final blow

SEED AND AGROCHEMICAL

PRODUCTION INDUSTRY

Prepared for:Professor Keifer

Professor McElfreshProfessor Marchese Professor Lambert

September 16, 2014

1

Prepared by:Team 2

Diana WahlSharmaine Wilcox

Anthony HeadEthan DillhoffRyan Cobb

TRANSMITTAL DOCUMENT

2September 16, 2014

EXECUTIVE SUMMARY

3September 16, 2014

TABLE OF CONTENTS

INTRODUCTION

KEY SUCCESS FACTORS………………………………………………………………………………3

ENVIRONMENTAL ANALYSIS

INDUSTRY

• INTRODUCTION ……………………………………………………………………………………5

• SIZE AND GROWTH………………………………………………………………………….5

• TRENDS…………………………………………………………………………………......5

• INNOVATIVE TECHNOLOGY……………………………………………………………...….5

• SUPPLIERS & BUYERS………………………………………………………………………..5

MARKET

• SIZE AND GROWTH………………………………………………………………………………...6

• FUTURE…………………………………………………………………………………………….6

• WHEN AND WHY DO CUSTOMERS BUY…………………………………………………………….7

• GOVERNMENT REGULATIONS……………………………………………………………………...7

• CHARACTERISTICS OF PURCHASES………………………………………………………………...7

• PESTICIDES & FERTILIZERS…………………………………………………………………....7

• SEEDS……………………………………………………………………………………….7

COMPETITION

• PESTICIDE COMPETITION…………………………………………………………………………...8

• FERTILIZER COMPETITION…………………………………………………………………………...8

• RIVALRY…………………………………………………………………………………………...8

• GAINING A COMPETITIVE ADVANTAGE…………………………………………………………....8

KEY SUCCESS FACTORS

INTRODUCTION……………………………………………………………………….……9

YIELD POTENTIAL

• INNOVATIVE SEED AND CHEMICAL TECHNOLOGY...……………………………………………...10

• USE OF BIOTECHNOLOGY TO GENETICALLY MODIFY SEEDS..………………………………10

• SEED AND AGROCHEMICAL PRODUCT COLLABORATION……………………………………...…10

September 16, 2014 4

CONSUMER SAFETY

• MANUFACTURING CONTROL……………...……………………………………………….....11

• AGROCHEMICAL CONSUMER/ENVIRONMENTAL SAFETY..………………………………….…11

• SEED CONSUMER/ENVIRONMENTAL SAFETY…………………………………………………..12

• CROSS POLLINATION………………………………………………………………………….12

INTELLECTUAL PROPERTY

• SEED CONSUMER/ENVIRONMENTAL SAFETY…………………………………………………..12

• CROSS POLLINATION………………………………………………………………………….12

CONCLUSION

REFERENCES…………………………………………………………………………………..14

APPENDICES

• A. SIZE AND GROWTH………………………………………………………………………..18

• B. PEST ANALYSIS…………………………………………………………………………….18

• POLITICAL………………………………………………………………………………19

• ECONOMIC………………………………………………………………………….....20

• SOCIAL…………………………………………………………………………….......20

• TECHNOLOGY…………………………………………………………………………..21

• C. PORTERS FIVE FORCES……………………………………………………………………..22

• RIVALRY……………………………………………………………………………......23

• THREAT OF ENTRANTS………………………………………………………………......23

• THREAT OF SUBSTITUTES………………………………………………………………….23

• BARGAINING POWER OF SUPPLIERS………………………………………………….....24

• BARGAINING POWER OF BUYERS……………………………………………………….24

• D. TOP COMPANIES………………………………………………………………………….24

TABLE OF CONTENTS


The main focus of this analysis is to provide an in depth look into the key success factors that goalong with the seed and agrochemical industry. These factors are yield potential, consumersafety, and intellectual property rights and protection. First, this report will provide anenvironmental analysis of the two industries. The environmental analysis will include informationpertaining to the industries as a whole, their market, and their competition. Following theenvironmental analysis, the report will expand on each of the aforementioned key successfactors. Ultimately explaining why they are critical for a companies success in the seed andagrochemical industry.

Introduction

Yield Potential

Consumer Safety

Intellectual Property Rights and Protection

Key Success Factors

INTRODUCTION


A PEST analysis is used to assess the marketfor a business of organization unit. PEST is anacronym for political, economic, social,and technological factors that affect abusiness's performance in a given industry.

Political: tax and trade regulations,employment laws and safety regulations• Economic: growth, exchange, inflation,

and interest rates• Social: demographics, population

growth rates, age, lifestyle, education, and income

• Technology: technological advancements

• (Brooks 2013)

Porter’s Five Forces is an in depth analysis ofcompetition within a certain industry. Theanalysis allows a company to identify thestrengths and weaknesses with an industry.The five forces are as follows:

1. Competition in the industry2. Threat of substitute3. Bargaining power of suppliers4. Bargaining power of buyers5. Threats of new entrants(Investopedia, 2014)

Porter’s Five Forces Porter’s Five Forces

LIST OF ILLUSTRATIONS

7September 16, 2014

INDUSTRY

Environmental Analysis

The Crop Production industry has been around for 10,000 years but didn’t start to become aglobally competitive market until after World War II. The industrialization of the farming processmade the industry much more efficient. The increase in technology has allowed farmers tomaximize the amount of crop per acre, this is known as having a higher yield. One of the main

technologies that plays an impactful role in the increase in seed production has beenagricultural chemicals; therefore, agricultural chemicals have become an industry of their own.

Introduction

Data Source: Neville, 2013

Year Revenue $ Million Growth %

2014 13,136.4 4.5

2015 13,451.5 2.4

2016 13,896.6 3.3

2017 14,118.6 1.6

2018 14,443.3 2.3

2019 14,582.9 1.0

The size of the crop production industrydepends on the demand which is driven byfood policies and trends of the population. Theindustry is growing rapidly because of anexpected high population growth. Farmers willneed to keep up with the future high demandfor crops. As we’ve seen continuous growth forthe past 5 years throughout the industry, we donot expect to see a rise in crop prices. Theindustry’s volume contribution to the economyis expected to grow 1.3% every year. See chartto the right (First Research, 2014 August 11;Neville, 2013)


Key Concepts

Size and Growth

A recent increase in health awareness and education among consumers has led to the rise in demand of organically grown crops (See appendix A

for PEST analysis)

Some recent technological advances which improve crop yield include renewable energy, chemical innovation, and genetically modified seeds

(See appendix A for PEST analysis)

To be successful, companies must do extensive research to meet the customer’s demand. Chemical manufacturers mainly sell to distributors, and sometimes to

larger farms. Soil, crop, and weather characteristics have a direct impact on the product demand (See appendix B for Porter’s Five Forces).

MARKET

Size and GrowthAccording to Markets and Markets, the agricultural chemical industry has become a $203.6million dollar market. The value and quantity of agrochemicals are growing, creating a pesticideand fertilizer that is affordable and high quality (Markets and Markets, 2014; International SeedFederation 2013).

Seed production and quality has been increasing. According to Amseed, the market respondsto high quality seeds. The seed market is overwhelmingly dominated by the United States holdingabout 26.71% of the seed market, with China being a close second at 22.15% (American SeedTrade Association, 2011; International Seed Federation, 2013).

The future of the market for seed and agrochemical production is growing at a rapid pace. This isdue to the massive projected increase in our population. According to First Research, the worldpopulation is forecasted to reach 9.6 billion people by 2050, increasing crop demand. A criticalfactor for farmers to generate higher yields to meet this demand is through the use of pesticidesand fertilizers. According to Markets to Markets, the agrochemical industry is projected to reach$248.2 million (Markets and Markets, 2014; First Research, 2014 August 11).

1.71%

2.20%

2.60%

3.01%

4.45%

4.72%

5.84%

6.23%

22.15%

26.71%

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00%

Italy

Argentina

Germany

Japan

India

Canada

Brazil

France

China

United States

Distribution of the Global Seeds Market Value in 2012

Market Share

Value

Data Source: International Seed Federation, 2013


Size and Growth

Future


“The world population is

forecasted to reach 9.6 billion

people by 2050”

MARKET

The point of using fertilizer is to replenish the nutrients in the soil. If too many crops are planted inthe ground and there are no nutrients left it will be nearly impossible to generate a higher yield.Without crop protection products, around 40% of the world's crops would be lost to pests anddiseases. The demand for pesticides is seasonal; for example, in China during 2013-2014, over550,000 pesticides were being produced from January and February, while the next closestmonth was December, producing 339,000 tons (National Bureau of Statistics of China, 2014;Lowes, 2014).

Characteristics of Purchases

Pesticides & Fertilizers SeedsThe main pesticide and fertilizer customersare comprised of corn farmers, wheatfarmers, golf courses owners, landscapers,and farmers in other industries (See appendixC for an example of a full list of key partners).The pesticide market consumerdemographic include 40% wheat and othercrop farmers, 10% livestock farmers, 6.5%non-agricultural consumers, 5.9% householdconsumer, 1.2% dairy farmers, 4.5% beeffarmers, and 1% sheep (Haider, 2014).

The seed industry consumer varies on thedemand of what type of seed needed to beproduced. For example, customers consist offarmers, wholesalers and distributers, foodprocessors, animal feed producers and foodmanufacturers (See appendix C for anexample of a full list of key partners). Anexpected growth in population has createdpressure for creating specialty seeds that canwithstand things like weather conditions whileproducing a higher yield. One customer thatthe seeds all have in common is exportmarkets and other farmers (Isakowitz, 2014).


When & Why Do Customers Buy

Characteristics of Purchases


271,000

227,000232,000

261,000 311,000339,000

544,000

300,000289,000

298,000

316,000

302,000

0

100,000

200,000

300,000

400,000

500,000

600,000

Jul '13 Aug '13 Sep '13 Oct '13 Nov '13 Dec '13 Jan/Feb

'14

Mar '14 Apr '14 May '14 Jun '14 Jul '14

Production of Chemical Pesticides in China From July 2013 to July 2014 (in tons)

(National Bureau of Statistics of China, 2014)

COMPETITION

The agrochemical industry is ranked with a mediummarket share competition. It is very difficulty toenter the pesticide and fertilizer industry. The costto open a competitive fertilizer plant is staggering.For example, The initial capital outlays required toenter this industry are quite significant. Operatorsrequire more than $500 million to construct acompetitive fertilizer plant. According to theFreedonia Group, there are fewer than 20 basic

manufacturers of active pesticide ingredients, andthe top six players account for the majority ofnational demand. Due to the medium marketshare, company acquisitions occur fairly often(Khedr, 2014; Haider, 2014).

The pesticide industry is driven by research and development. Companies are trying to makeseeds that are most resistant to their own pesticides, while some of these manufacturers also

produce genetically modified seeds, made specifically for biofuels, which are more resistant totheir company specific pesticides (Haider, 2014).


Agrochemical Competition

Gaining a Competitive Advantage

Rivalry

3,522

4,521

5,638

6,952

9,568

10,923

0 4,000 8,000 12,000

DuPoint

Monsanto

Dow Chemical

BASF

Bayer

Syngenta

Leading 10 Global Agrochemical

Companies Based on Revenue in 2013 (In

Million U.S. dollars)


The top four players in the

pesticide industry account

for 68.5% of its revenue.

The top four players in the

fertilizer industry account

for 79.7% of revenue

Threats of new entrants to theOrganic Chemical Manufacturingindustry include a requirement of alarge amount of capital, anintensive amount of maintenanceon factory equipment, andexpensive raw materials. Also,health, safety, and securityregulation must be heavilyconsidered. This part of thechemical producing industry mustalso be as efficient as possible inorder to reduce the already highcost to the consumer (Morea, 2014).

Data Source: Morea, 2014

KEY SUCCESS FACTORS

Yield Potential

Consumer Safety


As previously stated, the key success factors for the seed and agrochemical industries are yieldpotential, consumer safety, and intellectual property rights and protection. Yield potentialdeals with the combinations of innovative seed and agrochemical technology as well as newbiochemical knowledge to create a product that increases production and efficiency.Consumer safety touches on all of the issues that come with genetically modifying seeds andusing agrochemicals such as pesticides and fertilizers. The consumer safety portion willspecifically provide information about manufacturing control, agrochemical andenvironmental safety, the well-being of the seed consumer, and the effects of crosspollination. Intellectual property rights and protection will highlight why there is an increase inurgency to protect your product and research. It will also discuss the use of trade secrets andthe Plant Variety Protection Act. All of these factors can be responsible for a companiessuccess or failure in these two industries.

Key Success Factors

Introduction


YIELD POTENTIAL

Biotechnology is the alteration a cells DNA, “that overcome natural physiological reproductiveor recombination barriers”(WHO, 2005). Some forms of biotechnology in the industry includecloning and tissue culture. Gene technology allows plant modification well beyond the plantsnatural capabilities (WHO, 2005). Genetically modifying seeds leads to herbicide and insectresistance, as well as an improved plant and root structure. “It has been estimated that 80% ofall plant problems start with soil and root problems” (Syngenta, 2011 – Root Health).

The farmers that were able to adapt to drought resistant seeds during the drought period thattook place in 2012 were the ones that excelled during that time. Now about 85% of corn seeds,91%, of soybean seeds, and 80% of cotton seeds are all drought resistant (Plunkett, Steinberg,Faulk & Snider, 2014).

Many companies have realized the opportunity of combining innovative seed and

agrochemical technology to produce higher yield. For example, Syngenta merged the twodivisions into one in 2011. Monsanto, has used product collaboration in order to increase theirproduct sales and have their own brand of seeds that are genetically modified to withstandherbicides. When purchasing the genetically modified seeds from Monsanto, the farmer mustalso purchase the Roundup to apply to the plants, forcing the farmer to purchase both productsfrom Monsanto. Roundup ready seeds are only resistant to the herbicide Roundup (Syngenta,2014; Monsanto, 2014).

Key Success Factors

Innovative Seed and Chemical Technology

Seed and Agrochemical Production Collaboration


1960 1970 1980 1990 2000 2010

Yield and Acreage Trend

Yield Area

The graph to the left is a representation of yield rate increasing per the increase of landproductivity. In relation to the industry’s increasing demand the yield improvements has beenslowing down in major crops. See right graph (Syngenta, 2013 – Our Industry).

1970 1980 1990 2000 2010

Growth and Crop Yield

Yield Improvement

Data Source: Syngenta, 2013 – Our Industry

PRODUCTION, CONSUMER, AND ENVIRONMENTAL SAFETY

Manufacturing safety is presented more in agrochemical production than in seed production.Some chemicals may be solids, liquids, gases, flammable, explosive and/or toxic. Manufacturingprocesses frequently involve high temperatures, high pressures and reactions which can bedangerous. Hazards can be substantial, but are avoided by following the strict safetyprocedures. Workers have to be trained in handling hazardous chemicals as well as thechemical company safety measures. Workers are required to wear protective gear and havethat extensive knowledge from their training (College Grad, 2014; The Essential ChemicalIndustry, 2013).

The federal government has regulated agrochemicals since the early 1900s. With human andenvironmental health concerns rising over decades, several government bodies, includingEnvironmental Protection Agency (EPA) and World Health Organization (WHO), have establishedguidelines needed to follow in order to produce agrochemicals. Before any crop product canbe approved for use, it has to go through a series of tests to ensure that there is no harm tohuman or environmental health. There are also limits on how a product may be used, how oftenit may be used and what protective clothing or equipment that must be used.

In recent years, there has been increasing pressure against the use of agrochemicals because oftheir effect on air, land and consumer safety. Public concern can lead to increased regulation orlegislation, which could prevent companies from gaining governmental approval. Scientists havealso learned that some agrochemicals can leach through the soil, affecting the groundwater inwhich we drink (EPA, 2014; WHO, 2005).

Key Success Factors

Manufacturing Control

Agrochemical Consumer/Environmental Safety


In 1990, guidelines for use and release of GMO’s were created for human health andenvironmental safety. Since then, many countries have established specific pre marketassessments of GMO’s and GM foods before they are released. Globally, countries are boundto reach different decisions on assessing the products. Due to that concern, the internationalregulatory systems covering GM food safety and environmental safety was established in 2003.For seeds, the potential direct health effects are comparable to the known risks associatedwith foods like allergies and toxicity of present components, the nutritional quality andmicrobiological safety. The potential risk for environment include unintended effects on non-target organisms, ecosystems and biodiversity; cross pollination (EPA, 2014).

Cross pollination of GM plants with other conventional or wild crops has a direct and indirecteffect on food safety. Pollen drift and insect pollination directly affect the seeds of a plant.Unfortunately, identifying cross pollination is only possible in a laboratory. Some conclusions ofhow to prevent cross pollination include isolation distances, buffer zones, pollen barriers, croprotation and monitoring crops during cultivation, harvest, storage, transport and processing.Buffer zone is very popular on farms because it isolates GM products from non GM products.Currently, there is no need to label products that are contaminated with 0.9% of the totalmarketed product with genetically modified organisms. The main sources of that type ofcontamination could be seed impurity, cross fertilization and mixing during transport, storageand processing (EPA, 2014; WHO, 2005).

Key Success Factors

92%

92%

0% 20% 40% 60% 80% 100%

It Should be labeled

accordingly

It Should Meet Mandatory

Government Standards for

Long Term Safety

Consumer Preferences For Standards for Genetically

Engineered Food in the US in 2014

Data Source: Statista 2014

Seed Consumer/Environmental Safety

Cross Pollination


PRODUCTION, CONSUMER, AND ENVIRONMENTAL SAFETY

Data Source:

INTELLECTUAL PROPERTY RIGHTS AND PROTECTION

Key Success Factors

In the United States there are multiple ways to protect property. The first way is called TradeSecrets this is the most basic of Intellectual property. It is when the inventor doesn’t discloseinformation about the invention but can be discovered and copied. Trade Secrets can beenhanced by basically adding a licensing agreement but it will still only be limited protection.They can also gain rights through the Plant Variety Protection Act which allows for breeders tohave commercial rights to a new product for over 20 years. Then there is utility patents whichallows the inventor to maintain and control the research and commercial uses of their product.They can then specialize their patents by adding, a plant patent which controls thereproduction of the plant. SOURCE

Intellectual property rights are vital to a seed and agrochemical companies success. Investing inintellectual property rights promotes a companies “research and development, which untimelyenhances crop production and conversation of genetic resources” (Intellectual Property RightsFAQ, 2013). For example, Monsanto, one of the largest seed companies, writes in their 10-K thatthey “endeavor” gaining intellectual property rights in places where their products areproduced, used, and imported. Which is a common strategy among many successful seed andagrochemical companies including Bayer and Dupont (Monsanto 10-K).

Intellectual property protection allows developers to be rewarded for their efforts, which, in turn,puts extra emphasis on research and development. Intellectual property protection preventsother companies from duplicating products and research efforts.

Intellectual Property Rights

Trade Secrets and Plant Variety Protection Act

Add something


Environmental Analysis Industry

Increase of demand caused by health awareness and education

Innovative technology increases crop yield

MarketLarge population increase leads to increase in demand, despite supply shortage

Companies must comply with strict government regulations

Competition Major players control majority of revenue

Competitive advantage is key to success

Key Success Factors

Yield Potential Innovative technology, and the collaboration of company products increase crop yield

Consumer SafetyMore safety regulations lead to difficulty in gaining product approval by government

Cross-pollination has both a direct and indirect effect on food safety


A company’s ability to protect the rights of their products allows them to maximize profits.

Trade secrets and the Plant Variety Protection Act allow companies to protect intellectual property

KEY TAKEAWAYS

The seed and agrochemical industry has three main key success factors; yield potential,consumer safety, and intellectual property and production rights. These key success factorsare vital to a sustainable and profitable company within the seed and agrochemical industry.

Yield potential, being the first key success factor, adds value to the product by increasing thelikelihood of crop profitability. In the process of developing a product meant to create highyield, consumer safety must be weighed heavily throughout due to human andenvironmental health. In order for a company to gain maximum profit potential, they mustemploy intellectual property rights and protection, removing the possibility of othercompanies or consumers from recreating the product. When companies abide by thesefactors, their chances of success significantly increase.

Conclusion


KEY SUCCESS FACTOR WEIGHTS


Yield Potential

40% because the ability to create innovative products, which produce high yields and requirelittle resources increase sales, decrease costs, therefore increase the bottom line.

After extensive research of the industry, a conclusive company rating system has been decidedupon.

Yield Potential: 40 %

Intellectual Property Rights and Protection: 35%

Production, Consumer, and Environmental Safety: 25%


35% because it is a crucial component to a company to be able to protect their products.Without property rights and protection, a company’s investment in product innovation isvulnerable to competitors following similar suit.

Production, Consumer, and Environmental Safety

25% a safe product and production chain is necessary. A buyer will not purchase chemicalswhich will impose harm on their crops or farmers.

Monsanto is one of the world’s top providers of agricultural products. They offer several productsfrom seeds, herbicides, biotechnology, among others that are aimed to help farmers increasecrop productivity, efficiency, and provide better and safer products for consumers. Monsanto’sgenetically altered seeds are able to tolerate Roundup, which is it’s flagship product and also theworld’s top herbicide. Among these seeds, the company also provides Asgrow, DEKALB,Deltapine, and Seminis seeds. Recently, Monsanto has strayed away from being a companyfocused on agrochemicals to one focused on seeds and biotech (Mergent, 2014; Hoovers, 2014).

MONSANTO ANALYSIS

Strategy


54.90%

6%

10.60%

13.90%

7.70%

4.20% 3.20%

Total Revenue

North America

Asia Pacific

Brazil

Europe - Africa

Argentina

Canada

Mexico

Monsanto is a leader in providing agricultural products around the world. Monsanto is focusedon empowering farmers to make the absolute most from their plantable land while conservingwater and energy. By using in-the-seed technologies, Monsanto is able to improve yieldsand increase efficiency by reducing on-farm cost. Monsanto is able to provide a very widerange of crops. They offer crops corn, cotton, soybeans, canola and vegetables. Monsantoholds many patents, trademarks and licenses for the intellectual property protection of its seedsand genomics-related products and processes. For example, Monsanto hold the rights to theRoundup Ready seed trait. Research and development is one of the largest outlays ofMonsanto’s revenue. Monsanto invests a substantial portion of its revenue towards research anddevelopment per year. In 2013, the company's investment in R&D amounted to $1,533 million(One Source. 2014; MarketLine 2014).

Monsanto targets its market efforts tofarmers or growers, developmentpartners and distributors like wholesalersand retailers. They are involved withcrop protection, seed, and lawn andgarden businesses. Monsanto hasbuyers in United States, Europe-Africa,Mexico, Brazil, Canada, Australia, andArgentina (Monsanto 10-k).

Market

Research and development is

one of the largest outlays of

Monsanto’s revenue.

MONSANTO ANALYSIS

Future Prospects


Strengths Weakness Opportunities Threats

•Leading market position

•Strong focus on research and development

•Diversified operation

•Legal Proceedings •Growing demand for food products with reduced saturated fat and trans-fat

•Strategic agreements and acquisitions

•Growing population, especially in Asia

•Infringement of intellectual property rights GMO’s regulations

•Seasonal nature of sales of the seeds and genomics segment

•Risks associated with conducting business outside the US

Financial Situation

(See Appendix blah blah for detailed information)

Monsanto’s made a commitment in 2008 to sustainable agriculture by producing more,conserving more and improving lives everywhere by 2030. They want to be able to meet theneeds of a growing population by doubling yields in core crops. They will reach their goal throughadvanced plant breeding, biotechnology and improved farm management practices.Monsanto also commits to using one-third fewer resources such as land, water, and energy whileholding the goal of doubling crop yields. They are working with their partners to develop betterconservation system and are improving on-farm practices. Monsanto set a goal to help farmersimprove their quality of life to result in helping people prosper through healthier diets, educationalopportunities and improving local economies (Monsanto, 2014).

In 2012 Monsanto recorded a net sales of$13,504 million and $14,861 million in 2013, a10% increase between the two years. Netincome increased by 17% from $2,093million in 2012, to $2,525 million in 2013.During the same time their assets increasedby 2.1%, from $20,224 million in 2012 to$20,664 million in 2013, while their liabilitiesdecreased by 3.1% from $8,188 in 2012 to$7,936 million in 2013.

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$0.00

$5.00

$10.00

$15.00

$20.00

2009 2010 2011 2012 2013

Revenue vs. Net Income in Billions

Revenue Net Income

Data Source: Hoovers

SYNGENTA ANALYSIS

Strategy

Syngenta is an agricultural business operating in the crop protection and seeds industry. Thecompany is involved in a range of products designed to improve crop yields and food quality.The crop protection chemicals include controlling weeds, insects and diseases in crops. Mostproducts work in the professional products sector like public health and turf. The seed side hasthree sectors: seeds for field crops, vegetable and flower seeds, and pot and bedding plants.(One Source, 2014).

Syngenta regards itself to address the increasing complexity of the challenges farmers face.Syngenta’s main strategy is to integrate, innovate and outperform in the agriculture industry. Soin 2011, Syngenta merged its two major divisions, Crop Protection and Seeds, into one singledivision. Under this strategy, Syngenta innovates by expanding crop based product pipeline andlocal market strategies. They outperform by aiming to create value for their shareholders first bycreating value for their customers. Syngenta has broad patent and trademark portfolios. Theyprotect its investments in research and development as well as manufacturing and marketing.The level and type of protection depends on the country according to local laws andinternational agreements (Duncan, 2014; Syngenta, 2014 February 13; Syngenta, 2014).


Market

Syngenta targets its market effortstowards its distributors, consultants, andgrowers. Such activities include meetingswith growers and distributors, internetmarketing, and specified publicationmarketing. Syngenta focuses on fourmain geographic segments: Europe,Africa and Middle East, North America,and Asia Pacific. The company poses itscrop protection and seed business, andits global lawn and garden business(Syngenta, 2014 February 13).

“The new integration strategy is

expected to save the company

around $150 million by 2015.”

14%

26.90%

28.90%

30.30%

Total Revenue

Asia Pacific

North America

Latin America

Europe & AME

Data Source: One Source

SYNGENTA ANALYSIS


Financial Situation

Syngenta expects that increased emphasis will be placed on developing products that providebenefits to food and feed processors, fuel production, retail trade and consumers. Syngenta hasa growth plan that includes six commitments for change. By 2020 they commit to make cropsmore efficient by increasing the average productivity by 20% without using more land, water, orinputs. They plan to rescue more farmland by improving the fertility. They will help biodiversityflourish by enhancing it on 5 million hectares of land. Syngenta will help people stay safe bytraining farm workers on labor safety, especially in developing countries. They will also look afterevery worker by ensuring fair labor conditions across the entire network. Lastly, they want toempower smallholders by enabling them to increase productivity by 50% (Syngenta, 2014February 13; Syngenta, 2014).

Future Prospects

Strengths Weakness Opportunities Threats

•Comprehensive portfolio of agricultural and non-agricultural products

•Global footprint driving growth

•Reliance on single supplier for certain important products

•Acquisitions likely to further strengthen Syngenta’s seeds business

•New crop protection products may drive the company’s top-line growth

•Consumer and government resistance to GMO’s

•Intense competition likely to put position under Stringent laws, regulations and standards

(See Appendix blah blah for detailed information)

In 2013 Syngenta recorded sales of$14,688 million and sales of $14,202 in2012, a 3.31% increase between thetwo years. Syngenta had a net incomeof $1,649 million in 2013 and a netincome of $1,850 million in 2012, a10.86% decrease. In 2013 Syngentahad total assets of $20,216 million andtotal assets of $19,438 million in 2012.Total liabilities in 2013 were $10,712million and $10,653 million in 2012(Duncan, 2014). ADD REVENUE

$0.00

$0.50

$1.00

$1.50

$2.00

$0.00

$5.00

$10.00

$15.00

$20.00

2009 2010 2011 2012 2013

Revenue vs. Net Income in Billions

Revenue Net Income

Data Source: Hoovers

COMPANY COMPARISON:YIELD POTENTIAL


Monsanto Syngenta

Products

Commitments

Syngenta’s main strategy is tointegrate, innovate and outperformin the agriculture industry. Syngentais committed to decreasing farmerchallenges and making crops moreefficient by increasing the averageproductivity by 20% without usingmore land, water, or inputs by 2020(Syngenta, 2014).

Research and

Development

Syngenta has a broad range of cropprotection products. They are activein herbicides, fungicides andinsecticides which protect cropsfrom diseases that affect yield andquality. They also produce seedsand plants that have beendeveloped using advancedgenetics and technologies(Syngenta, 2014 February 13).

Monsanto is committed to theirSustainable Yield Initiative, theultimate goal of this initiative beingto double corn, soybean, cotton,and canola yields by 2030.Monsanto has an IntegratedFarming System which is used todeliver higher yield to farmers whilealso using less resources (Monsanto10-k; Monsanto Products)

Monsanto is the leading globalprovider of agricultural products forto improve productivity, reducecosts and produce better foods forthe consumer. They are active inbiotechnologies which enable cropsto protect themselves. They produceherbicides to control weeds andseeds using advanced genetic

technologies (Monsanto 10-k).

Monsanto’s research anddevelopment pillars are focused onfarmers being more productive andprofitable by protecting andimproving yields and improving theways they can produce foodResearch and development is oneof the largest investments thatMonsanto makes.: $1,533 million infiscal year 2013 (Monsanto 10-k).

Syngenta’s research anddevelopment centers and fieldstations are organized to continue todevelop quality products to improvecrop yield. Syngenta maximizes theirinnovation potential by partneringwith other technology leaders acrossthe globe as well (Syngenta, 2014February 13)

Weight Score

3.4

Weight Score

2.7


COMPANY COMPARISON:INTELLECTUAL PROPERTY RIGHTS AND

PROTECTION

Monsanto Syngenta

Statistics

Enforcement

Weight Score

3.06

Weight Score

2.45

Monsanto, like most companies,obtain protection for their productsand technology very routinely,whether it be via patents, or plantvariety protections. Where it isneeded, Monsanto also obtainsregistrations for its products inregistration countries. In the UnitedStates they get Plant VarietyProtection Act certificates, andequivalent plant breeders’ rights inother countries (Monsanto 10-k).

In 2013, their total carrying amountfor acquired intellectual propertywas $1.1 billion (Monsanto 10k).

Syngenta has one of the broadestpatent and trademark portfolios inthe industry. Syngenta does notpursue or enforce patents andapplications on their products inLeast Developed Countries (LDCs)for either private or non-commercialuse. Their policy is to not enforcethese patent rights “whereagriculture is undertaken forsubsistence purpose” (Syngenta,2014).

In 2013, Syngenta had $3.3 billion inproduct rights, $96 million intrademarks, and $70 million inpatents (Syngenta, 2014).


Monsanto

Employee

Safety

Testing

Methods

COMPANY COMPARISON:PRODUCTION, CONSUMER, AND

ENVIRONMENTAL SAFETY

Global

Initiatives

Environmental

Initiatives

.

Syngenta

Weight Score

1.69

Weight Score

2.00

Monsanto conducts two separatestudies on animals: a 42 day studyon chickens, and a 90-day study onrats. Both of these studies involvefeed with altered genes, and theanalysis of the effects on the animal.(Monsanto, Animal PerformanceAssessments).

Monsanto has incentive programs to

increase motivation to be safe likeThe Monsanto Star Program andVoluntary Protection Program.They instituted a lockout/tagoutprocedure to reduce injury whenworking with machinery (Monsanto,n.d.)

To decrease the use of animaltesting, Syngenta employs workingcapital to specifically develop newmethods such as cell cultures,computer modeling, bioinformatics,and in vitro techniques (Syngenta,2009)

Every year, Syngenta is focused onraising global safety awareness andtrains as many farmers as possiblethrough their partnerships andaffiliated organizations, with a goalof reaching 20 million farmers by theend of decade (Syngenta, 2009)

Operation Pollinator: Planting fieldmargins with local wildflower seedmixtures. This is to create an areawhere environmental pollinators areable to flourish once again. Bees arealmost 300 times more prevalentdue to inserting field margins thanbefore.

At Syngenta, everyone is responsibly

for their own health and safety. Theyhave Group Health, Safety andEnvironment Policy and Standardsmeant to guide employees. In 2012the UK Chemical Industry Associationawarded the Process Safety Awardto Syngenta (Syngenta, 2013;Syngenta, 2014).

Researchers of Monsantodiscontinue the development ofany product that did not successfullypass each environmental safety test.Since they are a U.S. company, all ofMonsanto’s products must follow theregulations of the EnvironmentalProtection Agency (Monsanto,2014).

Every one of Monsanto’s potentialproducts must be approved byregulatory agencies in each country.This is the only way these productscan be sold to farmers or other feedscan be imported for food and/oranimal feed in their country(Monsanto, 2014).

COMPANY RECOMMENDATION


After extension research, the findings support Monsanto as being the most well positionedcompany within the Seed and Agrochemical Production Industry. The conclusion is representedby research within the areas of yield potential, intellectual property rights and protection,production, Consumer, and environmental safety, as well as an in depth financial analysis ofboth Syngenta and Monsanto, supporting the conclusion that Monsanto is leading the industry.

Yield Potential

Yield potential is the most important key success factor in the agrochemical and seed industry.Monsanto generates multiple products with the goal of increasing the amount of yields forfarmers. Monsanto states that it’s goal is to double corn, soybean, cotton and canola yields by2030. Although, Syngenta does want to increase their yield potential and productivity by 20%,Monsanto has been outperforming them in the seed industry, as seen in recent financialstatements.

Monsanto actively pursues the protection of upholding Intellectual property ownershipthroughout all markets involved in. This active pursuit decreases the chance of unauthorized useof patented seeds and chemicals, while increasing revenues and the return on research anddevelopment capital investments. Syngenta, on the other hand, does not pursue protectingproperty rights in lesser developed nations because they do not want to further hinder

subsistence farming. Although this tactic is ethically applauded, it does not generate theamount of revenue which Monsanto acquires each year. Although Monsanto’s R&D expense tosales ratio has decreased from 11.72% in 2011 to 10.32% in 2013, Monsanto has increased its R&Dyearly investment by $16 million from 2012 to 2013.


Production, consumer, and environmental safety is extremely valuable and essential to anyagrochemical and seed company. This is because they are constantly dealing with potentiallydangerous materials that could harm the employees, the consumer, and the environment.Monsanto and Syngenta both completely excelled in consumer safety. When comparingMonsanto and Syngenta in their safety practices it was apparent Syngenta excelled more thanMonsanto. Despite Monsanto's excellent star program which was considered a VoluntaryProtection Program Syngenta has multiple practices that have a much more positive impact. Forexample Operation Pollinator which has already made bees 300 times more prevalent. They alsoare much better at educating farmers about global safety. Monsanto is much better atemployee safety but between the consumer and environment Syngenta proves to be dominantgiving them the competitive edge.

Production, Consumer and Environmental Safety

27

COMPANY RECOMMENDATION

Financial Analysis

Financially, Monsanto has proven to outperform Syngenta in most aspects. Firstly, through thefindings of financial ratios, Monsanto has proven to be more liquid, more profitable, and moreefficient.

During 2011 and 2012, Monsanto’s Net Incomewas nearly the same as that of Syngenta;however, in 2013 Monsanto earned a NetIncome of 153% of Syngenta’s Net Income,compared to earning 113% in 2012, and 110%in 2011. With a continued increase in NetIncome, Monsanto has doubled Return onAssets to 12.1% within three years. In 2013,Syngenta was obtaining an ROA of 10.2%.

Recently, a merger proposition betweenMonsanto and Syngenta dissolved due toMonsanto’s decision to repurchase $10 billion instock. This large increase in treasury stock,funded by a $4.5 billion bond, sends a strongmessage to investors that corporate is confidentin the financial stability and future growth of thecompany. Clearly investors support this claimwith a current 22.65 price to earnings ratio,

compared to a ratio of 17.98 price to earningsfor Syngenta.

Gaining a Better

Financial Position:

Separation From the

Competition:

Weight Rating WeightedScore

Rating Weighted Score

Yield Potential 40% 8.50 3.40 6.75 2.70

Intellectual PropertyRights and Protection

35% 8.75 3.06 7.00 2.45

Production,Consumer and Environmental Safety

25% 6.75 1.69 8.00 2.00

Total 100% 8.15 7.15

Monsanto Syngenta

Monsanto is better positioned for the future within the

agrochemical and seed industry

September 16, 2014

REFERENCES

• Agricultural Chemical Manufacturing. (2014, July 21). Retrieved from First

Research: http://mergent.firstresearch-

learn.com.proxy.library.ohiou.edu/industry_detail.aspx?pid=161&chapter=1

• American Seed Trade Association. (2011 June). Existing U.S. Seed Industry

Production Practices That Address Coexistence. Retrieved by American

Seed Trade Association http://www.amseed.org/pdfs/issues/biotech/asta-

coexistence-production-practices.pdf

• College Grad. (2014). Chemicals Manufacturing Industries, Except Pharmaceutical

and Medicine Manufacturing. Retrieved by:

http://www.collegegrad.com/industries/manuf03.shtml

• Charles, Dan. (2013 May). Fertilizer World. Retrieved by National Geographic

http://ngm.nationalgeographic.com/2013/05/fertilized-world/charles-text

• Environmental Protection Agency (EPA). (2014 April 4). Overview of Risk Assessment

in the Pesticide Industry. Retrieved by Environmental Protection Agency:

http://www.epa.gov/pesticides/about/overview_risk_assess.htm

• First Research. (2014 July 28). Crop Production. Retrieved by First Research

http://mergent.firstresearch-

learn.com.proxy.library.ohiou.edu/industry.aspx?chapter=12&pid=35

• First Research. (2014 August 11). Chemical Manufacturing. Retrieved by First

Research http://mergent.firstresearch-

learn.com.proxy.library.ohiou.edu/industry.aspx?chapter=0&pid=17

• GM Education. (n.d.). Contamination of Crops. Retrieved by GM Education:

http://www.gmeducation.org/environment/p149075-contamination-of-

crops.html

Conclusion


REFERENCES• GPS. (2013 September 27). Agriculture. Retrieved by GPS

http://www.gps.gov/applications/agriculture/

• Grace Communications Foundation. (2014). Pesticides. Retrieved Communications

Foundation http://www.sustainabletable.org/263/pesticides

• Haider, Zeeshan. (2014 July). Pesticide Manufacturing. Retrieved by IBISworld

http://clients1.ibisworld.com.proxy.library.ohiou.edu/reports/us/industry/def

ault.aspx?indid=484

• Intellectual Property Rights FAQ. (2013). Retrieved September 14, 2014, from American Seed Trade Association website: http://www.amseed.org/issues/intellectual-property/ip-rights-faq/

• International Seed Federation. (2013, June). Distribution of the global seeds market

value in 2012, by country. Retrieved from International Seed Foundation:

http://www.statista.com.proxy.library.ohiou.edu/statistics/262285/global-

seeds-market-share/

• Isakowitz, Lucas. (2014 July). Vegetable Farming in the US. Retrieved from IBISWorld.


ault.aspx?entid=15]

• Khedr, O. (2014, May). Fertilizer Manufacturing in the US. Retrieved September 4,

2014, from IBISWorld website:


ault.aspx?entid=480

• Lowes. (2014). Fertilizer Buying Guide. Retrieved from Lowes website: http://www.lowes.com/cd_Fertilizer+Buying+Guide_543192373_

• MarketsandMarkets. (2014, February). Worldwide agrochemical market revenue in

2013 and 2018 (in billion U.S. dollars). Retrieved from Statista website:

http://www.statista.com/statistics/311953/agrochemical-market-value-

worldwide-by-type/

• McKitterick, Will. (2014, April) Farm Supplies Wholesaling. Retrieved by IBISworld


ault.aspx?entid=994

Conclusion


REFERENCES• Morea, Stephen. (July 2014). Organic Chemical Manufacturing in the US. Retrieved

by IBISworld

http://clients1.ibisworld.com.proxy.library.ohiou.edu/reports/us/industry/co

mpetitivelandscape.aspx?entid=467

• Monsanto Company (2013). Form 10-K 2013. Retrieved from SEC EDGAR:

http://www.sec.gov/edgar.shtml

• National Bureau of Statistics of China. (2014, August). Production of chemical

pesticides in China. Retrieved by the National Bureau of Statistics of China:

http://www.statista.com.proxy.library.ohiou.edu/statistics/226213/productio

n-of-chemical-pesticides-in-china-by-month/

• Neville, Antal. (2013, September). Crop Services in US. Retrieved by IBIS World:


ault.aspx?entid=89

• Plunkett, Jack W., Plunkett, M. B., Steinberg, J. S., Faulk, J., & Snider, I. J. (2014).

Introduction to the Food & Beverage Industry. Food, Beverage & Tobacco

Industry. Retrieved September 4, 2014, from

http://www.plunkettresearchonline.com

• Syngenta. (2013). Our Industry 2013. Retrieved from Syngenta:http://europe.nxtbook.com/nxteu/Syngenta/ourindustry_2013/index.php#/12

• Syngenta. (2011). Root Health- The Key to Improving Yield. Retrieved from Sygentawebsite:http://www.syngenta.com/global/corporate/SiteCollectionDocuments/pdf/publications/products/Whitepaper_V9-screen.pdf

• The Essential Chemical Industry. (2013, July 21). The Chemical Industry. Retrieved

by: Promoting Science: The University of New York:

http://www.essentialchemicalindustry.org/the-chemical-industry/the-

chemical-industry.html

• U.S. Environmental Protection Agency. (2012 May 9). What is a Pesticide? Retrieved

from U.S Environmental Protection Agency

http://www.epa.gov/kidshometour/pest.htm

• U.S. Environmental Protection Agency. (2010 August). Source Water Protection

Practices Bulletin Retrieved from U.S Environmental Protection Agency

http://www.epa.gov/safewater/sourcewater/pubs/fs_swpp_fertilizer.pdf

• World Health Organization (WHO). (2005, June). Modern food biotechnology,

human health and development: an evidence-based study. Retrieved by

30September 16, 2014

Conclusion

APPENDICESA

Political Economic

Social Technology

Conclusion

PEST


Political

The American Association of American Plant Food Control Officials

(AAPFCO):

The Association of American Plant Food Control Officials also known as AAPFCO is one of thepremier regulators of fertilizers. Their main purpose is to generate uniformity among all fertilizerswithout damaging consumers needs, the environment, or competition in the industry. It is one ofthe leading regulators in the United States (American Seed Trade Association, 2011).

The Association of Official Seed Certifying Agencies (AOSCA):

The Association of Official Seed Certifying Agencies, AOSCA, sets quality standards throughoutthe industry of seed production. Acts taken to ensure seed quality throughout productioninclude steps within the planting, harvesting, cleaning, and storage processes. These such stepsmay either be taking by seed companies or growers producing the seeds for such companies.Examples of steps taken within these processes include having an in depth knowledge ofsurrounding crops, employing crop rotation, and continuous growth inspection. Maintaining thepurity of the seeds is very important for acceptance in the market and commercial sales(American Seed Trade Association, 2011).

Conclusion

APPENDICES


Organic Trends:

High media attention on nutrition during the past five years has encouraged awareness andeducation among consumers. People have shifted from processed foods to choosing freshoptions or even organically grown foods. Organically grown plants are in high demand and havebeen affecting competition in the industry. Farmers have increased their production of higher-quality foods without the use chemicals or altered seeds, which is more expensive for thecustomer. Consumer concern led to pesticide alternatives like the implementation of insects thatrepel other harmful pests. The demand for organic chemicals produced has risen over the pastfive years. Due to these trends, revenue for the organic chemical manufacturing is expected toincrease 2.9% in 2014 (First Research, 2014 July 28; Isakowitz, 2014; Morea, 2014).

Social

Some recent technological advances that help growers improve crop yield include GPSguidance and renewable energy. GPS guidance allows farmers to work in conditions such as rain,fog and darkness and is used for yield mapping, farm planning and soil sampling. Updatedmanagement systems are also a result of the AOSCA standards. Solar power is the most popularrenewable energy source. However, chemical innovation and genetically modified seeds takeprecedence over other advances (GPS, 2013; First Research, 2014 July 28; Steinberg, Faulk, andSnider, 2014; American Seed Trade Association, 2011).

Current green trends have increased

farm’s production of renewable energy

to more than 140% since 2007, 80% of

those being small farms.

(Steinberg, Faulk, and Snider, 2014)

30%

70%

Market of Agrochemicals

Pesticides

Fertilizers

The crop production industry features two main types of chemicals: Pesticides and Fertilizers. Asstated by National Geographic ,“Our planet’s soil simply could not grow enough food to provideall seven billion of us our accustomed diet. In fact, almost half of the nitrogen found in our bodies’muscle and organ tissue started out in a fertilizer factory.” Creating genetically modified seedswas one of the ways that creative technology was able to prevent a slowing in seed production.For example, the seeds that can adapt to drought during the drought period that took place in2012 were the ones that excelled during that time. (Plunkett, Steinberg, Faulk & Snider, 2014; FirstResearch, 2014 July 28; National Geographic, 2013).

Innovative Technology

Conclusion

APPENDICES


B

Porters

Competitive Rivalry

Threat of New

Entrants

Bargaining Power of

Buyers

Threat of Substitutes

Bargaining Power of Suppliers

Porter’s Five Forces

Threat of SubstitutesAs the society becomes more educated about their food, people will turn to substitutes. Forexample, chemicals can be manufactured in several different ways causing competition withinthe industry and with substitute products. This limits the ability to raise prices, even if their ownmanufacturing costs rise. Since recent healthy trends, one substitute consumers are using arevitamins. Consumers would not have to worry about contamination from chemicals or diseasefrom vitamins. The growth of Genetically Modified Seeds could reduce demand for pesticidesand fertilizers. Farmers have a larger selection of seed choices due to high quality seeds andnew technology (American Seed Trade Association, 2011; First Research, 2014 August 11).

Conclusion

APPENDICES

Bargaining Power of Suppliers Bargaining Power of Buyers

Chemical manufacturers mainly sell todistributors, while only a few go directly tolarger farms. They also sell large quantities tofertilizer and pesticide mixers to create variouschemicals suitable for different soil, crop andweather characteristics. External factors canultimately determine farmers demand forsupplies. Generally, farmers will purchasesupplies locally. The climate of a location alsodetermines what type of supplies farmersneed. Fertilizers are the top product soldbecause farmers need the nutrients to growproducts. For the seed industry, the mainbuyer is vegetable and fruit farmers (Isakowitz,July 2014; McKitterick, 2014; Haider, 2014).

To be a successful supplier in this industry,manufacturers need to have anunderstanding of the consumer’s demand. Forexample, market research sends informationto the seed industry about what should beproduced so that farmers can produce thewants and needs of the consumer.International trade in the chemical industry isbig because fertilizers need potash andphosphorus rock which is only available in afew countries. The US is a net exporter ofpesticides while fertilizers are imported. Thusgiving farmers the ability to inexpensivelyoutsource to international sellers causingoverall profit to rise (First Research, 2014August 11; American Seed Trade Association,2011).


C

The Business Model Canvas: Monsanto

35

35

Ke

y P

art

ne

rsK

ey

Ac

tivitie

s

Ke

y R

eso

urc

es

Va

lue

Pro

po

sitio

ns

Cu

sto

me

r R

ela

tio

nsh

ips

Ch

an

ne

ls

Cu

sto

me

r Se

gm

en

ts

Co

st S

tru

ctu

reR

eve

nu

e S

tre

am

s

Wh

o w

e a

re c

rea

tin

g

va

lue

fo

r:•

Farm

ers

•D

ev

elo

pm

en

t p

art

ne

rs•

Se

ed

dis

trib

uto

rs,

soc

iety

, la

wn

an

d

ga

rde

n, a

nd

cro

p

pro

tec

tio

n b

usi

ne

ssM

ost

Im

po

rta

nt

Cu

sto

me

rs:

•Fa

rme

rs

•Fa

rme

rs a

re

cru

cia

l va

lue

a

dd

itiv

es

alo

ng

th

e

pro

du

ctio

n

pro

ce

ss•

De

ve

lop

me

nt

pa

rtn

ers

•G

ive

c

om

pe

titiv

e

ed

ge

by

de

ve

lop

ing

in

no

va

tiv

e

pro

du

cts

Su

pp

ly C

ha

in:

•O

bta

ins

raw

ma

teria

ls

fro

m s

up

plie

rs

•M

an

ufa

ctu

re s

ee

d a

nd

ag

roc

he

mic

al p

rod

uc

ts

•Se

ll to

Cro

p F

arm

ers

, La

wn

an

d G

ard

en

Bu

sin

ess

es,

an

d W

ho

lesa

lers

an

d

Dis

trib

ute

rs

•W

ho

lesa

lers

se

ll

to f

arm

ers

,

pro

ce

sso

rs,

an

d

imp

ort

ers

an

d

exp

ort

ers

Ke

y P

art

ne

rs•

Co

mp

lix•

Ag

ra Q

ue

st•

BA

SF

•C

elle

tic

s•

The

Qu

alis

oy

Fo

un

da

tio

n•

Do

w

•Ev

og

en

eLt

d.

•G

rass

roo

ts B

iote

ch

no

log

y•

Inte

rgra

in•

Me

nd

el B

iote

ch

no

log

y

Inc

.•

Pro

tab

itLL

C•

Sa

pp

hire

En

erg

y•

Se

ne

sco

Tec

hn

olo

gy

•Su

mito

mo

Ke

y S

up

plie

rs•

The

ke

y p

art

ne

rs a

bo

ve

•Te

ch

no

log

y•

Se

ed

s•

Ch

em

ica

ls•

Eq

uip

me

nt

Ke

y A

cti

vit

ies

fro

m P

art

ne

rs•

Tec

hn

olo

gy

•G

ain

ing

Rig

hts

an

d

Lic

en

sin

gTh

e K

ey A

cti

vitie

s th

at

Pa

rtn

ers

pe

rfo

rm•

Exc

lusi

vity

•Li

ce

nsi

ng

•R

ese

arc

h a

nd

D

ev

elo

pm

en

t

Ke

y R

eso

urc

es

for

Va

lue

P

rop

osi

tio

ns:

•In

telle

ctu

al p

rop

ert

y

rig

hts

an

d p

ate

nts

Dis

trib

utio

n C

ha

nn

els

:•

Wh

ole

sale

pa

rtn

ers

C

ust

om

er

Re

latio

nsh

ips:

•Str

on

g c

ust

om

er

rela

tio

nsh

ips

ma

inta

in

ha

bitu

al b

uye

rs,w

hic

h

red

uc

es

in p

art

th

e

co

sts

in lo

ca

tin

g n

ew

ta

rge

t m

ark

ets

Re

latio

nsh

ip t

o C

ust

om

er

Se

gm

en

ts:

•Im

pro

ve

s q

ua

lity

, y

ield

pro

tec

tio

n,

an

d lo

we

rs c

ost

s

•D

istr

ibu

tors

exp

ec

t a

hig

h

qu

alit

y a

nd

hig

h v

olu

me

of

see

ds

Est

ab

lish

ed

:

•R

ela

tio

nsh

ips

with

pre

mie

r

tec

hn

olo

gy

co

mp

an

ies

suc

h

as

Ce

llte

k, d

istr

ibu

tio

n,

an

d

exp

ort

co

mp

an

ies

Inte

gra

tio

n w

ith

Bu

sin

ess

Mo

de

l:

•P

art

ne

rsh

ips

co

mp

rise

ma

jor

sou

rce

of

reve

nu

es

Co

stly

?

•In

ve

stin

g m

on

ey in

de

ve

lop

me

nt

pa

rtn

ers

is

co

stly

bu

t re

turn

s in

re

ve

nu

e

Ch

an

ne

ls t

o C

ust

om

er

Se

gm

en

ts:

Wh

at

are

th

e m

ost

im

po

rta

nt

co

sts

inh

ere

nt

in o

ur

bu

sin

ess

mo

de

l?

Wh

ich

Ke

y R

eso

urc

es

are

mo

st e

xp

en

sive

?

•R

ese

arc

h a

nd

De

ve

lop

me

nt

•In

telle

ctu

al p

rop

ert

y

Fix

ed

Co

sts

(sa

larie

s, r

en

ts,

utilit

ies)

•R

en

t

•U

tilit

ies

Va

ria

ble

co

sts

•P

rod

uc

tio

n a

nd

ho

urly w

ag

es

Ch

an

ne

ls t

o C

ust

om

er

Se

gm

en

ts:

Fo

r w

ha

t va

lue

are

ou

r c

ust

om

ers

re

ally

will

ing

to

pa

y?

•P

ric

es

the

ir p

rod

uc

t a

cc

ord

ing

to

va

lue

off

ere

d t

o t

he

cu

sto

me

r

Fo

r w

ha

t d

o t

he

y c

urr

en

tly p

ay?

•Fix

ed

an

d d

ete

rmin

ab

le c

ost

s (b

ase

d o

n v

alu

e)

Ho

w m

uc

h d

oe

s e

ac

h R

eve

nu

e S

tre

am

co

ntr

ibu

te t

o o

ve

rall

reve

nu

es?

•P

rod

uc

t sa

les

•Li

ce

nsi

ng

•R

ep

uta

tio

n

Va

lue

off

ere

d t

o t

he

c

ust

om

er:

•U

niq

ue

ne

ss•

Hig

h Q

ua

lity

•H

igh

Yie

lds

•P

rov

ide

s V

alu

eH

elp

ing

Cu

sto

me

rs

Pro

ble

ms:

•N

ec

ess

ity f

or

cro

p

pro

du

ctio

n•

Pro

du

cin

g h

igh

er

yie

lds

Pro

du

cts

an

d S

erv

ice

s:•

Ind

ust

ria

l tu

rf a

nd

o

rna

me

nta

l•

Tra

its

tec

hn

olo

gic

al

an

d p

art

ne

rin

g•

Ve

ge

tab

le•

We

ed

co

ntr

ol

Ch

an

ne

ls t

o C

ust

om

er

Se

gm

en

ts:

•B

y d

istr

ibu

tors

•D

eliv

ere

d t

o lo

ca

l sto

res

Ho

w a

re w

e r

ea

ch

ing

th

em

:•

Me

dia

•G

rou

nd

an

d a

ir

ship

me

nts

Wh

at

wo

rks

be

st•

On

line

ord

erin

gM

ost

Co

st E

ffic

ien

t•

Bu

lk s

ale

s to

wh

ole

sale

d

istr

ibu

tors

36

Who They Are:

Monsanto is a dominate force in the seed industry. Some of the key partners who they work withinclude Complix, Agra quest, BASF, Celletics, The Qualisoy Foundation, The Dow ChemicalCompany,Evogene Ltd, Grassroots Biotechnology, Intergrain, Mendel Biotechnology, Inc.,Protabit LLC, Sapphire Energy, Senesco Technology , and Sumitomo (Powers, 2012).

Key Partners

Key Suppliers:

These partners are main suppliers in the industry (Powers, 2012)

Key Activities from Partners:

The key resource that Monsanto is acquiring from all of these companies are mainly technology.They are gaining rights and licensing of all of the unique technologies as well as working withthem for R & D. For example Complix gave Monsanto exclusive rights to their productAlphabody which is a protein alphabody. Protien alphabodies is a protein therapeutic andprevents diseases. These key suppliers give Monsanto and a competitive edge. The moreexclusivity and technology rights that a seed company has the more powerful they will be.(Powers, 2012)

The Key Activities that Partners Perform:

The key activities that these key suppliers will do is either provide them exclusivity, licensing, orresearch and development help. This will improve Monsanto's ability to keep up with the newtrends. (Powers, 2012)

Key Activities

Proposition:

The key activities that these key suppliers will do is either provide them exclusivity, licensing, orresearch and development help. This will improve Monsanto's ability to keep up with the newtrends (Paolis, 2010).

APPENDICES

37

Chemical

Manufacturing

and Seed

Supplies

Monsanto

Distributors

/Suppliers

Importers/

Exporters

Farmers

Lawn and Garden Owners

Farmers

Farmers

Processors

End at Consumer

Value Chain:

Monsanto's value chain is critical to their success. Their process is listed above. According to areport written by Veronica Paolis the most value is added by farmers. This is because Monsanto’sseeds are combined with key resources to create all different types of products. The seed is usedas in an input and the output created is then sent to food processors who make food items thatinclude flour, oil, bread, etc. Consumers then will purchase the food. One of Monsanto's mostimportant key activities is the money they devote to research and development. This is what

gives Monsanto a competitive edge over many of the other agrochemical and seedcompanies (Paolis, 2010).

APPENDICES

Value Offered to the Customer:

Monsanto delivers value to the customers by providing a unique product that is not created byother companies as well as they generate higher yields for the customers. They also deliver topnotch seeds that are updated crop protection technology. Monsanto's customer segmentsinclude farmers, development partners, seed distributors, and society. Monsanto provides valueto each of these customer segments in specific ways (Osterwalder, 2014).

Value Proposition

Helping Customers Problems:

The problem that they are helping consumers solve is that there are many environmental factorsthat can impact the yield that can impact a seeds yield output. Some of the factors that impactplant growth include temperature, moisture supply, radiant energy, etc. As well as insects andanimals who have an tendency to destroy plant growth and provide a strong amount of cropproduction (Monsanto, 2014 - ).

Satisfying Customer Needs:

The needs that we are satisfying include the necessity for crop protection and the need togenerate higher yields to meet the growing demand because of the growing population(Monsanto, 2014).

Products and Services:

The main bundles and products that they offer to each customer segment crop protection,industrial turf and ornamental, traits technological and partnering, vegetable, and weed control(Monsanto, 2014).

APPENDICES

Who we are Creating Value For:

Monsanto is creating value for farmers, development partners, seed distributors, society, lawn andgarden, and crop protection business (Paolis, 2010).

Customer Segments

Most Important Customers:

The most important customers include farmers and development partners. Farmers create addvalue to Monsanto's seeds by combining their product with key resources to generate it into anincredibly valuable product. The development partners are incredibly important because ofMonsanto’s funding into research and development. Without their development partners theywould not be able to develop the high quality products that they have. As shown in the graph byMonsanto - 2013 Form 10-K, with information provided by Monsanto they spent a total of $1,533million on research and development which is about $200 million than Syngenta. Indirectly theyaffect all people who by processed food and crops. Directly they affect all of their maincustomers (Monsanto - 2013 Form 10-K, Paolis, 2010).

39

9801,098

1,2051,386

1,517 1,533

0

500

1000

1500

2000

2008 2009 2010 2011 2012 2013

Monsanto’s Research and Development Expenditure from 2008 to

2009 in Million US Dollars

Data Source: Monsanto - 2013 Form 10-K

Value Our Customers are Willing to Pay:

Monsanto is in a suppliers market. This means that Monsanto can pretty much control the pricesof their products. Monsanto is an invaluable product to many farmers of course they can go tosome of their competitors but each company has different quality products that improve yieldproduction. Monsanto prices their seeds based on the value that it provides specifically tofarmers. According to an article written by Monsanto they state the benefits of using their seedsand the higher the benefits the higher priced their seeds will be (Monsanto, 2014 – Prices Seeds).

Revenue Streams

How Customers Pay:

Customers pay fixed or determinable costs. Determinable costs are generated based on value(Monsanto 10-k).

How much does each Revenue Stream Contribute to Overall Revenues:

Majority of their revenue stream is contributed by products that they sell or are licensing.Customers are solely responsible for their revenue stream. Their reputation and intellectualproperty rights also plays a huge part in their revenue stream (Monsanto 10-k)).

APPENDICES

40

Channels to Customer Segments:

They want to be reached with distributors and the Monsanto company itself. They also want itdelivered or in stores near their locations because farmers are in rural areas and its hard tonecessarily find time to go to the stores to themselves (Paolis, 2010).

Channels

How we are Reaching Them:

Right now they are reaching them through media, delivery trucks, flight, and shipments.Specifically when seeds are sent from Latin America Monsanto will fly the seeds to theirdistribution centers all across the worlds (Paolis, 2010).

How Our Channels Integrated:

Their channels are integrated into their system by providing all farmers and distributors with easyaccess to their seeds by not only selling it in one specific place (Paolis, 2010).

APPENDICES

Which Ones Work Best?:

The ones that work the best is being able to order on their website. This is because farmers do nothave to leave their crops to buy their agrochemicals and seeds which saves time. This isincredibly important because when farmers waste time they lose money and potentially yield(Paolis, 2010).

Which Ones are Most Cost-Efficient?:

The most cost efficient is bulk selling the products into their wholesale distributors because it willbe less of a delivery fee than shipping less product to one person’s house. It allows Monsanto tomove inventory way quicker (Paolis, 2010).

How we are Integrating Them with Customer Routines:

Monsanto is integrating their product with the customer routines by making them incrediblyaccessible to farmers and distributors who are their main customer. They also are licensing theirtechnology and products which allows them to save costs because they don’t have to worryabout delivery costs. (Paolis, 2010).

41

Distribution:

Their key distribution channels include many of their wholesale partners and farmers Monsanto10-k).

Key Resources

Key Resources for Value Propositions:

Their intellectual property rights and patents, multiple distribution channels and developmentpartners, acquisitions, equipment, and the amount of investments that they spend of researchand development (Monsanto 10-k).

Customer Relationships:

As well they need to maintain strong customer relationships because that is one of the mainreasons they are so successful (Monsanto, 10-k)

APPENDICES

Cost Structure


Research and development is by far the most expensive key resource and activity but by far themost important costs. Intellectual property is key to being the most successful company in theindustry. Whoever is able to keep up with the technology is able to basically dominate the seedindustry (Monsanto 10-k).

Company:

Monsanto is value driven because their seed prices are solely based upon the value it providesto their customers (Monsanto, 2014 - Sumitomo).

D

The Business Model Canvas: Monsanto

42

Ke

y P

art

ne

rsK

ey

Ac

tivitie

s

Ke

y R

eso

urc

es

Va

lue

Pro

po

sitio

ns

Cu

sto

me

r R

ela

tio

nsh

ips

Ch

an

ne

ls

Cu

sto

me

r Se

gm

en

ts

Va

lue

off

ere

d t

o t

he

c

ust

om

er:

•U

niq

ue

ne

ss•

Hig

h Q

ua

lity

•H

igh

Pe

rfo

rma

nc

e

He

lpin

g C

ust

om

ers

P

rob

lem

s:•

Foc

us

on

ad

dre

ssin

g

issu

es

gro

we

rs fa

ce

Sa

tisf

yin

g C

ust

om

er

Ne

ed

s:•

De

pe

nd

s o

n

ge

og

rap

hic

al l

oc

atio

n

an

d n

ee

ds

of

gro

we

rsP

rod

uc

ts a

nd

Se

rvic

es:

•H

erb

icid

es

•Fu

ng

icid

es

•In

sec

tic

ide

s•

Ad

va

nc

ed

Ge

ne

tic

Se

ed

s

Wh

o w

e a

re c

rea

tin

g

va

lue

fo

r:•

Cro

p F

arm

ers

in

g

eo

gra

ph

ic

ma

rke

ts: La

tin

A

me

ric

a, A

sia

P

ac

ific

, N

ort

h

Am

eric

an

an

d

Eu

rop

e &

AM

E•

Co

nsu

me

rs

Mo

st Im

po

rta

nt

Cu

sto

me

rs:

•C

rop

Fa

rme

rs•

Wh

ole

sale

rs a

nd

D

istr

ibu

ters

•

Law

n a

nd

Ga

rde

n

Bu

sin

ess

Su

pp

ly C

ha

in:

•R

aw

ma

teria

ls fro

m

sup

plie

rs•

Ma

nu

fac

ture

se

ed

a

nd

ag

roc

he

mic

al

pro

du

cts

•Se

ll to

Cro

p F

arm

ers

, La

wn

an

d G

ard

en

B

usi

ne

sse

s, a

nd

W

ho

lesa

lers

an

d

Dis

trib

ute

rs

Ke

y P

art

ne

rs•

Du

Po

nt

•A

dv

ion

an

d

Ac

ele

pry

n•

Tae

gro

•G

riff

in G

ree

nh

ou

se

Su

pp

lies

•Su

nfle

ldSe

ed

s In

c•

Cro

p F

arm

ers

•La

wn

an

d G

ard

en

B

usi

ne

ss•

Wh

ole

sale

rs a

nd

D

istr

ibu

ters

Ke

y S

up

plie

rs•

Re

lian

ce

on

sin

gle

su

pp

liers

in v

ario

us

co

un

trie

sK

ey A

ctivitie

s fr

om

P

art

ne

rs•

Ma

nu

fac

turin

g t

he

p

rod

uc

ts•

Dis

trib

utio

n o

f p

rod

uc

ts t

o b

uye

rs

Ke

y R

eso

urc

es

for

Va

lue

Pro

po

sitio

ns:

•R

ese

arc

h a

nd

De

ve

lop

me

nt

•B

ran

d p

rote

ctio

n t

hro

ug

h

pa

ten

ts,

tra

de

ma

rks

etc

.

•R

eg

ula

tio

ns/

law

s –

loc

al,

na

tio

na

l a

nd

inte

rna

tio

na

l

Dis

trib

utio

n C

ha

nn

els

:

•P

art

ne

rsh

ip

•R

ese

arc

h o

n s

hip

pin

g

Cu

sto

me

r R

ela

tio

nsh

ips:

•R

ese

arc

h a

nd

Te

ch

no

log

y

•B

ran

d A

wa

ren

ess

•Tr

ain

ing

with

in t

he

co

mp

an

y a

nd

usa

ge

safe

ty

Re

latio

nsh

ip t

o C

ust

om

er

Se

gm

en

ts:

•H

igh

er

Yie

lds

•R

elia

bili

ty

•Q

ua

lity

of

Pro

du

ct

•C

on

sum

er

Sa

fety

•Tr

ain

ing

Est

ab

lish

ed

:

•H

igh

er

Yie

lds

•Q

ua

lity o

f P

rod

uc

t

Inte

gra

tio

n w

ith

Bu

sin

ess

Mo

de

l:

•A

bo

ut

of

the

va

lue

pro

po

sitio

n

•R

eve

nu

es

are

de

pe

nd

en

t o

n

this

Co

stly

?

•Y

es,

be

ca

use

of

pa

ten

ts,

rese

arc

h a

nd

te

ch

no

log

y,

follo

win

g re

gu

latio

ns,

ad

ap

t to

ma

rke

t

Ch

an

ne

ls t

o C

ust

om

er

Se

gm

en

ts:

•Sh

ips,

tru

cks,

airp

lan

es

•C

are

fully

dis

trib

ute

h

aza

rdo

us

ma

teria

l•

Eff

icie

ntly d

istr

ibu

tes

Ho

w a

re w

e re

ac

hin

g

the

m:

•G

PS t

rac

kin

g o

n

ve

hic

les

an

d

wa

reh

ou

ses

•IT

so

lutio

ns

Ch

an

ne

ls t

o C

ust

om

er

Se

gm

en

ts:

Wh

at

are

th

e m

ost

im

po

rta

nt

co

sts

inh

ere

nt

in

ou

r b

usi

ne

ss m

od

el?

•R

ese

arc

h a

nd

De

ve

lop

me

nt

Wh

ich

Ke

y R

eso

urc

es

are

mo

st e

xp

en

siv

e?

•

Re

sea

rch

an

d D

ev

elo

pm

en

t•

Lic

en

sin

gW

hic

h K

ey A

ctiv

itie

s a

re m

ost

exp

en

siv

e?

•R

ese

arc

h a

nd

De

ve

lop

me

nt

Fixe

d C

ost

s •

Sa

larie

s a

nd

Re

nt

Co

st S

tru

ctu

reR

eve

nu

e S

tre

am

s

Ch

an

ne

ls t

o C

ust

om

er

Se

gm

en

ts:

For

wh

at

va

lue

are

ou

r c

ust

om

ers

re

ally

will

ing

to

pa

y?

•W

illin

g t

o p

ay $

14

.01 p

er

$1 o

f re

ve

nu

eFo

r w

ha

t d

o t

he

y c

urr

en

tly p

ay?

•

Av

era

ge

pric

e fo

r a

pro

du

ct

is $

20

Ho

w a

re t

he

y c

urr

en

tly p

ayin

g?

•

Dire

ct

co

nta

ct

with

Syn

ge

nta

an

d p

ay w

ith

cre

dit/c

ash

/ch

ec

kH

ow

mu

ch

do

es

ea

ch

Re

ve

nu

e S

tre

am

co

ntr

ibu

te t

o o

ve

rall

reve

nu

es?

•M

ost

of

the

ir r

ev

en

ue

co

me

s fr

om

Ag

roc

he

mic

als

(1

9%

) o

f th

e

Ag

roc

he

mic

al m

ark

et

•Se

ed

s

Va

ria

ble

co

sts

•W

ag

es

•P

rod

uc

tio

n C

ost

s

43

Who They Are:

Syngenta has multiple key partners that help their company thrive in the agrochemical andseed industry. Their key partners include Dupont, Advion and Acelpyrn, Taegro, Griffin

Greenhouse Supplies, Sunfield Seeds, Crop Farmers, Lawn and Garden business, andWholesalers and distributors. These key partners provide everything from nitrates andphosphates for agrochemical production to technology for research and development. Theyalso have key buyers that make up majority of the industry these include crop farmers,wholesalers and distributors, and the Lawn and Garden business (Syngenta 20-).

Key Partners

Key Suppliers:

Syngenta’s key suppliers include Dupont, Advion and Acelpyrn, Taegro, Griffin GreenhouseSupplies, and Sunfield Seeds. Of course Syngenta has other suppliers but these companies havecreated a strong relationship with them (Syngenta 20-f).

Key Activities from Partners:

The Key Resources that are obtained from their Key Partners include research and development,nitrates and phosphates, equipment, and a loyal customer base (Syngenta 20-f).

The Key Activities that Partners Perform:

The Key Activities that partners perform in include research and development and

transportation. They also help them find new partners and opportunities for mergers andacquisitions (Syngenta 20-f).

APPENDICES

Key ActivitiesValue Chain:

Syngenta’s value proposition can be shown through Syngenta’s supply chain. The supply chainstarts off with the supplier providing chemicals, seeds and equipment it takes to manufacturetheir products. It is then taken to Syngenta where they add value by combining the newtechnology that they receive with their seeds or making cutting edge agrochemicals. Theproduct is then distributed to four different customer segments distributors and retailers, importersand exporters, farmers, and lawn and garden owners. The distributors, retailers, importers, andexporters will provide the product to farmers as well making them a channel of reachingSyngenta’s most popular customer. The farmers then add the most value to the product bytaking all of the key resources and making a fully grown crop. The crop is then sent to processorswho turn the product into processed foods. It is then sold to retailers who sell it to the consumer(Syngenta, 2014).

44

Chemical

Manufacturing

and Seed

Supplies

Monsanto

Distributors

/Suppliers

Importers/

Exporters

Farmers

Lawn and Garden Owners

Farmers

Farmers

Processors

End at Consumer

APPENDICES

Value Offered to the Customer:

What Syngenta promises to deliver to its customer is a unique, high quality, high yield generatingproduct. This is important to the consumer due to the fact that Syngenta provides a productthat they can’t get from anywhere else. (Syngenta 20-f)

Value Proposition

Helping Customers Problems:

Syngenta solves multiple customer problems by providing crop protection and quality seeds thatare immune to factors that would prevent higher yields (Syngenta 20-f)

Satisfying Customer Needs:

Syngenta satisfies multiple customer needs. Wholesalers need a product that is efficient and indemand to the consumer, farmer needs a product that generates higher yields and protectstheir crops, importers and exporters need a product that is in demand globally and followsnational laws, and lawn and garden owners need protection from insects and wild animals(Syngenta 20-f).

45

Products and Services:

The bundles of products that are being offered to each customer segment include herbicides,fungicides, insecticides, and advanced genetic seeds. Syngenta’s highest revenue generatingproducts are their agrochemicals). Whereas Monsanto's greatest product is their geneticseeds((Syngenta, 2014, 20f; Monsanto, 2014, 10K).

Customer Relationships

Relationship to Customer Relationship:

The customer segments expect multiple types of relationships. Farmers expect the product toproduce higher yields, to be reliable, have a high quality, a safe product, and proper training(Syngenta 20-f).

Integration with the Business Model:

Syngenta has established a relationship with consumer expectations of higher yields and highquality (Syngenta,20-F).

APPENDICES

Costly?:

Syngenta is focused on the lowering of costs by acting as sustainably as possible, but the cost ofResearch and Development and the patents protecting those products is very expensive(Syngenta 20-F).

Who we are Creating Value For:

Syngenta creates value for many areas of the market. Included are: Crop farmers in differentgeographic locations such as Latin America, Asia, the Pacific, North America and Europe, andalso creating value for individual customers buying product for non-farm related operations(Syngenta 20-F).

Customer Segments

Most Important Customers:

The most valued customers within the segment are the crop farmers, which make up themajority of sales, wholesalers and distributors, and lawn and garden businesses. Farmers createadd value to Syngenta’s seeds by combining their product with key resources to generate it intoan incredibly valuable product. This is then sent to food processing plants, wholesalers anddistributed where it is then sold to society (Syngenta 20-F) .

46

Value Our Customers are Willing to Pay:

According to the price to earnings ratio, customers are willing to pay $14.01 for every $1 ofrevenue (Syngenta 20F).

Revenue Streams

How Customers Pay:

Customers are able to pay in the usual ways of cash, debit, credit, check to purchase Syngentaproducts. They can also contact Syngenta directly for a private consultation (Syngenta, 2014).

How much does each Revenue Stream Contribute to Overall Revenues:

Majority of the revenue stream is generated from their agrochemical products. Whereas theirinnovative seed technology brings in the second highest for revenue (Syngenta 20f).

APPENDICES


Syngenta sends all their products via ships, trucks, airplanes and trains. Syngenta takes specialcare when shipping hazardous material. Shipping efficiency is a must at Syngenta (Syngenta,2014).

Channels

How we are Reaching Them:

Syngenta keeps track of all products in route by using GPS tracking. They are able to knowexactly where their freight is from leaving the warehouse all the way to the destination.Syngenta uses GPS coupled with IT solutions to ensure fast and efficient shipping (Syngenta 20-F,2014).

Key Resources

Key Resources for Value Propositions:

Syngenta’s research and development, brand protection through patents, trademarks, andregulations and laws in local, national, and international governments are all key resources forvalue propositions (Syngenta 20-f).

47

Distribution:

Syngenta has partnerships with many shipping and distribution companies. Syngenta has doneresearch to find the most efficient ways to ship all their products (Syngenta 20-f).

Cost Structure


Research and Development is the most important cost when it comes to the business model.Keeping up to date with technology is how a company in this industry is successful. Syngentainvests a large amount of money in licensing and fixed cost such as salaries, rent, and utilities.Research and development is one of the largest outlays of money that Syngenta has. Syngentatakes research and development very seriously as highlighted by their 1.376 billion dollarexpense (Syngenta 20-f).

Company:

Syngenta is completely value driven. All of their products are made for the value of thecustomer. Prices are given to their agrochemicals and seeds based upon the yield potential andvalue that they see given to the customers.

APPENDICES

48

APPENDICES

SWOT Analysis of Monsanto

D

Strengths

Leading Market Position:

Monsanto is able to offer a seeds that have high yields that are recognized as brand names.

Monsanto can easily break into new geographies because they have such a well recognized

product portfolio. With such a strong brand portfolio, Monsanto is able to enhance its market

leadership position (MarketLine, 2014 July 18).

Strong Focus on Research and Development:

Monsanto is one of the largest suppliers of agricultural needs because of their ability to deliverinnovative products to farmers. Monsanto is able to provide seeds that are weed and droughtresistant that at the same time have high yield potential. Research and development is one ofthe largest investments that Monsanto makes. Investing amounted to $1,533 million in fiscalyear 2013 (MarketLine, 2014 July 18)..

Weaknesses

Legal Proceeding:

Monsanto has been in multiple lawsuits. One of which is one where the Arkansas TeacherRetirement System filed a lawsuit because Monsanto was making false and misleadingstatements regarding its earnings guidance for 2009 and 2010. The EPA has also had problemswith Monsanto. The EPA issued a Notice of Violation at the phosphorous manufacturingplant. With these problems, shareholders have doubt in Monsanto and lead to a lack ofcustomer confidence in the company (MarketLine, 2014 July 18).

49

Growing Demand for Food Products With Reduced Saturated Fat and Trans-fat:

Monsanto is on the cutting edge of health trends. The are now offering Soybeans that havevirtually eliminated trans-fatty acid in their processed soybean oil. Monsanto has also completedmany keep acquisitions. “In June 2012, Monsanto completed the purchase of plantingtechnology developer Precision Planting” (MarketLine 2014). The Precision Planting team is nowpart of Monsanto's integrated farming systems unit, which will utilize advanced agronomicpractices, seed genetics, and innovative on-farm technology to deliver optimal yield to farmerswhile using fewer resources (MarketLine, 2014 July 18)..

APPENDICESOpportunities

Growing Population:

With the population growing, Monsanto has a huge opportunity to increase its profit. Asia has topopportunity for Monsanto to expand. Monsanto is a leading supplier in the countries it operatesin. This gives them the advantage of having expertise, distribution network, and product portfoliocomprising well known brand names (MarketLine 2014).

Threats

Infringement of Intellectual Property Rights:One of the biggest threats that faces Monsanto is the infringement of their intellectual propertyrights If Monsanto fails to protect their intellectual property rights it could lead to substantial lossin revenue and market share, and brand dilution. Monsanto also faces growing legislation ofgenetically modified organism (GMO) regulation. Public concern can also lead to an increase inlegislation against GMOs. With legislation concerning GMOs increasing, Monsanto could facedifficulty expanding into new markets and growing its revenue (MarketLine 2014).

Seasonal:

Seasonality is also a difficult threat that Monsanto faces. In 2013 Monsanto sold 72% of seeds andgenomics in the second and third quarters. This is effected by the growing patterns found in NorthAmerica. Approximately 46% of Monsanto’s revenue comes from business outside the UnitedStates. This is an imposing threat due to trade restrictions, investment regulations, governmentalinstability, and other potentially detrimental governmental practices or policies affectingcompanies doing business overseas. Fluctuation of different currencies is also pressing threat that

Monsanto faces. Monsanto also faces political and economic problems such as civil uprisings,riots, and terrorist acts. Such problems could a great negative effect on Monsanto's revenuegrowth (MarketLine 2014).

APPENDICES

Strengths

Weaknesses

Reliance on Single Supplier for Certain Important Products:

Syngenta acquires raw materials from various suppliers, but for certain important activeingredients they depend on a single supplier. Such single supplier arrangements account forapproximately 16% of the company's purchases of these items. If there would be a sudden loss ofa single supplier, it will affect the supply of the material which in turn may have a negativeimpact on the production activities (MarketLine, 2014).

SWOT Analysis of Syngenta

D

Global Footprint Driving Growth:

Syngenta is geographically diverse since it operates in North America, Latin America, Europe,Africa and the Middle East. That gives Syngenta the ability to offset demand fluctuations in

certain geographic regions. In FY2013, the company generated 23.7% of the total revenuesfrom the US (MarketLine, 2014).

Comprehensive Portfolio of Agricultural and Non-agricultural Products:

Syngenta has a comprehensive product range making it a leader in all of its target segments.They focus on all major crops. For example: corn, cereals, diverse field crops, rice, soybean,fruits, trees, nuts, potatoes, cotton, plantations, sugar cane and vegetables. Syngenta’s cropprotection business provides herbicides, fungicides, insecticides and seed care products. Theseed business offers field crops and vegetable seeds. They are sold to customers engaged inagricultural activities. The lawn and garden business offers professional products for turf,ornamentals treatment, vegetation management and for home and garden use (MarketLine,2014).

51

Opportunities

Acquisitions Likely to Further Strengthen Syngenta’s Seeds Business:

Syngenta has strengthened their seed business through acquisitions. In October 2013, theyacquired a developer, producer and distributer of white corn seed in Zambia called MRI SeedZambia and MRI Agro (MRI). This will further expand high-growth in East African markets and maybe leveraged globally through breeding programs. Most recently in June 2014, Syngenta signedan agreement to acquire winter wheat and winter oilseed rape breeding and businessoperations of Lantmannen, the Swedish food energy and agriculture group. They will enable thedevelopment of hybrids with yield stability, winter hardiness and broad disease resistance, to givethem a competitive advantage (MarketLine, 2014).

APPENDICES

New Crop Protection Products May Drive the Company’s Top-line Growth:

Syngenta has launched new crop protection products, which may help in revenue growth. The

company announced, in October 2013, the registration of a novel seed treatment insecticidecalled Fortenza. The Fortenza family provides growers with new tools against pests above andbelow the ground. According to Syngenta, the global peak sales potential of the Fortenzaproduct family is expected to be around $300 million. Recently, in March 2014, Syngentaannounced a product called Elatus has been approved by Brazilian authorities. Elatus offersprotection against a disease that can significantly affect yields called soybean rust (MarketLine,2014).

Threats

Consumer and Government Resistance to Genetically Modified Organisms:

Syngenta is active in the field of GMO’s and biotechnology research and development in seedsand crop protection. The high public profile of biotechnology and lack of consumeracceptance of products that Syngenta has devoted a large number of resources to couldaffect public image. There are currently resistance of GMO’s from consumer groups in Europe.They have concerns over the effect on food safety and the environment. This could influencethe acceptance of products developed through biotechnology in other regions of the world,which could limit the commercial opportunities. Also, some government authorities haveenacted regulations regarding GMO’s which may limit or prohibit the development and sale.This could affect Syngenta’s sales and brand image (MarketLine, 2014).

52

APPENDICES

Intense Competition Likely to Put Syngenta's Market Position Under Duress:

Syngenta operates in the crop protection industry which is a highly competitive environment. Itis mainly comprised of agricultural businesses or large chemical companies. The topcompetitors are BASF, Bayer, The Dow Chemical Company, DuPont and Monsanto Company.Syngenta also competes with generic producers. The company competes on factors likeproduct range, product development and differentiation, geographical coverage, price andcustomer service. Competition in the seeds business is anywhere from small producerscompeting in local markets. The major competitors include Monsanto Company, Vilmorin, KWSSAAT, Bayer, Dow and Takii & Co. Intense competition may affect their market position.Syngenta is subject to increasing laws, regulations and standards.If the company fails to complythey could face legal proceedings and remediation liabilities. Syngenta’s operational andfinancial position could be affected (MarketLine, 2014).

53

MONSANTO ASSETS Aug 31, 2013 Aug 31, 2012 Aug 31, 2011

Cash and Cash Equivalents 17.75% 16.23% 12.96%

Short-term Investments 1.23% 1.49% 1.52%

Trade Receivables, net 8.30% 9.38% 10.67%

Miscellaneous Receivables 3.62% 3.07% 3.17%

Deferred Tax Assets 2.8% 2.64% 2.25%

Inventory, net 14.26% 14.04% 13.06%

Assets of discontinued operations - - -

Other current assets 0.80% 0.90% 0.77%

Current Assets 48.77% 47.76% 44.39%

Property, plant and equipment, net 22.52% 21.58% 22.14%

Goodwill 17.03% 16.98% 16.96%

Other intangible assets, net 5.93% 6.12% 6.60%

Noncurrent deferred tax, net 2.20% 2.72% 4.40%

Long-term receivables, net 1.15% 1.86% 2.39%

Noncurrent assets of discontinuedoperations

- - -

Other assets 2.40% 2.98% 3.12%

Noncurrent Assets 51.23% 52.25% 55.61%

Total Assets 100.00% 100.00% 100.00%

54

MONSANTO LIABILITIES Aug 31, 2013 Aug 31, 2012 Aug 31, 2011

Short-term debt, including current portion of long term debt

0.25% 0.18% 3.42%

Accounts payable 4.82% 3.93% 4.23%

Income taxes payable 0.44% 0.37% 0.59%

Accrued compensation and benefits 2.38% 2.70% 2.15%

Accrued marketing programs 5.22% 6.33% 5.59%

Deferred revenues 2.50% 1.96% 1.88%

Grower production accruals 0.29% 0.96% 0.44%

Dividends payable 1.10% 0.99% 0.81%

Customer payable 0.06% 0.07% 0.47%

Restructuring reserves - - 0.12%

Liabilities of discontinued operations - - -

Miscellaneous short-term accruals 3.93% 3.39% 4.13%

Current Liabilities 20.98% 20.87% 23.83%

Long-term debt 9.97% 10.08% 7.78%

Postretirement liabilities 1.73% 2.68% 2.57%

Long-term deferred revenue 0.67% 1.21% 1.70%

Noncurrent deferred tax liabilities 2.27% 1.55% 0.77%

Long-term portion of environmental and litigation 0.93% 1.05% 0.89%

Noncurrent liabilities of discounted operations - - -

Other liabilities 1.5% 3.04% 3.44%

Noncurrent Liabilities 17.42% 19.62% 17.13%

Total Liabilities 38.40% 40.49% 40.96%

Common stock, par value $0.01 0.03% 0.03% 0.03%

Treasury stock, at cost -20.03% -15.06% -13.17%

Additional contributed capital 52.18% 51.28% 50.88%

Retained earnings 34.79% 27.38% 21.03%

Accumulated other comprehensive loss -6.18% -5.12% -0.58%

Reserve for ESOP debt retirement - - -0.01%

Total Monsanto Company shareowners equity 60.78% 58.51% 58.18%

Noncontroling interest 0.82% 1.00% 0.86%

Total shareowners equity 61.60% 59.51% 59.04%

Total liabilities and shareowners equity 100.00% 100.00% 100.00%

55

MONSANTO INCOME STATEMENT 2013 2012 2011

Net Sales 100.00% 100.00% 100.00%

Cost of Goods Sold 48.5% 47.83% 48.58%

Gross Profit 51.5% 52.17% 51.42%

Operating Expenses - - -

Selling, General and administrative expenses

17.16% 17.70% 18.52%

Research and Development expenses

10.32% 11.23% 11.72%

Restructuring charges, net - -0.07% -0.01%

Total Operating Expenses 27.47% 28.86% 30.26%

Income from Operations 24.02% 23.31% 21.26%

Interest Expense 1.18% 1.41% 1.37%

Interest Income -0.62% -0.57% -0.63%

Other Expenses, net 0.41% 0.34% 0.34%

Income from Continuing operations before income taxes

23.07% 22.13% 20.08%

Income tax provision 6.16% 6.67% 6.06%

Income from Continuing operationsincluding portion

16.92% 15.45% 14.02%

Discounted Operations - - -

Income from Operations of discounted businesses

0.11% 0.07% 0.03%

Income tax provision 0.04% 0.03% 0.01%

Income on discounted Operations 0.07% 0.04% 0.02%

Net Income 16.99% 15.50% 14.03%

Less: Net income attributed to Noncontroling interest

0.29% 0.36% 0.44%

Net Income Attributed to Monsanto Company

16.70% 15.14% 13.59%

56

SYNGENTA INCOME STATEMENT 2013 2012 2011

Net Sales 100.00% 100.00% 100.00%

Cost of Goods Sold 54.37% 50.82% 50.78%

Gross Profit 45.63% 49.18% 49.22%

Operating Expenses - - -

Marketing and Distribution 16.30% 17.03% 16.17%

Research and Development expenses

9.37% 8.82% 8.49%

Restructuring charges, net 1.22% 1.64% 2.31%

Divestment Gains (losses) - -0.18% 0.57%

Other General and Administrative 4.54% 5.37% 7.36%

General and Administrative - -7.19% 9.10%

Total Operating Expenses 31.43%

Operating Income 14.20% 16.14% 15.46%

Income (loss) from associated and joint ventures

- 0.05% 0.11%

Interest Income 0.82% 0.82% 0.70%

Interest Expense - 1.00% 1.15%

Other Financial Expenses - 0.14% 0.15%

Currency Gains (losses), net - 0.71% 0.65%

Financial Expense, net - 1.04% 1.24%

Income Before 13.17% 15.15% 14.33%

Income Tax Expense - 1.5% 2.27%

Net Income 11.23% 13.20% 12.06%

Less: Net income attributed to Noncontroling interest

- 0.02% 0.01%

Net Income Attributed to Syngenta AG shareholders

- 13.18% 12.05%

57

SYNGENTA ASSETS Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

Cash and Cash Equivalents 4.46% 8.24% 9.66%

Trade Receivables, net 17.04% 16.45% 15.87%

Other accounts receivable 4.84% 4.80% 4.00%

Inventory, net 27.58% 24.40% 24.30%

Derivative and Other Financial Assets 0.96% 1.29% 1.56%

Other Current Assets 1.23% 1.32% 1.15%

Total Current Assets 56.12% 56.51% 56.55%

Property, plant and equipment, net 17.34% 16.46% 17.55%

Intangible assets 16.72% 18.05% 16.64%

Deferred Tax Assets 4.75% 5.54% 5.39%

Derivative financial assets and other non-current assets

4.05% 2.89% 3.11%

Investments in associates and joint ventures

1.01% 0.74% 0.76%

Noncurrent Assets 43.88% 43.49% 43.45%

Total Assets 100.00% 100.00% 100.00%

58

SYNGENTA LIABLITIES Dec 31, 2013

Dec 31, 2012 Dec 31, 2011

Trade accounts payable 18.88% 17.57% 16.71%

Current financial debt and other financialliabilities

7.87% 5.93% 5.54%

Income Taxes Payable 3.4% 2.95% 3.17%

Other Current Liabilities 4.81% 5.97% 5.96%

Provisions 1.42% 1.22% 1.35%

Total Current Liabilities 36.39% 33.13% 32.73%

Financial debt and other non-current liabilities

12.21% 12.63%

Deferred tax liabilities 3.93% 4.45% 4.37%

Provisions 3.79% 4.33% 5.61%

Non-current liabilities 16.60% 21.74% 23.75%

Total Liabilities 52.99% 54.87% 56.48%

Issued share capital 0.03% 0.03% 0.03%

Reserves 18.87% 19.21% 18.48%

Retained earnings 30.43% 27.24% 21.67%

Total Shareholders’ Equity 46.95% 45.14% 43.65%

Total liabilities and equity 100.00% 100.00% 100.00%

final blow

Documents

Transcript of final blow