Dairyland Case Study

Company Analysis

Strengths:

* Commitment to R&D and innovation

* Leader in the development of STS varieties

* Proprietary research in alfalfa, corn, and soybeans

* Premium price leading to higher margins

* Products fare well in trials

* Largest alfalfa breeding program in industry

* Corn growing steadily

* Customer focus

Weaknesses:

* No definitive, strong relationship with either biotechnology company

* Family ownership may lead to a lack of new strategic vision

* Not enough focus on specific traits

* Little experience outside of local markets

Opportunities:

* Round-Up growth

* Partnership with Monsanto

* Full participation in Monsanto's rebate program

* No dominant supplier in alfalfa (product being one of Dairyland's strengths)

* New Dairyland varieties demonstrate resistance to particular plant diseases (niche market opportunities)

Threats:

* Competition is intense in all three product categories

* Competitors like Novartis and Pioneer not having to pay Monsanto the technology fee have greater funds for R&D

* Market share growth of Round-Up--competes directly with STS

* DuPont's more tight relationship with Dairyland's key competitor Pioneer

* STS markets may become less attainable due to Monsanto's rebate program

* Farmers are becoming less brand loyal and more economically focused

* Higher price may look unattractive to the cost-conscious farmers

Problem Statement

How can Dairyland continue to provide the best value to its customers and profitably compete in a changing and intensely competitive seed industry?

Alternatives

1. End the DuPont relationship and focus solely on Monsanto

2. End the Monsanto relationship and focus solely on DuPont

3. Proceed with both of the current technology supplier relationships and focus R&D more on specific traits, rather than high-yielding genetics alone.

Critical Issues

* Profitability

* Satisfied farmers

* Costs

* Growth

* Consistent with commitment to innovation and new product development

Analysis

Alternative I

+ Full participation in Monsanto's incentive programs would result in higher margins.

? 95% of farmers using Round-Up experienced "satisfaction" with the product; this may lessen as farmers have more data and experience with product.

+ Offers up-front cost savings.

+ High projected growth in the Round-Up market. 50% market share projected for 1999. From introduction, market growth only limited by supply.

? Wasn't licensed to market Round-Up until 1998--giving competitors opportunity to be first to market new product.

Alternative 2

? No concrete effect on profitability.

+ DuPont is very active in promoting STS seed varieties and