Spreader Sourcing Decision Essay

938 Words May 20th, 2012 4 Pages
RUNNING HEAD: Scotts Miracle-Gro : The Spreader Sourcing Decision

Unit 7 Scotts Miracle-Gro : The Spreader Sourcing Decision
Kaplan University
School of Business and Management
MT460 Management Policy and Strategy
David H Brose
Professor: Zurick
October 11, 2011

Introduction Scotts merged with Miracle Gro in 1995 to form the largest lawn and garden supplier to the do it yourselfer. The company started as a seed supplier in 1868, claiming to distribute a weed free seed. Scotts marketed fertilizer in the late 1920s. In 1930, they developed their drop spreader business and their broadcast spreader business in 1983. Synopsis of the Situation Scotts had developed an injection
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Moving to China would save the high cost of rent and salaries, delivery, and utilities in California. The company already freights components from China to the U.S.; the additional freight would still be a saving over U.S. manufacturing. Implementation Implementation can be accomplished over the next 30 months. Manufacturing can be contracted to a company that has the equipment for the label stamp injection mold. Or the cost of the molds can be shared between Scotts and the contracted manufacturing company. The cost of raw materials is comparable the world over. The cost of training of the mold operation and the less productive nature of Chinese laborers will be a challenge to keeping up with the demand and the time of product in transit. Recommendations Even with the growth expectations for China, Scotts would be wise to move production to China to increase the shareholders wealth because even with freight costs, outsourcing will increase the net profit. By contracting the production of the spreaders with a company in China that is set up for injection molding the cost of setting up a new manufacturing facility will be diverted. Conclusion Scotts and Miracle Gro is an industry leader not only in the manufacturing of spreaders, fertilizer, and grass seed; but in the development of the global market and new standards of injection molding. The idea of a business is to find a need of the consumer in order to increase the value of the

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