Problem: Management Decision

How Does Your Garden (Company) Grow? The Scotts Company is older than dirt. Well, almost. O.M. Scott founded the company in 1868 as a premium seed company for U.S. farmers, who, to his mind, needed and should have clean, weed-free fi elds.101 The company began selling grass seed in 1907 and launched a dedicated research division in 1947. Throughout the 20th century and still today, Scotts has been associated with the Turf Builder line of consumer grass seed, professional turf seed (think golf courses and football fields), and numerous fertilizer products. In 1995, the $100 million plant-food company Miracle-Gro, started by your grandfather, merged with Scotts to form Scotts Miracle-Gro. Since the merger was finalized, you've seen Scotts Miracle-Gro buy companies that make everything from fertilizer to insecticides. When conglomerate ITT, which primarily makes electronics and fluid controls and equipment, bought Burpee, the seed company, ITT asked Scotts to manage it. In addition, Scotts introduced a line of fertilizer spreaders under its own name, solidified relationships with big-box retail stores like Lowe's and Home Depot, and began selling products in the United Kingdom countries, known for their love of and knack for gardening. Over the years, Scotts Miracle-Gro has bought dozens of companies, and as a result, Scotts MiracleGro is huge. Now with $2.5 billion in annual sales, Scotts dominates lawn care like Budweiser dominates beer. (Your grandfather would never have imagined this.) So now that you're on top, how do you keep growing? Or should you keep growing? The lawn and garden market is a $35 billion annual market, so there could be plenty of upside, but drawing from your weed-killing technology, you know it's possible to grow a plant to death.

Questions

1. What strategic alternative -risk seeking or risk avoiding-do you think Scotts Miracle-Gro should pursue? Answer in terms of strategic reference point theory.

2. Using portfolio theory, map out a diversification plan that would help Scotts grow without straying too far from its distinctive competencies in turf, seed, and fertilizer.

3. Do you continue following a growth strategy, or do you shift to a stability strategy? Explain.