Marketing plan for launching roundup ready system in vietnam master project in business and marketing management

Understanding the needs and the potential market of more than 1 million hectares of corn production per year with potential market value of more than 75 million USD, Monsanto company has

TRƯỜNG ĐẠI HỌC MỞ TP.HCM UNIVERSITÉ LIBRE DE BRUXELLES

HO CHI MINH CITY OPEN UNIVERSITY SOLVAY BRUSSELS SCHOOL

Tutor’s name: Dr Le Thanh Long

Ho Chi Minh City

(2010)

ACKNOWLEDGEMENTS

We, firstly, would like to express our gratitude to all of those who have given us the possibility to complete this thesis Especially, I would like to express my profound gratitude and great appreciation to my supervisor Dr Le Thanh Long for his valuable guidance, advice and encouragement throughout the research study

Special thanks are extended to my colleagues in Monsanto Vietnam for their attention and giving valuable information, materials needed to improve the content of this study Taking this opportunity, I would also like to give my special thanks all professors, staff from both Hochiminh City Open University, and Solvay Brussels School Moreover, I would like to thanks my classmates, Solvay Vietnam Alumni for their assistance and co-operation during

my study of the Master in Business and Marketing Management

Finally, my gratefulness to my beloved family, friends for supporting me to complete the master course

Ngo Lanh

15 December, 2010

TUTOR’S COMMENTS

TABLE OF CONTENTS

Title Page i

Commitment ii

Acknowledgements iii

Tutor’s comments iv

Table of Contents v

Abbreviations vii

List of Figures and Tables viii

Executive summary ix

CHAPTER 1 INTRODUCTION 1

1.1 Rationales of the project 1

1.2 The objective of the project 3

1.3 Scope of the project 3

1.4 Limitation of the project 3

15 Research outline 3

CHAPTER 2 LITTERATURE VIEW 4

CHAPTER 3 RESEARCH DESIGN 7

3.1 Assumptions 7

3.2 Research objectivities 7

3.3 Metholodogy 7

3.4 Findings 8

CHAPTER 4 STITUATIONAL ANALYSIS 9

4.1 External analysis 9

4.1.1 General information 9

4.1.2 Macro environment (PEST analysis) 13

4.1.3 Micro environment (Poter’s 5 forces analysis) 16

4.1.4 Summary of opportunities and threats 19

4.2 Internal analysis 19

4.2.1 The company introduction 19

4.2.2 Summary of strengths and weaknesses 25

4.3 SOWT analysis 25

CHAPTER 5 MARKETING STRATEGIES 26

5.1 Marketing objectives 26

5.2 Segmenting 27

5.3 Targeting 28

5.4 Characteristics of customers 28

5.5 Positioning 29

5.6 Marketing mix 29

5.7 Budgeting 38

5.8 Implementation and control 39

CHAPTER 6 CONCLUSION AND RECOMMENDATION 42 REFERENCES

APPENDICES

Appendix 1: Discussion guide for in-depth interview and group discussion A.1 Appendix 2: Questionnaires for market research A.3 Appendix 3: Research findings (corn growers’ concern about their current weeding)….A.6 Appendix 1: Some pictures of the product system &samples of promotional activities A.9

LIST OF ABBREVIATIONS

DAP Day after planting

EBIT Earn before income tax

FAO Food and Agriculture Organization

FAB Features, Advantages, Benefits

GRC Glyphosate resistant corn

ISAAA International Service for the Acquisition of Agri-Biotech Applications

KPI Key performance indicator

KSF Key success factor

NSC None standard cost

RR Roundup Ready

RRC Roundup Ready Corn

PPP Public-private partnership

SGA Sales & General Administration

US The United State of America

USDA United State Department of Agriculture

VND Vietnam Dong; MT: Metric Ton

LIST OF FIGURES AND TABLES

Figure 3.1: Weed management methods in Vietnam 8

Figure 4.1: Global area of biotech crops, 1996-2009 11

Figure 4.2: Vietnam corn planted area, 2000-2009 12

Figure 4.3: Porter’s 5 forces 17

Figure 4.4: Market share of conventional hybrid corn seeds 19

Figure 4.5: Monsanto sales growth, FY’2006- 2010 22

Figure 4.6: The company portfolio 24

Figure 4.7: The current organizational chart 24

Figure 5.1: Levitt’s Total product concept 29

Figure 5.2: Product distribution flow chart 34

Figure 5.3: Sales and marketing organizational chart 2011 41

TABLES PAGE Table 3.1 Weed concern of corn growers 8

Table 4.1 Conventional hybrid corn and biotech corn forecast, 2011-2013 13

Table 5.1 The cost of seed and weed management for DK919 hybrid corn 32

Table 5.2 Comparison RRC with the current weeding methods 33

Table 5.3 Promotion and advertisement budget 38

Table 5.4 RRC projected sales FY’2011 - 2013 39

Table 5.5 The Profit & Loss analysis in 3 year for RRC business 39

Table 5.6 The detailed promotional activity planned on monthly basic, FY’2011 40

Table 5.7 The detailed promotional activity planned on monthly basic, FY’2012-2013 40

EXECUTIVE SUMMARY

Weed management process has played an important role in corn production And so far, the Vietnamese corn growers have been facing difficulties and have low productivity in weed management Understanding the needs and the potential market of more than 1 million hectares of corn production per year with potential market value of more than 75 million USD, Monsanto company has a plan to bring Roundup Ready Corn (RRC) system which has been commercialized in the other countries for more than 14 years to Vietnam market Roundup Ready Corn system is an innovative weed management solution developed from advanced biotechnology by the Monsanto The system consist of corn seed, herbicide resistant gen and herbicide working together that can deliver high performance in weed control in corn production The difference of RRC system from the current weeding methods is easy to use, clean weed, safe to corn plant and perhaps its cost is cheaper As this is the first time to market this kind of product in Vietnam, a marketing plan to launch the product is needed, the objectives of the marketing plan is to make fast adoption of the product and sales volume of 1500 metric ton by 2013 The current environment is quite favorable to launch the product: the corn growers have demand of the product, the Government highly support, and create a favorable conditions to bring the product to Vietnam Additionally, Monsanto already has a office in Vietnam long time ago with full

of skillful sales and marketing staff and also has a big market share of conventional hybrid corn seeds which will be footprint for RRC system to fast adoption In order to achieve the objectives in the first few years, a proper marketing strategy is needed to be in place The competition expected to be hard later on, since competitors also have the same product solution However, with careful preparation in launching process, it is believed that Monsanto will success to fast make adoption of the new weed management solution The success of the plan will bring benefits to the corn growers and Monsanto as well as it would help accelerate the modernization of agriculture industry of Vietnam

REFERENCES

Nguyen Quoc Binh (2008), “Market research on Vietnam corn production”

Duong Van Chin, Suk JinKoo 2005,Common Weeds in Vietnam, Saigon Pesticide Company Nguyen The Phu 2000, Basic Marketing, NXB Đại Học Quốc Gia Tp Hồ Chí Minh

Nguyen Dinh Tho (1998), Nghiên cứu Marketing, NXB Giáo Dục

Niên Giám Thống Kê 2009, Tổng Cục Thống Kê

Clive James (2009) “Report on Global Status of Biotech Crops”, ISAAA

Donald W Henedon (2004), Marketing Failures, NXB Tổng Hợp Tp Hồ Chí Minh

Jay Conrad Levinson (2007), Guerrilla Marketing, Houghton Mifflin Company

Philip R Cateora and John L Graham 2007, International Martketing, McGraw-Hill

Philip Kotler (1994), Marketing Management, Prentice-Hall International, Inc

Philip Kotler, Gary Armstrong, Swee Hoon Ang, Siew Meng Leong, Chin Tiong Tan,

David K Tse (2005), Principles of Marketing - an Asian Perspective, Prentice-Hall

Technology Development Team 2010, “The protocol of corn biotech field trial in

Vietnam”, Monsanto Company

William A Cohgen (1998), The Marketing Plan, John Wiley & Son, Inc.,

www.biotechknowledge.com

www.monsanto.com

www.fao.com

www.vcn.vnn.vn

CHAPTER 1 INTRODUCTION

1.1 Rationale of the project

Corn (maize), is the world’s third leading cereal crop, behind wheat and rice, and is grown

in over 25 countries worldwide The majority of grain and forage derived from maize is used as animal feed, however maize also has a long history of safe use as food for human consumption The grain can be processed into industrial products such as ethanol (by fermentation), and highly refined starch (by wet milling) and sweetener products In addition to milling, the maize germ can be processed to obtain corn oil and numerous other products The majority of maize is grown for animal feed production and human food, however an increasing percentage is being used for the production of ethanol as a biofuel alternative to petroleum products from fossil sources

Vietnam is considered as an agricultural country, of which total planted area of annual crops is 11.1 million hectare Corn has been an important food crop ranking the 2nd after rice The corn area has been increasing since 1995 when Vietnamese people started using corn as material for industrial feed for livestock, poultry production and the area reached 1.1 million hectares in 2009 (General Statistic Book 2009)

Weed is one of the big factors causing yield reduction in agriculture industry Weeds can reduce the yield potential of corn by as much as 20-40% Under limited resource conditions, weeds compete with the plant in terms of soil water, nutrients and sunlight Weeds also harbor insect pests and rats The critical stages for crop-weed competition is highest at the first 1/3 of the crop life cycle or at 35-40 day after planting (DAP) Weed control must be given particular attention at this stage So weed control is always placed as

an important farming practice in corn cultivation Currently, there has been several weed control methods in commercial corn production such as chemicals, manual Manual weeding has been considered as one of the practices in weed control which is consuming a lot of labors and low productivity Additionally, in the recent years, the manpower from

country side is moving to big cities and industrial parks to work, this movement has created the shortage of labor resources in the countryside who could do farming For herbicide application, due to there is no efficacy chemical for weed control in corn production so far,

so the current herbicide application practice is difficult and less effective Therefore, the challenges for the corn growers are getting bigger, meanwhile corn cultivated area is still increasing To solve the problem Monsanto has an intention to bring an innovative biotechnology which has been commercialized in the other countries to help the corn growers in controlling the weed more effectively In together with support from the Vietnam Government, especially Ministry of Agriculture and Rural Development who is accelerating in issuing policies to modernize the farming practices, this has created a favorable environment to for biotechnology acceptance

The innovative weed management solution is so called “Roundup Ready Corn (RRC)

System” which was developed by Monsanto Roundup Ready Corn is a genetic modified

corn crop containing a gen that produce protein which can be tolerant to a none-selected Glyphosate herbicide under Monsanto trade name “RoundupTM” – a chemical has been largely used in weed control for the none target crop area The gene encoding a glyphosate tolerant form of the enzyme 5-enolpyruvlyshikimate-3-phosphate synthase (EPSPS) was

isolated from the soil bacterium Agrobacterium tumefaciens strain CP4 and introduced into

corn plant using recombinant DNA techniques This tolerant gene protects the plants from being harmed when sprayed with Roundup herbicide RRC system is combination of Roundup herbicide and Roundup Ready Corn seeds RRC works as a system because it requires the use of both RRC seed variety and a Roundup herbicide

With this technology, the grower can simply use Glyphosate (Roundup) to spray on top of the corn without any plant injury Normally, the Glyphosate chemical can kill any kind of the plant that touches the chemical So the growers will easily than ever control the weed

in their farm more effectively

Roundup Ready Corn System has been successfully introduced and adopted more than 10 years in the world, especially North and South America In the Asia, it was commercialized

in Philippines 6 year ago The benefit of RRC system has been proven through the area of RRC has been increasing year by year

1.2The objective of the project

The purpose of this project is to develop a marketing plan for launching Roundup Ready Corn System in Vietnam

1.3 Scope of the project

It is a marketing plan to launch Roundup Ready Corn System in Vietnam for three year from 2011 to 2013

1.4 Limitation of the project

As the project is conducted in a very short period of time and with limited resources, it contains several limitations such as:

- The market research was just conducted in some main corn provinces, the number

of samples was only limited to 120 samples

- The project is made basing on collected data and assumptions in the period of project implementation

- No much future research data available of the corn weed management, the future data, or other data are presented in this thesis based on the best estimation of the Monsanto in Vietnam 2010

Due to the limitation, if the company has available resource, should continue doing market research to have more proven data

1.5 Research outline

- Define the company objectives

- Data collection: Secondary and primary data

- Situational analysis

- Define marketing strategy

- Implementation and control

- Conclusion and recommendations

CHAPTER 2 LITERATURE REVIEW

A marketing plan is a written document that details the necessary actions to achieve one

or more marketing objectives It can be for a product or service, a brand, or a product line Marketing plans cover between one and five years A marketing plan may be part of an overall business plan Solid marketing strategy is the foundation of a well-written marketing plan While a marketing plan contains a list of actions, a marketing plan without

a sound strategic foundation is of little use (Wikipedia definition, 2010)

The importance of a marketing plan: marketing plan plays an important role in business

success, it is essential for every business operation and for efficient and effective marketing of any product or service This is true for a brand new business, or even for marketing a product, service, or product line within a company Seeking success for any project without the use of a marketing plan is like trying to navigate a ship in bad weather, through stormy water, while under torpedo, and with neither a compass nor clear idea of where you are going to (William A Cohgen, 1998)

Theory of marketing planning process in this project is referred to theory mix of authors: McDonald, Philip Kotler and Jean-Pierre Baeyens To develop a marketing plan, it requires a lot of information from both internal and external of the organization which the marketing plan is applied to Starting from knowing company vision, objectivities, then analyze the situation to find the SWOT, the competitive advantage, as well as added value

to customers (marketing value proposal) A typical marketing plan is consisting of following key elements: Situational analysis, creating marketing strategies, implementation and control

Situational analysis is process to gather and analyze the data, information or all the

situations that we are facing with the proposed a product or service to be marketed It is including external environment such as market, customers, competitors, environment, and the trends The external environment analysis comprises of opportunity and threat analysis The company needs to identify the main threats and opportunities that their company faces Internal analysis is to analyze the organization culture, strategies, resources, constraints as well as company performance Internal analysis tend to focus on the strengths and weaknesses in the present and past, and on internally controlled factors such as product, price, channels, promotion, people, etc

One of the results of situational analysis is to define the target market, it is to describe

the customers market which we are going to serve, define who are the core customers or potential customers As long as the target market can be defined, the proper tactics,

resources are established to approach the market The problems and opportunities are

also determined in the situation analysis process, though the problems and opportunities may already expose during the situational and target market analysis or they are still at implicit It is good to restate the problems or opportunities that to have a plan to capture the opportunities and actions to prevent or minimize the problems Some problems or opportunities may not exist at planning stage, but it may occur during the implementation process due to some consequence of some actions, competitors’ reaction or accidental change of business environment, so to foresee the potential problems or opportunities is also an important step in marketing planning

Marketing strategies

Marketing objectives: A marketing objective is a precise statement which outlines what is

to be accomplished by the service company’s marketing activities Defining marketing objective is an action can be taken place before writing a marketing plan The marketing objectives should also be in alignment with a company objectives either short or long term

The objectives will enable to work the detailed steps, activities in the implementation process or prepare the financial budget and measure the success of a marketing plan

Strategies

A marketing strategy is the means by which a marketing objective is achieved The marketing objectives look like destinations and marketing strategy is “how to get there” Marketing strategy is the overall route to the achievement of specific objectives and should describe the means by which marketing objectives are to be reached (McDonald & Payne, 2006) Marketing strategies should state in broad terms how the marketing objectives are to

be achieved

Operational marketing plan

Just as strategy tells what should do to reach objectives, operational marketing plan tells how to carry out the strategy planned List every action required to implement each of the strategies (William A Cohgen, 1998) So, if to apply marketing-mix, in this section tell how the marketing is implemented (product, price, place, promotion) Or as recommended by Jean-Pierre Baeyens following is some examples:

- Define the target market and the satisfy that target market by:

Product concept

Communication

Channeling

Convincing

Implementation and control

Marketing implementation is the process that turns marketing plans into action assignments and ensures that such assignments are executed in a manner that the plan’s stated objectives (Philip Kotler, 1998) In this session, a detailed action plan is worked out, the assignment of what, when, who, how will be clearly defined KPIs (sales volume, marker share, growth rate, profit, etc.,) and KSFs are also indicated to monitor the progress and

measure the success of the plan Reviewing process is also prepared and how to take corrective actions, how do we ensure the action plan is implemented appropriately So the sales force, marketing organization, out sourcing agencies, and other resources are prepared properly to accomplish marketing plan objectives

CHAPTER 3.RESEARCH DESIGN

3.1 Assumptions

The Vietnam corn growers have been facing difficulties in weed management in their corn fields RRC system can be a new solution which will help the corn growers to solve the problems in weed management

3.2 Research objectives

In order to understand the value of Monsanto’s new weed management system in the corn farmers, it is imperative to know the practices and costs associated with farming, and to understand the perceptions and acceptability of the farmers This research is designed to collect data to support the launching marketing plan

3.3 Methodology

- Desk research: the secondary data have been collected from the source of Sate

Government documents: General Statics Book, Hochiminh Biotech Center, ISAAA report, FAO and internal sources, etc.,

- Field research: a field research was designed to collect primary data, mainly focus on

corn weeding practices Focus groups were conducted in Dong Nai provinces In- depth interview with key corn growers, agriculture officials were also conducted in Dong Nai, Baria, Daklak, Son La, Thanh Hoa (in the North, conducted by telephone) Additionally, farmer practice survey by questionnaires on weed management was carried out in the country with total of 120 samples, and 30 samples in each following provinces which are representative for North and South region: Dong Nai, Daklak for South region and Thanh Hoa, Son La for North region

3.4 Findings

- Weed problem status, almost corn

growers have been raising a big concern

on the weeds in their farms, 81% of corn

growers were asked have concern at

level 1-4 The problem of weeds is a

matter that corn growers taking into

account of the con growers

Table 3.1: Weed concerns

(1: Very concern; 9: No concern)

Frequency Percent Cumulative percent

- The weeding methods

About 47% of corn growers have been

using chemical (herbicide) to control the

weed in their farms and other 53% still

use manual methods And in the South

region the number of corn growers using

herbicide is about 68% whereas in the

-The cost associated with weed management

On average the cost for hand weeding is about 1,600,000 VND/Ha (or 80USD/Ha) and the cost for weeding by herbicide is 980,000 VND/Ha (or 49 USD/Ha), and according to the protocol of RRC application from Monsanto Vietnam, the cost of RRC without technology fee is 312,000 VND/Ha (or 16 USD/Ha) This findings was from interview of several

typical corn growers in Dong Nai province in Summer Autumn season 2010

- The grower concern about their current weeding methods

In the North and South region, it seems to have different concern level In the North, the corn growers think they may have labors to control weed As they mostly use hand weeding, so they do not much worry about the difficulty in weed control by the current chemical And it seems that they not willing to spend money to buy herbicides

In the South, as compared with the North, they are concerning the labor availability for weeding, as well as they worry the difficulty of the current chemical method However, they not much care about the cost of the herbicides (more detailed in the Appendix 1.3)

- Willingness to use new weed management method

Overall for the whole country respondent is 67% say “Yes”, 4% say “ No”; 29% answer is

“Neutral”

CHAPTER 4 SITUATION ANALYSIS

4.1 External analysis

4.1.1 General market information

Overview on the global biotech crop and glyphosate resistant corn

It is good to refer to the global status of biotech corn crops and Glyphosate resistant crops

The first biotech corn crop was commercialized in 1996 in the US and in 1999 in Canada and Bulgaria This was considered an evolution of in corn weed management The

advantage of Roundup Ready crops is that they greatly improved a farmer's ability to control weeds, improve the crop productive and soil erosion After 2 years of commercialization of Roundup Ready Corn, in fact, 96 percent of surveyed U.S Roundup Ready corn growers reported they were satisfied with the Roundup Ready corn system overall In addition, 89 percent of Roundup Ready corn growers (Monsanto survey 2000) indicated Roundup Ready corn was a some-what or much better value compared to non-Roundup Ready corn In Canada, where 2000 was the second commercial year for Roundup Ready corn Nearly 100 percent of surveyed Roundup Ready corn growers there reported equal or better weed control with the Roundup Ready system as compared to conventional systems and rated crop safety as good to excellent (2000 Monsanto grower survey, www.biotechknowledge.com) The adoption biotech crops generally and glyphosate resistant corn in particular have been increase year by year In the US, 63% of glyphosate resistant crop has been used as of 2009 (USDA Economic Research Service 2009) Farmers have rapidly adopted glyphosate resistant crop or glyphosate technology for three main reasons: cost savings, better weed management, and simplicity of use

In Asia, the first GRC (Roundup Ready Corn) was introduced in 2004 in Philippines and it has brought significant contribution to corn production and benefit to corn growers There was about 500 thousand hectare of GRC or 40% of corn cultivated area had been planted in

2009 (ISAAA report 2009)

According to the data of ISAAA (figure 4.1), the biotech crops have been almost “straight line” increasing in both crop and trait criteria The biotech corn area is increasing from zero hectare in 1996 to 42 million hectares in 2009 In term of trait, the planted area of glyphosate resistant crop is reaching 82 million hectares in 2009 Base on this trend, the area of biotech crop will be increase more and more in the near future

The global growth of the RRC system in the last decade can be an indication that RRC system is benefit

Figure 4.1: Global area of biotech crops, 1996 - 2009

Source: Clive James, 2010- ISAAA report 2009

Overview on the current corn production and weed management in Vietnam

In Vietnam, the cultivated corn area has been increasing since year 2000, from 730 thousand hectares and reached 1087 thousand hectares in 2009 (General statistic book, 2009) So the consumption of seeds for commercial corn production would be about 15,000

MT per year And the Government has plan to expand corn area up 1.2 mil hectares by

2015 to have output to meeting local consumption of feed mills, it means there should be 18,000MT of corn seed is needed for production

Weed management is a must in crop production, and it is one of corn grower concerns in the corn production, the weeds not only competes nutrition with corn but also being a vector to transfer diseases and pest insects to corn plants that causes yield reduction In the current corn production, different from rice production, there is no efficient chemical nor the way that can easily to control weeds Currently estimated that 53% corn farmers control

weeds by manual, 47% use chemicals (market research findings) For control by chemical, there is chemical namely Atrazine that is recommended to control weed in the corn field by spraying on top of the corn plants, but this chemical can not control all the weeds, and just control the small weeds but it has side affect that causes corn plant turning yellow for several days after application The 2nd chemical that many of corn growers have been using

is Paraquat, a herbicide but can kill all the plants, weeds which are touch with the chemical, so corn grower has to spray very carefully to avoid chemical touching corn plants, thus it is very difficult to apply and takes a lot of time (focus group in Dong Nai province) If corn growers don not use chemical to control weed they have no choice to use manual weeding, for this method it takes a lot of labors to do The current weeding methods are not only costly but also inconvenient Therefore, it is obviously that an advanced technology which can improve the benefit, convenience and be safe is needed It can be verified by a research result conducted by Hochiminh Biotech Center in 2008, in Vietnam that more than 70% of corn growers willingly pay higher price to purchase genetic modified corn

Figure 4.2: Vietnam corn planted area 2000 - 2009

Source: Vietnam General Stactiscal Book, 2009

Market trend and future forecast in Vietnam

It is estimated the glyphosate resistant corn will increase as soon as it is introduced due to its added benefit and convenience Technically, there is no barrier for its fast adoption as long as it is approved for sales by the Government The adoption rate mainly replies pricing policies of the seeds companies It is estimated in the South of Vietnam will be growing faster than of the North since the farmers in the South are more adapting things

Table 4.1: Conventional hybrid corn and biotech hybrid corn forecast FY’2011-2013

Monsanto Vietnam forecast, 2010

4.1.2 Macro environment (PEST Analysis)

Social-culture factors

Vietnam is still a country of agriculture which around 70 percent of population living in the rural area, of which 68 percent of them earn on agriculture production (Vietnam General Statistic Office 2009) Agriculture production has been backward, manual farming practices are the major methods in crop cultivation, it not only consume a lot of labors but also has a low productivity And recently, the young generation tend to leave rural for urban to earn living or to study Additionally, the Vietnamese tend to have less children in the family so that they can take a good care of them, these movement will create a shortage labor resources for farming in the rural area

Economic factors

Vietnam’s economy may grow between 7 percent and 8 percent annually from 2011 to

2015 (Bloomberg – on Thanh Nien online – Nov.24, 2009) And Vietnam people still needs more meats Current output of corn production mainly supplies raw material for animal feed production With the growing in animal husbandry industry in Vietnam, the needs of feed materials are increasing In 2009, 11.5 million metric tons of industrial feed was produced to feed livestock, poultry and others, but local materials supply for feed production was only 4-4.5 million metric tons, the rest more than 6 million tons of materials had to be imported from foreign countries, of which grain corn about 2 million metric tons and total cost of the materials imported was bout 2.04 billion USD (Vietnam Animal Feed Association, 2010) In order to meet the increasing demand of animal feed industry, Vietnam has to improve the output of corn production by either improving the yield and corn production productivity

Political and regulatory factors

Vietnam Government has been strongly supporting the development of the agriculture to improve living standard The Government is not only appealing local investment and but also seeking for support from foreign ones and create favorable conditions for agriculture development The Government is realizing the needs of applying biotechnology in crop production, therefore Minister of Agriculture and Rural Development issued the Circular number 69/2009/TT-BNNPTNT, dated 27 October, 2009 stipulating trial for risk assessment to biodiversity and environment of genetically modified plant variety

The biotech crops are scientific achievements have been widely and successfully used in the world with planted area up to now over 130 million ha, so Vietnam needs to quickly acquire advanced science to apply into production creating development and improving productivity, quality and efficiency of crop production Undertakings, in the coming years,

we should bring even the genetically modified plant varieties, including maize, cotton and

soybean into production Currently, the multinational companies already had genetically modified crops and it is able to plant in the Vietnam conditions Ministry of Agriculture and Rural Development welcome the companies to bring genetically modified crops in Vietnam to test, do necessary process for registration for mass production The Ministry requested the concerned units under the Ministry to create favorable conditions, simple procedures for seed companies and implement the testing process (Document No 2535/TB-BNN-VP Quote, dated 05.05.2010 informing conclusions Minister Cao Duc Phat

at the meeting on testing genetically modified crops)

And recently, in the hosting public–private partnership (PPP) forum on November 2010- and Minister of Agriculture and Rural Developemen again stated: “The Government of Viet Nam is striving to accelerate administrative reforms, create most favorable conditions for investors, and beef up public–private partnership (PPP) in agriculture and rural area” stated Minister of Agriculture and Rural Development Cao Duc Phat

The Minister made the statement when hosting the PPP forum about investment opportunities in agriculture and processing industry on November 10

Viet Nam seeks not only high profits from agriculture but also better spiritual and material life for farmers, he said

While foreign direct investment in Viet Nam’s agriculture remains modest, PPP is of great importance because the model helps the country fully tap resources, technologies, management skills and markets of multinationals

To attract more domestic and foreign investors in important infrastructure projects, the government is building up pilot mechanisms about PPP investment, under which investors

will receive preferential treatment when participating in the PPP projects (source:

Government Web Portal on 12 November, 2010)

So the Government fully supports the development of agriculture in general, innovative biotechnology in particular This will pay the way for introducing the Roundup Ready Corn System in Vietnam

Though there are a lot of positive environment factors, there will be still a group of people who not like the biotech, will try to do something to inhibit the adoption of biotech crops

Technology factors

It is no doubt that applying advanced technology could help to improve the productivity in everything we do and so in agriculture industry would be the same Evidently, the Green Revolution in a period from around 1960 to 1990, when there was a tremendous boom in agricultural productivity in the developing world Intensive breeding and selection led to the development of high-yielding varieties of crops and more productive breeds of livestock There were also breakthroughs in the development of agro-chemicals, like pesticides and fertilizers During these decades, in many regions of the world, especially in Asia and Latin America, the yield of the major cereal crops (rice, wheat and maize) more than doubled There were significant increases for other crops, too (www.fao.org) Genetic modification technology would be considered as the 2nd revolution in agriculture industry in the 21th century In Vietnam, as mentioned above, farming practices of Vietnamese is still backward, causing low yield and productivity, in particularly in the North part of Vietnam,

73 percent of corn growers are using hand to uproot the weeds (market research findings, 2010) So is it needed to apply the innovative weed management method to not only improve productivity and also improve living standard

4.1.3 Micro environment (Porter’s 5 forces analysis)

Potential entrants

As soon as the RRC is approved for sales in Vietnam and other multinational companies

will enter the market As it is very costly and takes time to develop the similar products, so

it expects there is no new entrant with their own technology The seed companies who do

Figure 4.3 Porter’s 5 forces

not have same technology may not have competitive advantage, in order to survive in the market, they may contact the competitors to buy technology license to apply in their products However their cost of the product can be high due to license fee

The current technology is considered as the most advanced technology and it is forecasted

that still no one can be replaced within next five years

Industry competition

In the international market place, there are three main big players in this field: Monsanto, Syngenta and Pioneer but Monsanto has been a leading player And these three players

have already operated in Vietnam for a long time

-Syngenta company is a Swizerland based company which operating in Vietnam more 15

years ago They have been doing in both agrochemical and seed business Syngenta also has a strong corn hybrid pipeline and portfolio Currently they have 5 hybrids corn seeds in the market place And their seeds business is growing which reached market share of 13%

in 2009 This can be an advantage for their biotech crop adoption Syngenta also has a similar technology as Monsanto does, that means they have biotech corn that can resistant

to Glyphosate, and already launched in other countries Their intention is to market in Vietnam as well

- Pioneer is a subsidiary of Dupont Company whose headquarter located in US In the US,

Pioneer is reported as a strong competitor of Monsanto in biotech crop business However,

in Vietnam due to late comer, unaggressive business activities and the product portfolio are not fitting the consumer behaviors, so their seed business not well performance, this has created unfavorable conditions for their biotech corn in Vietnam Pioneer also has the same technology with Monsanto and plan to bring to Vietnam

Overall, the main competitor of the first few years is Syngenta, however the competition can be less fierce at launching time due to each company “compete themselves” Every company may try to replace their conventional corn seeds with biotech ones due to biotech seeds can deliver much more profit to the company than the conventional ones

Figure 4.4 Market shares of conventional corn seeds

Source: Corn panel survey conducted by Kleffmann and Monsanto internal analysis 2009

4.1.4 Summary of opportunities and threats

Base on the above analysis, there are a lot of opportunities to market RRC system in Vietnam: It is needed to have a better weed management method which can bring more benefit and convenience to corn growers and the corn cultivated area is still growing The Government put more effort to support in applying advanced technology in agriculture industry Though the hard competition may take place from the 3rd year after launching, it

is just to compete within several existing companies However, the strong habit of manual weeding and low educated corn growers, anti-GMO could be the barriers of RRC adoption

4.2 Internal analysis

4.2.1 The company introduction

Monsanto Company was found in 1901 and its Headquarter is located in St Louis,

Missouri, USA It is an agricultural company - applying innovation and technology to help

farmers around the world produce more while conserving more With more than 20,000

employees and more than 320 locations worldwide, Monsanto focus on Seeds, Trait and Agrochemical business and achieved net sales amount of 10,500 million USD in fiscal year

20101

For agrochemicals business, this is a core business of the company before 1996 But not like other big agrochemical companies such as Bayer, Syngenta, BASF, Dupont, Sumitomo Chemical etc., Monsanto only developed and commercialized herbicides, just one of the crop protection chemical categories (fungicides, insecticides and fungicides) There are several famous herbicide products of company such Lasso (alachlor), Echo (Butachlor), Roundup (Glyphosate) Of which, Monsanto was also the one invented the active ingredient Glyphosate The sales performance of Roundup had brought Monsanto to be one

of top agrochemical companies in the world

The agrochemical business has been growing but the competition is getting fierce Meantime, the people in the world is still facing many big challenges such as lack of reliable food source, malnutrition¸ soil degradation, insufficient fresh water, demand for food, feed and fuel, limited arable land etc., that may need more innovative solutions to fix Monsanto took it as a big opportunity by shifting R&D focus from agrochemical to biotechnology So in the early 1980s, the company set up a molecular biology group and the company strategy started focusing on plant biotechnology, seeds and traits since then

To support the new strategy, the company has acquired many big seed companies to enhance and diversify plant germplasm: Cargill seeds division, Asgrows, Dekalb Genetic Inc, Seminis, Delta and Pine, ect.,

In 1996, the first biotech cotton insect resistant with a singe gen integration developed by the company was introduced in the US and also the first biotech crop officially commercialized in the world Keeping the growing momentum, the company has been pioneer in plant biotechnology development and in 2010, the biotech corn crop with 8 benefit gens integration is commercialized

The company concentrates on both large scale and small scale crops, the following ones are crops that the company has been focusing on:

- Cotton

- Corn

- Soybean

- Vegetables

- And recently the company also pay attention to rice and wheat

The company current seed and trait platforms

Corn

Dekalb is

branded exclusive for hybrid corn existing the market for more than 70 years It is belonging to Dekalb Genetic inc., Monsanto acquired this company in 1998 This brand has been recognized a best performance hybrid corn seeds

Borer insect resistant

Roundup herbicide resistant Rootworm resistant

Corn borer and Rootworm resistant

Corn borer, Rootworm, and Roundup resistant

Soybean

ASGROW was a

company, and also was acquired by Monsanto

Roundup resistant

soybean varieties

with low trans-fatty acids (trans- fats) Cotton

Delta Pine is company specializing in cotton business for more than 90 years, and now owned by

Monsanto

Insect resistant-1st generation Insect resistant 2nd generation

Vegetable

The company sales revenue and gross profit

From fiscal year (FY) from September to August annually, 2006 and 2007, sales growth increased about 17% Company very successful in FY 2008, sales revenue was $11.36

billions, growth 33% compared to FY 07 and gross profit reached $6.18 billion (figure)

However, due to world economic crisis in 2009, the sales performance of Monsanto also declined but still remained a very strong position, FY10 sales revenue reached to 10.5 S billion and gross income achieved 3.49 $ billion

Figure 4.5: Monsanto Sales Growth from FY2006 to FY2010

Source: Monsanto annual report 2010