/quotes030105.cfm http://www.bangmfood.org/quotes

p. 10 Shapiro, Greenpeace Business Conference, Monsanto Company Document, October 6, 1999 http://www.monsanto.com, http://de.wikipedia.org/wiki/Monsanto

p. 12ff . Eurobarometer: “Europeans and Biotechnology in 2005: Patterns and Trends” http://www.transgen.de/pdf/dokumente/eurobarometer2006.pdf

p. 13 SPIEGELonline: “Wie Genmais-Gigant Monsanto Politik macht “ http://www.spiegel.de/wirtschaft/0,1518,482238,00.html arte: “Monsanto - mit Gift und Genen” http://www.arte.tv/de/wissen-entdeckung/Monsanto-mit-Gift-und-Genen/1912794.html Naturkost.de: “Greenpeace setzt sich gegen Monsanto durch “ http://www.naturkost.de/meldungen/2005/050613genv1.ht http://www.greenpeace.de/themen/gentechnik/nachrichten/artikel/bestechung_millionenstrafe_fuer_monsanto http://www.greenpeace.ch/.../monsanto-missachtet-internationalen-vertrag-terminator-technologie-macht-saatgut-s http://www.foe.org

p.14 EFSA - http://www.efsa.europa.eu European Comission - http://ec.europa.eu/food/food/biotechnology/gmfood/index_en.htm Transgen : “Streitfall Bt-Mais”, http://www.transgen.de/pdf/kompakt/mais.pdf

p. 16 BBC: “Monsanto retreats from Europe “, http://news.bbc.co.uk/1/hi/business/3198312.stm J. Brovník, Faculty of Science, Charles University, Prague, Assoc. BIOTRIN Biotechnology in European agriculture, http://www.biotrin.cz/enpages/BIOTECH%20IN%20EUROPEAN%20AGRIC.pdf

p. 17 http://www.themanager.org/Models/p5f.htm

Conclusion

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Europe - full of mistrust

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