In business, each entity pursues profit maximization. Scotts Miracle-Gro is facing a dilemma. The concern is based on outsourcing. Some members of the company are of the opinion that Temecula should remain the central point to source products from, while others believe sourcing from China is better (Gray & Leiblein, 2008). As such, the primary objective is to reduce operating costs in order to realize maximum profits. Before arriving at the best option, conducting a SWOT analysis is critical.
Scotts Miracle-Gro implementation tactics
The first tactic in outsourcing involves refocusing. This rests on the idea that some companies have underperforming areas. Such areas call for attention. When outsourcing organization leaderships should prevent a decline in performance levels. Similarly, the organizations must introduce necessary competencies that may be lacking in an organization. For instance, the Scotts Miracle-Gro should ensure that the Chinese firms have the necessary competence in the industry. In addition, the company must reduce the learning curve in order to accelerate improvements on performance. In this regard, the Scotts Miracle-Gro must incorporate the best practices in implementing the project.
Scotts Miracle-Gro SWOT Analysis
The strengths show attributes that positions an organization well in the pursuit of set objectives. On the other hand, the weaknesses reflect attributes that could harm the chances of an organization in achieving its targets. Opportunities represent external conditions that are likely to hurt the success of an organization. Regarding threats, reference is made to external conditions that pose a danger to the attainment of organizational objectives. As a result, when making decisions, managers need to establish whether the objectives are attainable given the SWOT analysis. SWOT analysis, thus guides the determination of the strategies that organizations use in pursuing their objectives.
The case of Scotts Miracle-Gro centers on the decision of the company to outsource production from China as opposed to Temecula. Thus, a primary concern should border on the strategic benefits or risks associated with outsourcing from China. The first benefit would be the low costs involved in the supply. The low costs are due to cheaper labor and electricity. Thus, the company could lower its overall overhead costs.
There is however, a risk associated with the move to outsource from China. Some costs would be expensive. For instance, inventory and freight costs from China may increase due to shipping. Moreover, the testing of products shipped from China may reduce the value of sourcing from China. The inspection process would require more money and time. The company may also need to train its suppliers to ensure that they supply quality products. Thus, the company would incur extra costs. Since the products would be processed in China, the company’s staff would lose its knowledge in processing. However, conducting a thorough financial analysis leads to the conclusion that outsourcing from China would save the company in terms of costs.
It is worth observing that the Scotts Miracle-Gro Company has a strong brand name due to its dominant position in the market. Similarly, the company has used other strengths to propel its leadership in the industry. For instance, the company has encouraged the development of innovative approaches in handling its business. The Scotts Miracle-Gro company also boasts a strong customer following. Put differently, customer loyalty is high, an aspect that guarantees the company high sales. However, the company has one major weakness, which is high overhead costs. High overhead costs have a negative effect on the company’s profits. This explains why the Scotts Miracle-Gro Company is considering outsourcing from China.