Bayer-Monsanto: The Challenges of a Mega Merger SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
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Case Study SWOT Analysis Solution
Case Study Description of Bayer-Monsanto: The Challenges of a Mega Merger
In September 2016, German-based Bayer AG (Bayer) and U.S.-based Monsanto Company (Monsanto) agreed to merge entities to create a global leader in agriculture. The combined entity would benefit from Monsanto's expertise in seeds and traits, and from Bayer's wide range of crop protection products. Bayer would acquire Monsanto for $128 per share, a high 44 per cent premium in an all-cash transaction. There were issues with the deal, which included antitrust concerns, which could require subsequent divestments, and Monsanto's brand image, owing to its involvement in controversial business operations. Given these issues, would Bayer's diversification into agrochemicals by merging with Monsanto be able to create sufficient synergies and deliver economic benefits to shareholders, while meeting expectations from other stakeholders at different levels? Wiboon Kittilaksanawong is affiliated with Saitama University.
Swot Analysis of "Bayer-Monsanto: The Challenges of a Mega Merger" written by Wiboon Kittilaksanawong, Gabrielle Gate includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Monsanto Bayer facing as an external strategic factors. Some of the topics covered in Bayer-Monsanto: The Challenges of a Mega Merger case study are - Strategic Management Strategies, Ethics, Financial analysis, Financial markets, Mergers & acquisitions and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Bayer-Monsanto: The Challenges of a Mega Merger casestudy better are - – challanges to central banks by blockchain based private currencies, competitive advantages are harder to sustain because of technology dispersion, increasing inequality as vast percentage of new income is going to the top 1%, increasing household debt because of falling income levels, talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, increasing energy prices,
cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Bayer-Monsanto: The Challenges of a Mega Merger
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Bayer-Monsanto: The Challenges of a Mega Merger case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Monsanto Bayer, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Monsanto Bayer operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Bayer-Monsanto: The Challenges of a Mega Merger can be done for the following purposes –
1. Strategic planning using facts provided in Bayer-Monsanto: The Challenges of a Mega Merger case study
2. Improving business portfolio management of Monsanto Bayer
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Monsanto Bayer
Strengths Bayer-Monsanto: The Challenges of a Mega Merger | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Monsanto Bayer in Bayer-Monsanto: The Challenges of a Mega Merger Harvard Business Review case study are -
Training and development
– Monsanto Bayer has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Bayer-Monsanto: The Challenges of a Mega Merger Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
High brand equity
– Monsanto Bayer has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Monsanto Bayer to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Monsanto Bayer
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Monsanto Bayer does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Diverse revenue streams
– Monsanto Bayer is present in almost all the verticals within the industry. This has provided firm in Bayer-Monsanto: The Challenges of a Mega Merger case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Ability to lead change in Strategy & Execution field
– Monsanto Bayer is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Monsanto Bayer in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Monsanto Bayer is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Wiboon Kittilaksanawong, Gabrielle Gate can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Learning organization
- Monsanto Bayer is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Monsanto Bayer is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Bayer-Monsanto: The Challenges of a Mega Merger Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Monsanto Bayer has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Bayer-Monsanto: The Challenges of a Mega Merger HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Monsanto Bayer digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Monsanto Bayer has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Ability to recruit top talent
– Monsanto Bayer is one of the leading recruiters in the industry. Managers in the Bayer-Monsanto: The Challenges of a Mega Merger are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Strategy & Execution industry
– Bayer-Monsanto: The Challenges of a Mega Merger firm has clearly differentiated products in the market place. This has enabled Monsanto Bayer to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Monsanto Bayer to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Monsanto Bayer in the sector have low bargaining power. Bayer-Monsanto: The Challenges of a Mega Merger has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Monsanto Bayer to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Bayer-Monsanto: The Challenges of a Mega Merger | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Bayer-Monsanto: The Challenges of a Mega Merger are -
High cash cycle compare to competitors
Monsanto Bayer has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Monsanto Bayer is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Bayer-Monsanto: The Challenges of a Mega Merger can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Need for greater diversity
– Monsanto Bayer has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Bayer-Monsanto: The Challenges of a Mega Merger HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Monsanto Bayer has relatively successful track record of launching new products.
No frontier risks strategy
– After analyzing the HBR case study Bayer-Monsanto: The Challenges of a Mega Merger, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Increasing silos among functional specialists
– The organizational structure of Monsanto Bayer is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Monsanto Bayer needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Monsanto Bayer to focus more on services rather than just following the product oriented approach.
Products dominated business model
– Even though Monsanto Bayer has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Bayer-Monsanto: The Challenges of a Mega Merger should strive to include more intangible value offerings along with its core products and services.
Slow decision making process
– As mentioned earlier in the report, Monsanto Bayer has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Monsanto Bayer even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Bayer-Monsanto: The Challenges of a Mega Merger, in the dynamic environment Monsanto Bayer has struggled to respond to the nimble upstart competition. Monsanto Bayer has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Bayer-Monsanto: The Challenges of a Mega Merger, is just above the industry average. Monsanto Bayer needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Bayer-Monsanto: The Challenges of a Mega Merger, it seems that the employees of Monsanto Bayer don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Opportunities Bayer-Monsanto: The Challenges of a Mega Merger | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Bayer-Monsanto: The Challenges of a Mega Merger are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Monsanto Bayer in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Monsanto Bayer to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Monsanto Bayer to hire the very best people irrespective of their geographical location.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Monsanto Bayer is facing challenges because of the dominance of functional experts in the organization. Bayer-Monsanto: The Challenges of a Mega Merger case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Monsanto Bayer can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Monsanto Bayer to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Learning at scale
– Online learning technologies has now opened space for Monsanto Bayer to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Building a culture of innovation
– managers at Monsanto Bayer can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Using analytics as competitive advantage
– Monsanto Bayer has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Bayer-Monsanto: The Challenges of a Mega Merger - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Monsanto Bayer to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Monsanto Bayer can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Monsanto Bayer in the consumer business. Now Monsanto Bayer can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of Monsanto Bayer has opened avenues for new revenue streams for the organization in the industry. This can help Monsanto Bayer to build a more holistic ecosystem as suggested in the Bayer-Monsanto: The Challenges of a Mega Merger case study. Monsanto Bayer can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Monsanto Bayer can use these opportunities to build new business models that can help the communities that Monsanto Bayer operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Monsanto Bayer can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Bayer-Monsanto: The Challenges of a Mega Merger External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Bayer-Monsanto: The Challenges of a Mega Merger are -
Regulatory challenges
– Monsanto Bayer needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Shortening product life cycle
– it is one of the major threat that Monsanto Bayer is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Monsanto Bayer will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Environmental challenges
– Monsanto Bayer needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Monsanto Bayer can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Monsanto Bayer can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Bayer-Monsanto: The Challenges of a Mega Merger .
High dependence on third party suppliers
– Monsanto Bayer high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Monsanto Bayer in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Monsanto Bayer can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing wage structure of Monsanto Bayer
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Monsanto Bayer.
Stagnating economy with rate increase
– Monsanto Bayer can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Consumer confidence and its impact on Monsanto Bayer demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Weighted SWOT Analysis of Bayer-Monsanto: The Challenges of a Mega Merger Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Bayer-Monsanto: The Challenges of a Mega Merger needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Bayer-Monsanto: The Challenges of a Mega Merger is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Bayer-Monsanto: The Challenges of a Mega Merger is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Bayer-Monsanto: The Challenges of a Mega Merger is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Monsanto Bayer needs to make to build a sustainable competitive advantage.