Achieving Competitive Gain INSIDE THE Biotechnology Sector Commerce Essay

Biotechnology can be generally defined as the use of living things to create products or to do responsibilities for humans. Biotechnology or biotech is utilized in industry, remedies and agriculture to create foods, medicine, and test for diseases and remove wastes. (Biotechnologyonline, n. d) So, there will vary types of biotech such as green technology, red technology, and white technology and Bio fuels.

In this record, we will offer an insight into each one of these branches of biotech and use various analytical tools to evaluate how knowledge management is playing a job in creating competitive edge for companies in the sector. In so doing, we shall go through the Green biotech, Red biotech, White biotech and bio energy respectively.

Green Biotechnology

Green technology, often known as place or agricultural technology is a branch of biotechnology (biotech) which "involves the intro of overseas genes into economically important species, leading to crop improvement and the development of novel products in plants". (123biotech, n. d. ).

To better understand the role of knowledge management in harnessing a competitive benefits in this branch of biotechnology, we will need Monsanto as circumstance example. Monsanto is the world's leading inexperienced technology company before rival such as DuPont. (SmartMoney, 2009). The business specialises in mating (enhancing the genetic platform through technology of vegetation thus increase yield and genetic anatomist (by enhancing generic traits in plants such as insect resistance, herbicide tolerance and drought-tolerance). (SmartMoney, 2009 and Monsanto, n. d. )

As using its sister braches such as bioinformatics, white technology(industrial biotechnology), red technology(pharmaceuticals) as well as biofuels, green technology and companies associated with it like Monsanto, are not remaining unscathed by critics. For example, Monsanto and its own counterpatrs, through its use of plant technology has been criticised of endangering individuals, the surroundings and socio-economic. ( Friends of the earth, 2006).

Significance of Green Technology

However, the next advantages are beign celebrated by its followers:

Protection of Crops: for occasion, the AT-DBF2 gene from Arabidopsis Thaliana crop injected into crops to enable them withstands Osmotic stress such as drought, sodium and stress. (PNAS, n. d. )

Increase Crop yield: through the teething many years of biotechnology in term of Genetically Modified Food, there's been a widespread criticism of GMO saying that GM Plants do not increase crop produce, that on the other hand it, reduces it. (Truth about Trade and Technology, 2009). These promises were dismissed by the then USA president Jimmy Carter who stated that, "responsible biotechnology is not the opponent; starvation is. " (Biotechnology Industry Company, n. d. )His favourable stance towards green biotechnology because of microorganisms like the Bacillus Thuringiensis used to produce the BT-corn. Introduces in 1996, the "Bt corn has the potential to simplify management and effectively control corn borers throughout the growing season" thus increasing its yield. (School of Agriculture, n. d. )

Improved Food Quality: a good example of this was the technology of the Golden Rice by Prof Potrykus and Prof. Beyer of ETH-Zurich and College or university of Freiburg respectively. The Golden rice is thought to alleviate Vitamin A insufficiency in young people especially in the producing world. (Golden Rice, n. d. ) Another example is the Maltogenic Amylase used for "Retardation of staling in baked food", such as bakery and cakes. (Food and Agriculture Company, 1997)

Having acquired an insight about how precisely inexperienced technology functions, its benefits and drawbacks, it is currently essential to discover how companies like Monsanto use knowledge management in harnessing and safeguarding advancement in order to create a sustainable competitive advantages against competitors like DuPont.

Knowledge Management as a competitive benefits vehicle.

To understand the role knowledge management in reaching competitive benefit for biotech companies such as Monsanto, let's apply the Resource-Based View of strategy coined by Offer (1991citied in Henry, 2008). This analysis seeks to analyse how a company exploits its resources to attain a sustainable competitive advantages against its competitors on the market. (Henry, 2008)

A resource-based view of strategy analysis

Consumer Self-assurance, First Mover Benefit, Touch blue Oceans,


Fund expensive R&D, New Product Development


Finances, Experts, People Capital


Knowledge electricity, Experience curve



(Grant 1991 cited in Henry 2008)

Step 1: Resources: Biotech market sectors such as Monsanto exceed the ordinary in Identifying and attaining young skill; because technology can simply be rendered outdated, there is always the never-ending requirement to pool skill and innovate. Thus, biotech companies like Monsanto are in collaboration with renowned sciences colleges like Truman Status School to recruit exceptional students with reasonable sciences background. (Monsanto, n. d. ). Furthermore, with the immense finance capacity, they are able to fund and exploit these abilities.

Step 2: Capacity: with their finance ability, these biotech companies are able to fund thorough Research and Development: Monsanto reported spend $2. 6m dollars per day in research and development on "how mating and genetic executive could develop corn, cotton and soybean seed products that produce more bountiful and healthy crops and drive back insects and weeds". (SmartMoney, 2009)This paids off gets the company as had the opportunity to develop leading brands such as Acceleron, Roundup Ready, Asgrow and Yieldgard for herb resistance to osmotic stress as well as De Ruiter Seeds, Dekalb and Deltapine(Monsanto, n. d. )

Step 3: Competitive Gain: therefore, Monsanto can acquire a sustainable competitive advantage because of its ability to produce Knowledge electric power and experience curve on producing competitive and fast advertising products like its renowend leading brands like, Acceleron and Roundup Ready

Step 4: Strategy: because of this, Monsanto take up a differentiation strategy. This diferentiation strategy is typical of biotech companies with exception to biofuel companies as they final result; gas, once drilled and sophisticated is standard worldwide.

Step 5: Bridging any resources Spaces: this demands proactiveness from the part of the company as it consists of identifying where in fact the company is weak and formulating sufficient strategy to treat such weaknesses or resource deficeincies. For instance, tapping blue oceans or untouched markets to improve the company's economies of level (Henry, 2008)

Knowledge Security in Biotech

Use of copyright and licensing: to safeguard knowledge and technology the business licenses seed germplasm or biotechnology characteristics to around 200 seed partners in the United States. (Monsanto, 2009)

In summary, it could be argued that as a result of level of technological innovation that occurs in the biotechnology such as renewable technology, it's both an integral and critical success factor for company to effectively and efficiently management knowledge by harnessing and guarding its knowledge thus maintain a competitive advantage. This we have examined using the resourced-based view of strategy evaluation coined by Offer (1991 citied in Henry 2008).

Red Technology


The term biopharmaceutical means that expanding drugs from using living cells, protein and nucleic acids. None of the two biopharmaceuticals can be same. Within the last ten years world has seen substantial development in this sector.

Part 2.

The Value Chain


Technology Development

Human Resource Management

Firm Infrastructure

Post Sales Service

Inbound Logistics


Marketing & Sales



Adopted from Micheal E. Porter Competitive Benefit: Creating and sustaining Superior Performance. (1985 p. 37)

A lot of experts like Porter (1985, p36) Henry (2008, p103) have emphasized the value and request of Value string analysis. We can assess the power and weaknesses of any biotechnology company by looking at its resources. It expresses important information about strategy and concentration of a particular company. By discovering key focus areas, companies can focus in obtaining competitive advantages.

Biotech companies have a tendency to elongate their value chains by getting into alliance with the business enterprise partners; this can either be achieved by incorporating the idea of upstream or downstream value. Henry (2008, p103) depicts the importance and benefits of adopting this plan. By exploiting the resources of associates, a biotech company can maximize functional efficiency. This functional efficiency brings about achieve competitive edge.

Each industry sector is exclusive in terms of function. Biotechnology industry, usually being a developing industry always works diversely as compared to a service industry because of the fact that primary and support activities vary from industry to industry. Porter (1985, 38-40) also supports this simple fact. Like most of other industries, knowledge management performs a essential role in biotechnology sector and is considered to be always a principal activity.

Prusak as cited in Young (2008, p5) states that knowledge management is all about the information that is the brain of people as a secured asset and how it is employed to leverage into corporate property. In biotechnology, explicitly it could be altered into a corporate knowledge paradigm. This idea is also reinforced by Gorelick, Apr and Milton. (2004).

In biotechnology sector, although you may check out any sub-sector of biotechnology, industry advancement is the primary weapon to attain competitive benefit. Cooke and Mayes (1996, p. 13-15) also set up relationship of development and competition. This mean that by invention biotech companies achieve competitive advantage and in changes get increased market stocks with higher progress rates. The creativity is leading to new effective products thus allowing biotech companies to attain competitive advantage.

By considering the value string research of biotech industry we come to learn that the most appreciated activity is innovation and knowledge management. That's the reason biotech companies invest heavily in research and development (R&D). For biotech industry R&D part of value chain is a lot more centered and valued. In biofuel, biofood and bioagri the worthiness string is more or the less same, however when we look at biopharmaceutical and bioinformatics, the worthiness chain will alter itself a bit. The experience that also impacts biophrmaceuical is that the phase of clinical trial demands lots of time, capital and management.


Technology Development

Human Source of information Management

Firm Infrastructure

Post Sales Service

Inbound Logistics


Marketing & Sales



Clinical Trials

A typical value string for biopharmaceutical company.

Knowledge is a scarce tool and that is why there are incredibly few biotechnology companies in the market.

Adopted from Tzokas, N. and Saren, M.

By looking at the above physique it is clear that knowledge management is difficult to achieve. Companies change their knowledge-based and skills-based information with equipment-based knowledge to build competitive gain. Theses factors build an organizational culture of advancement and the stake holders like employee and customers push company to come up with new ideas

We need to investigate about the contribution of every stakeholder-based knowledge pool to the strategic investment funds, plots and projections undertaken by the biotech firms. The long-term development effort needs trust romance from stockholders that the deliverable of R&D can bring about to a competitive edge.

This can be done by causing multidimensional ideas linking knowledge requirements and knowledge swimming pools, thus evolving an understanding space in which the strategic issues of the organization and its stakeholders can be placed. Consequently knowledge space and associated ranges can be used as navigational devices for knowledge usage.

White Technology

Biotechnology is currently used as a very vast term, but we can say that generally term that this the use of organisms by human. Lately and past also researchers around the globe got new techniques and suggestions to develop biotechnology and changing the future. the most known technology of biotechnology is cloning of pet animal as well as of name. This amazing technology works at aesthetic as well as molecular level.


Industrial biotechnology is identified everywhere in the world weather to prepare consumer goods, materials, chemical. ( www. liebertpub. com, 12:04) " Industrial Biotechnology is the top forum because of this critical field and really the only publication bridging biotechnology R&D with later-stage commercialization for many industrial and environmental applications". it include fooding items, textiles, cars, pharmaceuticals, cosmetic makeup products and body care products and many other products which we use inside our daily life. The growing companies in many countries are taking help of biotechnology. By this companies make assurance to the general public to provide new and increased products with their customers.

Industrial biotechnology is of two types red and white. Red technology is currently ignored by the firms and very less companies are dedicated with white biotechnology.




The first and the primary factor to go through in pest research is the political factor. Analysts has stresses a lot on this factor. One particular researcher is Jobber (2007, p79) who's of the opinion that Political and Legal issues can effect marketing decisions by setting up the rules by which business can be conducted. Union Laws, Collusion, Mistreatment of market dominance, acquisitions and mergers, condition aid and national laws are few of the politics factors that reshape the firms.

This factor includes all the politics effects which impact the business or a business. In a few business political issues are higher than any others but in case of industrial biotechnology government supports it and make regulations to amend it or even to improve it so the future of a country can get better and standard of living can be increased. Those organizations which do experiments on different methods of industrial biotechnology, administration offers rebate from taxes go away legislations and create new departments to check out their working procedures.

Strong legislation makes the

Through legislation biotech companies are getting their products and procedures trademarked. The biotech companies usually invest greatly in R&D and produce impressive products; these deliverables are end result of knowledge management. By getting the patent biotech companies make sure that their intellectual property right is anchored and therefore they achieve competitive benefit as no other company can imitate that.

In the case of biopharmaceutical, the main governing person is FDA (Foods and Drugs Supervision, USA). FDA


Economic environment is the second the very first thing in PEST analysis.

"Factors that affect consumer buying electricity and spending patterns" Kotler et al (1999, p158)

As evident from the many researchers, monetary insurance plan, interests and exchange rates, income circulation, change in purchasing vitality, change in spending habits, availability and rising cost of energy, labor and organic material has lead to significant changing running a business world.

World economy is within tough economy, so is the truth of UK's. Unemployment ratio has truly gone up; people's purchasing vitality is going down with a less savings. People are naturally targeted more on spending towards needs. Earnings are low.

In this circumstance consumer will move toward those products which will save you their money and bio-products are one of those products which are cheap and reusable without destroying the envoirment and triggering pollution. Envoirment issues are to be considered as it pertains to shopping perspective and vacationing.


Banerjee, (1998) as cited in Charter and Polonsky (1999, p31), claims that The threat of tougher legislation and the increasing costs of complying with environmental regulations are possible motivating factors for organizations to include environmental concerns in their strategies.

Tougher legislation can affect a company in two ways: first the price tag on conformity becomes prohibitive, second, legislation can require substantive changes in product or program design or circulation channels. (Taking back used thing)

Public Concern

Another important reason for firms to develop an international orientation and strategy is the climb in public matter for the environment. There are basically hundreds of view polls on the surroundings conducted in Europe, Asia and USA. Charter and Polonsky (1999, p32)

The need to keep up a good general public image and react to public concerns can lead to firms adopting corporate environmentalism. Charter and Polonsky (1999, p33)

Need for competitive advantage

There are numerous conditions where the installing new environmentally friendly technology has reduced costs for companies Charter and Polonsky (1999, p35)

Social factors

Social / ethnic factors include Demographics forces, World Population development, Age distribution, household structures and sociable factors.

According to Kotler et al (1999, p153) the Western european and American societies are evidencing huge demographic shifts.

Technological Factors

Kotler et al. (1999, p165) "Forces that induce new technology, creating new product and market opportunities". Those companies that have good knowledge about the services can form those and can draw in new and existing customers. By this technique apart from new technology consciousness among public will also in a position to increase. Companies with better knowledge will develop new products in order to spread awarness among all industries of consumers.





"Biotechnology is the utilization of biological processes, organisms, or systems to make products designed to improve the quality of individual life". Biotechnology can be an important progressive tool to attain

The target the many levels example Bio fuels Bio informative, Bio medics, agriculture Biotechnology skills can serve to increase biomass produce, improve crop quality, and convert agriculture misuse into bio fuels. (whatistechtarget n. d)

Bio fuel

It is also knows as agro gas, these fuels are mainly produced from Biomass or Bio waste. It's often derived from plants and animals. Bio fuel is employed faster growing modern tools for carrying sector. Liquid form of gas is required for most vehicles is this convenient for storage area and delivery, hence the bio mass is converted to liquid form. Bio energy plays a exclusive role in modern gas manufacturing as they are renewable way to obtain energy. Ethanol is the mostly used Bio fuel in the world particularly in Brazil's and major exporters Asia, Europe and America are the some major manufacturer of bio gases Lleading gas companies like Bp's and Shells company they involved with research and development in bio fuels. (biofuel, n. d)

Generic strategies

Porters alter the system by reducing its down to three best strategies.

Overall Cost leadership

Differentiation strategies

Focus strategy strategies

Overall cost command:

A company produced standard product by low priced and also take responsibility of monetary level and experience curve effect. market show is advantages.

Differentiation strategies:

A company is aimed at broad market. the merchandise must some special feature like progress technology, brand image, etc

Focus strategies:

In this focus strategies a firm concentrated in market and particular band of consumer.


Overall cost control ?

Bio fuel are the cheapest form of petrol you can ever before get they don't really need big investment in new syndication system but just the essential establishing plant is enough to produce them bio gas mostly requires in permanent investment. Hence Original investment is very important. It's been evaluated that share holders across the world show keen curiosity about investing large amount of profit this upcoming encouraging sector.

Differentiation strategies?

Bio petrol is renewable way to obtain energy unlike others fuels they have got less emission of air contaminants. Hence they are simply environmentally friendly; they are incredibly low cost to allow them to match all the price tag on leading fuels. The impact of Cross cars and inexperienced vehicles with play a massive role in decreasing global warming.

Focus strategies?

Bio gas industry will generate a big occupations all over the world and helps the country's overall economy to develop as well. They provide jobs at all levels even form farmers to experts. This industry has been welcomed by all countries and they are seeking to be innovative to boost this sector all around the globe. Most federal government offer discount and taxes reduction on renewable cars thus pushing people to get them. This difference makes the bio gas market to become more competitive in the gas market. In forward planning about the global warming all country now concentrate on bio energy as they play a essential role in helping to control the pollution.


Biotech industry has a diverse selection of applications like in agriculture, molecular biology, health care, pharma sector, chemical substance industry, environment related etc.

Porter's five causes theory helps us to comprehend and interpret the business enterprise processes. This knowledge can be translated to get a competitive edge over the competition. This theory is also used to evaluate the profits that may be made in the proposed business circumstance or the products.

According to the theory, the five causes that decide the competitive power of the organization on the market are as follows,

Threat of new entrants

In the biotech industry, intellectual property is the main asset. The companies in this industry are intensely dependent on financing to sustain the research and development activities. And very negligible revenue is generated by the company till the product is developed. So finance is one of the major hurdle that retains away new entrants from the industry.

Another barrier that deters the new entrants is the want of particular knowledge in the region of research or development. Patent privileges and proprietary privileges also act as barriers to some extent.

In some cases where knowledge and patent privileges are easily conquer, many small players come into the picture. Although entrance is straightforward for smaller companies, sustenance would be very hard in this industry.


As discussed previously, intellectual property is the most important advantage in this industry. The biotech companies usually do not heavily rely on the suppliers. The tools, products, equipment, chemicals and all other requirements are highly customized.

However small companies who either neglect to explore new programs of circulation or who cannot afford the traditional stations of distribution, are in a loss, because they are compelled to enter into marketing alliances.


The electricity of potential buyers is not uniform throughout the biotech market. Previously, the pharma companies weren't affected by the buyers as the customers didn't have or got an extremely little say about the merchandise. The pharma companies experienced marketing alliances with the private hospitals, pharmacists and agencies. Therefore the buyer vitality was less.

In circumstance of firms where in fact the major purchasers will be the government authorities or the nursing homes, the buyers are strong. But now the health attention companies, insurance companies and common man have entered the area. The increasing price level of sensitivity of this new band of purchasers is forcing the biotech companies to cut the prices and then the profit margin is becoming less.

In addition to this, governments in a few producing countries are pressurizing the biotech companies to have some social responsibility. ( as in the case of providing vaccines for epidemics at a cost-effective price. )

So there's a clear shift and the buyer's ability is increasing.


The option of substitutes also will depend on the type of bitech organization/product.

If the data and patent protection under the law are not properly secured, the investment in Research and Development (R & D) cannot be recovered. When the patent can be easily defeat, some other company can merely copy the solution/application to own product at a much cheaper price. Therefore the formulae/knowledge should be carefully guarded through patenting and Intellectual Property (IP) rights.

In some conditions, cheaper chemical product alternatives may be available to the sophisticated and more accurate biotech products.


The competition rivalry is too intense in the biotech industry. Market analysis demonstrates only 1% of the biotech companies manage to make a profit. Biotech industry is basically dominated by few large firms although there are hundreds of smaller companies. All the firms are struggling to convert their R&D attempts into a breakthrough technology/product. This invention could potentially change the destiny of the company overnight. Therefore the Intellectual Property is carefully guarded and the rivalry is incredibly saturated in this industry.

For example, In U. S, 82 % of biotech organizations make 0 % profit, 76 % of businesses have less than 50 employees in support of 30 companies have more than 300 employees.

Porters five forces theory certainly assists with understanding the pros and cons, the opportunities and hazards available situation. This theory definitely supports evolving an enterprise strategy. but this theory may not be of great help in assessing the degree of simplicity or difficulty or success in working with the business enterprise situation.

In this framework, this theory will not consider the next strategic influences like,

Industry merges and acquisitions have grown to be typical of the day and the consequences of such deals cannot be assessed and is also not taken into consideration.

Research and creativity has the potential to drastically change the face of the industry. As new discoveries/improvements appear, many new hazards/opportunities sprout. This makes the biotech industry an extremely susceptible one. This aspect is left out by the idea.

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