O.M. Scott & Sons Company

DE LA SALLE PROFESSIONAL SCHOOLS GRADUATE SCHOOL OF BUSINESS CASE ANALYSIS â€Å"O. M. SCOTT & SONS COMPANY† SUBMITTED BY: ESTIMADA, ANNA GABRIELLA C. Executive Summary The O. M. Scott and Sons company was a company which first started to produce weed-free grass, but diversified into other products related to its product line: lawn mowers, fertilizers, and other garden paraphernalia. It encountered the problem of nationwide distribution, finding difficulty in the delivery of its product.The company solve this problem of nationwide distribution by first, increasing its work force to keep up with the voluminous orders. Second, by setting up dealerships which will distribute their products and lastly, establishing a trust receipt payment system in order to assure the quick returns of investments. Problem The company encountered difficulty in the distribution of its products for two reasons: the nature of its agriculturally based products necessitated the quick distribution of pro ducts upon order.The voluminous orders and distances of nationwide coverage rendered the distribution difficult. Corporate Objective In keeping up with the modernization of agricultural products and technology, the company expanded its product line by diversifying into related products and services. From grass, O. M. Scott & Sons started the production of fertilizers, lawn mowers and other products. This diversification assured the company against stagnation. Areas of Consideration Shareholders & Key Officers Sales Force The company’s success can be attributed to the efforts of the sales force since they are the ones who are improving the salesmanship of the dealers in order to be available to their prospective customers. * Dealers The dealer is one of the key players in the company’s sales since the products are made available through them. With the dealership, the company can save money from overhead expenses and other general and administrative expenses from operati ons. * ScottThe owner of the company is considered as one of the key players in the company since he had found ways to cope with the market trend. Market Profile * Product Initially, the company is only selling the country’s first clean, weed-free grass seed in 1868. Scott’s business began to grow rapidly in the local market in Central Ohio. In 1990’s, the company have expanded it’s product range from grass seeds to new chemical weed and garden pest controls and special-purpose lawn fetilizers. * Price * Place & DistributionWhen the company first started, the weed-free grass seed was available upon order over the phone and after some time, the seeds will be delivered to you house. However, as the business expanded, Scott realized that neither him nor his competitors were able to tap the potential market of lawn care. In the company’s case, this was attributed to the distribution system since the customer’s could not buy the products easily. To address this issue, the company opened its products to dealerships wherein the sales force is tasked to train dealers how to do a better selling job with the company’s products. Promotion and Advertising When the business became successful during its initial operations, the company began to advertise extensively, In 1927, the company added a free magazine called Lawn Care, which was widely distributed. Financial Profile * Profitability * The company’s profitability for the next 5 years, as computed in the projected plan, will greatly increase as computed for the gross profit rate and contribution margin rate. There is a yearly increase of 1% for both rates which is a good sign for the company. * Turnovers The turnover rate for the first projected year will not be good since it will take longer for the inventory to be converted to cash. However the succeeding projected years is seen to be improving in terms of the turnover rate. * Capacity Utilization * For the proje cted years, the rate of capacity utilization will improve as it was projected that the rate will increase by 2% yearly. * Financial Leverage * The liquidity of the company will neither improve nor worsen as projected in the plan. There was only a little difference in the yearly computed projected rates.