MT 460-02 Management Policy and Strategy
Dr. Carrie A. O’Hare
April 22, 2013
Unit Seven Scotts Miracle-Gro Case Study Analysis
The submitted report identifies Scotts Miracle-Gro’s strengths, weaknesses, opportunities, and threats (SWOT) (Pearce & Robinson, 2011, p. 140). Key issues will be explored concerning Scotts Miracle-Gro’s external environment and solutions developed to maximize its opportunities or minimize its biggest threats. This comprehensive analysis will used to add value to the company and its consumers. Synopsis (Background) of the Situation
The Scotts Miracle-Gro Company (Scotts), based in Marysville, Ohio, was formed by a 1995 merger of Miracle-Gro and the Scotts Company (Pearce & Robinson, 2011, p. 26-1). The merger made Scotts the largest company in the North American lawn and garden industry as well as the world’s leading supplier and marketer of consumer products for do-it-yourself lawn and garden care (Pearce & Robinson, 2011, p. 26-1). The Scotts Company was founded in 1868 by Orlando McLean Scott as a purveyor of weed-free seeds. By 1879, Scotts had diversified into distribution of horse-drawn farm equipment and also started a mail-order farm seed distribution channel. Scotts began offering grass seeds for lawns in 1907, distributing through retail channels beginning in 1924 (Pearce & Robinson, 2011, p. 26-1). In 1928, Scotts introduced Turf Builder, the first fertilizer specifically designed for grass and started its spreader business with the introduction of drop spreaders in 1930; broadcast spreaders were rolled out in 1983 (Pearce & Robinson, 2011, p. 26-1). Scotts acquired Republic Tool & Manufacturing Company in 1992 and gained competencies in total quality control over spreader manufacturing (Pearce & Robinson, 2011, p. 26-1). Ownership of the firm changed hands several times, beginning in 1971 when ITT bought Scotts from the Scotts family. In 1986, a leveraged buy-out (LBO) made Scotts a private company again for a time, until 1992, when its stock started trading on the NASDAQ (Pearce & Robinson, 2011, p. 26-2). Miracle-Gro was founded in 1951 by Horace Hagedon (Pearce & Robinson, 2011, p. 26-2). Unlike Scotts, Miracle-Gro had no internal production; all production was outsourced to contract manufacturers. Before the 1995 merger with Scotts, Miracle Gro was already a leading brand in the lawn care chemical industry (Pearce & Robinson, 2011, p. 26-2). By early 2000, Scotts Miracle-Gro products were No. 1 in every major category and in virtually every major market in which they competed (Pearce & Robinson, 2011, p. 26-2). Key Issues
The three key issues facing Scott’s are increased domestic production costs, dependence on large scaled customers, and profitability below market average. The comparatively high plant and labor costs of the Temecula plant continues to be an issue to the growth of Scott’s Miracle-Gro. The key issues revolve around the idea that that is has become expensive to produce fertilizer spreaders and lawn seed by Scott’s Temecula plant. Another weakness that has been identified is Scott’s over dependent to customers, such as Home Depot and Wal-Mart, which account for 61% of the company’s sales (Mays, 2012). These large consumers have demanded a change in policy and production by “leaner inventories to end their fiscal years as well as to move shipments closer to the start of the lawn and garden season (Mays, 2012). Scott’s also has experienced lower sales in the international segment, tumbling 21 percent, while also missing revenue targets in 2011 due to sales declining by -2%, an 8% miss (Mays, 2012).
Define the Problem
The main problem to Scott’s survivability and health is the increasing cost of production for the Temecula plant, which manufactures products for Scott’s Miracle-Gro. These increasing costs are driven by the...