Mt 460 Unit 7 Assignment

Unit 7 Scott’s Miracle-Gro Case Study Analysis

Kaplan University

School of Business

MT460 Management Policy and Strategy

Razak Al-Hassan

Dr. Bagley

March 19, 2013

Name of Case Study

Introduction

The Scott’s Miracle-Gro Company was formed with the 1995 merger of Miracle-gro and The Scotts Company. The merger made Scotts the largest company in the North American lawn and garden industry. It also became the world’s leading supplier and marketer of consumer products for do-it-yourself lawn and garden care.

Synopsis of the Situation

In 2001 Scotts consolidated all its production into one building by purchasing a manufacturing plant in Temecula, California. The Temecula was responsible for producing all of Scotts Miracle-Gro’s domestic lawn see and fertilizer. In addition, the site and staff were the innovators of many projects that increased production and increased profits. However, in 2007, the question came on whether to close the plant and move production of its spreaders to a low-wage manufacturing site in China.

Key Issues

The operating costs of running the Temecula operations; cheaper labor costs in China; shutting down a plant that was responsible for many production innovations in the company.

Define the Problem

The Temecula manufacturing plant had an annual cost of $3 million annually. The company consolidated all its production processes in one building to rationalize its production process. However the high plant costs, labor, raw materials, and electricity costs started to create intense cost pressure over the years. Scotts already had considerable experience sourcing components for its spreaders and had considered the possibility of outsourcing the complete spreader manufacture and assembly in China. Labor, plant costs, and electricity were in particular very low when compared to their American counterparts.

Alternative Solutions

Take some of the production responsibilities from Temecula and move them overseas to China. This...