Economics Case Study Example | Topics and Well Written Essays - 750 words

Economics - Case Study Example For example, selling Roundup explain Monsanto’s ability to develop GM herbicide-tolerant crops. A maturity of crops industry is a well-known fact and there is an evident growth of R&D costs, stricter legislation and more approval and support from the government. Moreover, the pricing policy of Monsanto can be explained by the company’s ability to develop Roundup in the post-patent period. Therefore, a fostering of GM products and success of Monsanto can be illustrated in the following way: Roundup is responsible for provision of plants with required herbicides and there is a growth of plants productivity providing a more favorable environment to the crops. As far as we can see, there is a clear strategy of Monsanto developed at different levels (social, economical and technical). Innovations in the company led to an evident increase of prices. Unfortunately, Monsanto did not have such kind of privileges in the earlier years. In 70s OPEC restricted nations in the amount of oil coming to America. Price per barrel of crude oil was very high. Due to the fact that Monsanto needed petroleum for the major part of its developments, and price increase could not be easily passed on to consumers. Monsanto got a trend of 90s and made an emphasis on clear environment. At that time it was a great advantage of the company. Moreover, Monsanto became a monopolist thanks to patent policies of America. Price reduction of Monsanto between 1995 and 2000 is the result of patent law in America, tolerant policy to companies developing eco programs and products. Therefore, price elasticity of Monsanto can be correlated with the best chosen pricing decision strategy: in case a price is low, more units of goods are sold; in case a price is high, fewer units of goods are sold. It is a well-developed mechanism of pricing strategy and Monsanto gained huge profits decreasing their prices for