Case Study Description of Scotts Miracle-Gro: The Spreader Sourcing Decision
The Scotts Miracle-Gro company is the world's largest marketer of branded consumer lawn and garden products, with a full range of products for professional horticulture as well. Headquartered in Marysville, Ohio, the company is a market leader in a number of consumer lawn and garden and professional horticultural products. The case describes a series of decisions regarding the ownership and organization of the assets used to manufacture fertilizer spreaders. This case is intended to illustrate the application of and tradeoffs between financial, strategic and operations perspectives in a relatively straightforward manufacturing "make-buy" decision. The case involves a well-known, easily-described product that most students would assume is made overseas. Sufficient information is provided to roughly estimate the direct financial cost associated with internal (domestic) production, offshored (non-domestic) production and outsourced production. In addition, information is included that may be used to estimate potential transaction costs as well as costs associated with foreign exchange risk.
Authors :: John Gray, Michael Leiblein, Shyam Karunakaran
Swot Analysis of "Scotts Miracle-Gro: The Spreader Sourcing Decision" written by John Gray, Michael Leiblein, Shyam Karunakaran includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Gro Scotts facing as an external strategic factors. Some of the topics covered in Scotts Miracle-Gro: The Spreader Sourcing Decision case study are - Strategic Management Strategies, Human resource management, Manufacturing, Strategy, Supply chain and Organizational Development.
Some of the macro environment factors that can be used to understand the Scotts Miracle-Gro: The Spreader Sourcing Decision casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic , cloud computing is disrupting traditional business models, technology disruption, central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies, increasing commodity prices,
there is backlash against globalization, increasing energy prices, etc
Introduction to SWOT Analysis of Scotts Miracle-Gro: The Spreader Sourcing Decision
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Scotts Miracle-Gro: The Spreader Sourcing Decision case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Gro Scotts, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Gro Scotts operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Scotts Miracle-Gro: The Spreader Sourcing Decision can be done for the following purposes –
1. Strategic planning using facts provided in Scotts Miracle-Gro: The Spreader Sourcing Decision case study
2. Improving business portfolio management of Gro Scotts
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Gro Scotts
Strengths Scotts Miracle-Gro: The Spreader Sourcing Decision | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Gro Scotts in Scotts Miracle-Gro: The Spreader Sourcing Decision Harvard Business Review case study are -
Training and development
– Gro Scotts has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Scotts Miracle-Gro: The Spreader Sourcing Decision Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Ability to recruit top talent
– Gro Scotts is one of the leading recruiters in the industry. Managers in the Scotts Miracle-Gro: The Spreader Sourcing Decision are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Gro Scotts has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Gro Scotts to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Highly skilled collaborators
– Gro Scotts has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Scotts Miracle-Gro: The Spreader Sourcing Decision HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Gro Scotts is one of the most innovative firm in sector. Manager in Scotts Miracle-Gro: The Spreader Sourcing Decision Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Sustainable margins compare to other players in Organizational Development industry
– Scotts Miracle-Gro: The Spreader Sourcing Decision firm has clearly differentiated products in the market place. This has enabled Gro Scotts to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Gro Scotts to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Gro Scotts in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy in the Scotts Miracle-Gro: The Spreader Sourcing Decision Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Cross disciplinary teams
– Horizontal connected teams at the Gro Scotts are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Low bargaining power of suppliers
– Suppliers of Gro Scotts in the sector have low bargaining power. Scotts Miracle-Gro: The Spreader Sourcing Decision has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Gro Scotts to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Gro Scotts is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by John Gray, Michael Leiblein, Shyam Karunakaran can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Ability to lead change in Organizational Development field
– Gro Scotts is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Gro Scotts in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Scotts Miracle-Gro: The Spreader Sourcing Decision | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Scotts Miracle-Gro: The Spreader Sourcing Decision are -
Skills based hiring
– The stress on hiring functional specialists at Gro Scotts has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Aligning sales with marketing
– It come across in the case study Scotts Miracle-Gro: The Spreader Sourcing Decision that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Scotts Miracle-Gro: The Spreader Sourcing Decision can leverage the sales team experience to cultivate customer relationships as Gro Scotts is planning to shift buying processes online.
No frontier risks strategy
– After analyzing the HBR case study Scotts Miracle-Gro: The Spreader Sourcing Decision, it seems that company is thinking about the frontier risks that can impact Organizational Development strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Workers concerns about automation
– As automation is fast increasing in the segment, Gro Scotts needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High cash cycle compare to competitors
Gro Scotts has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Products dominated business model
– Even though Gro Scotts has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Scotts Miracle-Gro: The Spreader Sourcing Decision should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, firm in the HBR case study Scotts Miracle-Gro: The Spreader Sourcing Decision has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Gro Scotts 's lucrative customers.
Lack of clear differentiation of Gro Scotts products
– To increase the profitability and margins on the products, Gro Scotts needs to provide more differentiated products than what it is currently offering in the marketplace.
Capital Spending Reduction
– Even during the low interest decade, Gro Scotts has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Scotts Miracle-Gro: The Spreader Sourcing Decision, in the dynamic environment Gro Scotts has struggled to respond to the nimble upstart competition. Gro Scotts has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow decision making process
– As mentioned earlier in the report, Gro Scotts has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Gro Scotts even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Opportunities Scotts Miracle-Gro: The Spreader Sourcing Decision | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Scotts Miracle-Gro: The Spreader Sourcing Decision are -
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Gro Scotts in the consumer business. Now Gro Scotts can target international markets with far fewer capital restrictions requirements than the existing system.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Organizational Development industry, but it has also influenced the consumer preferences. Gro Scotts can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Manufacturing automation
– Gro Scotts can use the latest technology developments to improve its manufacturing and designing process in Organizational Development segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Gro Scotts can use these opportunities to build new business models that can help the communities that Gro Scotts operates in. Secondly it can use opportunities from government spending in Organizational Development sector.
Buying journey improvements
– Gro Scotts can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Scotts Miracle-Gro: The Spreader Sourcing Decision suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Better consumer reach
– The expansion of the 5G network will help Gro Scotts to increase its market reach. Gro Scotts will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Gro Scotts can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Gro Scotts to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Gro Scotts can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Gro Scotts has opened avenues for new revenue streams for the organization in the industry. This can help Gro Scotts to build a more holistic ecosystem as suggested in the Scotts Miracle-Gro: The Spreader Sourcing Decision case study. Gro Scotts can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Gro Scotts can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Organizational Development industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Gro Scotts can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Gro Scotts can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Gro Scotts in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Organizational Development segment, and it will provide faster access to the consumers.
Threats Scotts Miracle-Gro: The Spreader Sourcing Decision External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Scotts Miracle-Gro: The Spreader Sourcing Decision are -
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Gro Scotts will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Stagnating economy with rate increase
– Gro Scotts can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Gro Scotts.
Shortening product life cycle
– it is one of the major threat that Gro Scotts is facing in Organizational Development sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Regulatory challenges
– Gro Scotts needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Organizational Development industry regulations.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Gro Scotts business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– Gro Scotts has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Gro Scotts needs to keep up with the evolution of technology in the Organizational Development sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Gro Scotts in the Organizational Development industry. The Organizational Development industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Increasing wage structure of Gro Scotts
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Gro Scotts.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Gro Scotts in the Organizational Development sector and impact the bottomline of the organization.
Easy access to finance
– Easy access to finance in Organizational Development field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Gro Scotts can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Scotts Miracle-Gro: The Spreader Sourcing Decision Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Scotts Miracle-Gro: The Spreader Sourcing Decision needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Scotts Miracle-Gro: The Spreader Sourcing Decision is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Scotts Miracle-Gro: The Spreader Sourcing Decision is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Scotts Miracle-Gro: The Spreader Sourcing Decision is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Gro Scotts needs to make to build a sustainable competitive advantage.
