The O. M. Scott & Sons Company

Topics: Balance sheet, Asset, Generally Accepted Accounting Principles Pages: 18 (5999 words) Published: March 30, 2011
Between 1955 and 1961, management of The O. M. Scott & Sons Company launched a number of new programs aimed at maintaining and increasing the company's past success and growth. Largely in response to these activities, Scott's field sales force grew from 6 to 150 men, several entirely new and expanded production facilities went on stream, and the number of products in the company's product line tripled. Sales increased from about $10 million to $43 million. In late 1961, company officials were preparing to review the results of all these changes to ascertain how, if at al1, Scott's plans and financial policies should be changed. The O. M. Scott & Sons Company commenced operations in 1868, when it began processing the country's first clean, weed-free grass seed. Scott's early business came from a small but rapidly growing local market in central Ohio. Later, however, the company went through several stages in its growth. At about the turn of the century the company turned from supplying its local market to selling grass and other farm seeds over a wider geographic area by mail. As its success with its mail-order business increased, the company began to advertise extensively and in 1927 added a free magazine called Lawn Care, which has been widely distributed ever since. In all of these early promotional activities, the company sought to sell the Scott name and products as well as the idea of improved care of lawns. In the 1920's a special lawn fertilizer developed for home use was added to the company's product line. During the 1930's the company began to distribute its products on a small scale through selected retail stores and garden centers. Sales and profits grew steadily throughout these years. Scott continued to grow along these same general lines until 1945, by which time sales reached $2.7 million and net profits after taxes were about $30,000. Over the decade immediately following the war, pioneering research by Scott led to the development and introduction of a wide range of new chemical weed and garden pest controls and special-purpose lawn fertilizers. In addition, the company's grass seed lines were upgraded and supplemented. Largely in response to the success of this research, sales increased to $11.4 million and profits to over $210,000 in fiscal 1955. By 1955, however, despite the company's impressive postwar record of growth in sales and profits, management was convinced that neither Scott nor its competitors had begun to develop and tap the potential inherent in the national lawn care market. In Scott's own case this failure to develop and tap the national market was attributed to the fact that Scott's customers could not buy its products easily where and when they expected to find them. The company's distribution system had not evolved adequately in response to developing market opportunities, and in many instances the company's dealers either were poorly stocked or were not the right kind of dealer for the company's products. They began a new stage in Scott's development. Early in 1955 the company launched a program to build a national field sales organization with the objective of increasing the number, quality, and performance of its distributors so as to capitalize more fully on the success of its product research and development efforts. When this program started, the company had six field salesmen. By 1960 Scott had a field sales force of 150 men serving almost 10,000 retail dealers across the country. These dealers were mainly department stores and small hardware stores and garden supply centers. The company's salesmen spent most of their time training the dealers how to do a better selling job with Scott products and were paid a salary plus a bonus based on factory shipments to dealers.

OM Scott & Sons

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Scott's product development program continued apace with the buildup in the direct selling force so that by the end of the 1950's the company...
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