Ethical Paradigm - Monsanto - Case Study Example

Tile] Ethical Paradigm- Monsanto When an organizations values and ethics support its strategy, it is courtesy to stakeholders and the community to inform of any changes in the organization this enhances the companys success and stability. Customers, suppliers, employees, and shareholders each have their own interest in the performance and success of the organization because each can benefit or be harmed by the decision making management makes. This act of sharing with the community and stakeholders better puts the reputation of the organization in good standing with future consumers and investors. Thesis Statement The main reason for the Monsanto backlash was the ethical dilemma brought about by the unproven, yet potentially risky scientific processes used to genetically modify their products. Introduction Monsanto is a company that deals in life sciences and has three separate businesses which share both a common objective and the shared the latest technologies to attain that objective. These tri-dimensional businesses comprise of food components, agriculture, and pharmaceuticals. Within these tri-dimensional business bodies, Monsanto has a broad variety of products like pesticides, herbicides, biotechnological agricultural products, genetically engineered produce and pharmaceuticals etc. Background Monsantos products are developed through genomic technology, the study of genes and their functions. Monsanto used this technology to alter the genes in both animal hormones and in plants to boost the traits they wanted emphasized, and to remove any traits they wanted. The knowledge gained from genomics gave the scientists at Monsanto an innovative way to design new agricultural and produce solutions. It was through this technology that the company was able to alter the genes of a number of plant seeds so as to be resistant to Roundup. In doing so, Monsanto was able to create long-term demand for the product. Cultural differences in Monsantos experiences in the US and Europe The citizens of Europe were very concerned about the potential creation of super bugs and super weeds, which would be resistant to the current herbicides and pesticides. If this were to happen Monsanto would be forced to create an even more potent chemical, and the cycle would continue. From an ethical standpoint, Monsanto faced a critical decision: do their products benefits outweigh their potential risks. While the answer was yes in the US, Monsanto never gave the people of Europe a chance to discuss and debate this before placing their products in the market. Monsanto also failed to take into consideration the commercial and cultural differences associated with life on opposite sides of the Atlantic, and the potential concerns that Europeans had that were unique from those of Americans. Monsantos reasons to push ahead were twofold: one was their self absorbed enthusiasm of the new technology, and two was their attitude that the size of their corporation could help mold the consumers behaviors and feelings towards genetically modified foods. Another reason that Monsanto may have pushed so hard in Europe was their desire to continue to grow at the rapid rate they had seen in the previous years. Based on historical growth in Europe the shareholders had high expectations for profitability. This is another factor that led to Monsantos aggressive push, but ultimately resulted in a decline of shareholder equity. Monsantos business model and the pressures it creates A large part of the dilemma faced by Monsanto in Europe was a direct result of the companys business model: selling genetically modified seeds and pesticides to farmers through local and regional distributors. This business model and the success of this model is based on a huge amount of research and development, which is incredibly costly, despite the advent of new technologies. The costly process through which Monsanto develops its products places an enormous amount of pressure on Monsanto to cover these costs through increased sales. Monsantos drive to achieve profits directly affects its relationships with farmers, environmentalists and government officials. Monsanto is driven by profits, which causes them to push the envelop on ethically acceptable practices, which in turn creates a pressure on the relationship between Monsanto and its worldwide partners, including farmers and governments. Updating customers regarding change in organizational set up and product quality is social responsibility where an organization informs the community, were making profit is not as important as how the effects of a disastrous change of events can have on the communities that rely on the business for their services and products, Wheelen & Hunger are of the opinion that bad quality affected customers can be displeased if an organizations management remains unsuccessful to perform according to normally established ethical values (Wheelen & Hunger, p. 58). Monsanto unethical boundaries Monsanto has been emphatically accused of involving and harassing small farmers recurrently in litigation and unjustly for patent violation. Monsanto Co. so to say has been ill-reputed around the globe as the most unethical company in the world. Gary Rinehart, a small business owner in a small town of Eagleville, Missouri, was accused of planting genetically modified soybeans. Rinehart knew of Monsantos unyielding popularity for imposing its patents and suing anybody who supposedly desecrated them" (Besser, 418). Rinehart bewildered about his circumstances; he wasnt a grower or a seed trader. Panorama like this has Monsanto going after anybody who might have infringed its patents i.e. genetically modified seeds. Monsanto focuses on growing crop productivity known for its genetically engineered seeds and chemicals for crops. Monsanto is one of many corporations that go on to ignore moral boundaries, using patent seeds to produce better crops and profits for farmers. Having an external, unconnected agency to take care of the ethical and social tasks of a corporation is a great resolution to averting unethical conduct. (Cannon, 67) An agency that can rule out any stakeholders who can achieve from corporate activities, verify and document any legal actions that the corporation has been concerned with tackling with any patterns of unethical behaviors. Corresponding to the significance of ethics and remaining constant in not hesitant about the values of the corporation will infuse the significance of ethics and social responsibility the corporation has to implement to itself as well as to all members of society. During the transformation of Monsanto, the management was implementing a three-phase process. The first was divestiture of non-core businesses and acquisition of complimentary businesses that would aid in the companys future plans. The next phase was rearranging operations of core businesses to achieve quality and customer satisfaction as well as redesign of processes or re-engineering. The final phase was growth. In order to successfully refocus the company the management needed to win the support from the employees. Therefore, Monsanto carried out a strategy-building exercise which was attended by a cross-section of the company, with plant operators, unit presidents, sales managers, secretaries, staff leaders, technicians, and others in attendance. In this strategy building exercise, five main themes were identified and discussed: operational excellence, globalization, culture of change, growth, and sustainable development. It also incorporated an underline theme-small and connected, implying how business units should relate to each other. During the transformation process, the CEO emphasized sustainable development, pushing the idea of feeding the world, rather than increasing production or profit as motivation for Monsanto employees. An explicit goal for extending operations outside the US was to increase global sales by 2000 to a level, which would represent one half of total revenues, as opposed to about one third in 1996. The spin-off the chemicals division would facilitate this objective, as it was 90 percent domestic. Management would like to invest in overseas market that might be modest in scope but offer real potential. The CEO stressed interest in Latin America and Asia. The company understands the need to educate people about the safety of genetically-altered consumer foods. This is an important marketing tool in many geographic markets. Chemicals segment would focus on forecasting and meeting customer needs, pricing to manage share, and asset utilization, and managing the cost of doing business. During this transformation process management would review changes regularly. The final goal was to increase shareholder value which would come from business growth and value creation. This would require operational excellence via growth sources and via portfolio restructuring. The company seemed to be well placed for its future vision. (Weaver, 544) The media already started circulating positive reviews for its recent turn around. Monsantos future plan was to invent some new businesses around the concept of environmental sustainability. “The Swiss research outfit Covalence ranked 581 corporations from most ethical to least ethical. And where was Monsanto on the list? Dead last. 581 out of 581. The least ethical corporation in the world. Now, you might be asking whether they included some of the other well-known and notorious corporations.”(Bob Cesca, 2010, web source) Conclusion It is hard to say what the finest way is for a corporation to choose the best decision. Many perspectives include so many people that are in a straight line affected by the verdicts made by organizations, both internal and external aspects that can damage the community and the prospects of the company. The best strategy to follow is one that will keep the behavioral and moral of the organization ethical. Such outside factors that influence the functions of a business should never force an organization or employee to perform illegal and unethical practices. The new Monsanto had innovated in three hub areas: pharmaceuticals, agricultural chemicals, and food components. It was implementing a process called transformational management, which calls for remaking the firm into a set of activities that are manageable in the sense of fitting a coherent whole, but which predict future market and technological changes in the core businesses. Monsanto was transforming both the firm and its businesses. First, they defined a new competitive environment in which a company wanted to operate. Second, the company defined its future as a time of opportunity for products that are environmentally friendly and that contributes to human and animal wellness. To do this, it had to exclude those commodity chemicals that had been the mainstay of the company for about a century. Next step was to implement a process of placing the company into a position to take maximum advantage of that future. The life sciences model asked for a reformulation of the strategies for the remaining. The final part of transformational management was to bring customers and potential customers to believe in the same view of the world, and thus bringing them to products and services that meet the future needs. Works Cited Besser, Terry. (2004). “The Significance of Community to Business Social Responsibility” Rural Sociology 63(3):412-431. Bob Cesca, 2010, Monsanto leads in genetically modified agriculture, trails in ethics: 08-04-2010. Retrieved on 14-04-2011 from http://www.walletpop.com/2010/04/08/monsanto-leads-in-genetically-modified-agriculture-trails-in-e Cannon, Tom. 1994. Corporate Responsibility: A Textbook on Business Ethics, Governance, Environment: Roles and Responsibility. London: Pitnam Publishers. 67 Weaver, Gary R., Linda Klebe Trevino, and Philip L. Cochran. 1999. “Integrated and Decoupled Corporate Social Performance: Management Commitments, External Pressure, and Corporate Ethics Practices.” Academy of Management Journal 42(5):539-552. Wheelen, T.L., & Hunger, D. (2008). Concepts in Strategic Management and Business Policy (11th ed.). Upper Saddle River, NJ: Prentice Hall. 58 Read More