MT460 Unit 7 Corporate Strategy Divestment Case Example

Course	MT460 Management Strategy and Policy
Unit	Unit 7
Paper type	Corporate strategy case
Length	About 1,100 words, 6 pages double-spaced
Format	APA 7 student paper
School	Purdue University Global
Program	BS in Business Administration
Updated	October 2026

Free sample paper for MT460 Unit 7

Sell the Pod Plant, Keep the Seeds and the Subscription: An MT460 Unit 7 Corporate Strategy Case

[Student Name]

Purdue University Global

MT460: Management Strategy and Policy

Unit 7 Corporate Strategy Case

[Instructor Name]

[Date]

Sprigwell Gardens, its businesses and every figure are composite; the precedents and the sources cited are real.

What this part is doingStating what to sell and what to keep in the lead frames the case as a question of ownership, not competition.

The Portfolio

The question in this unit is corporate, not competitive: which businesses Sprigwell Gardens should own, not how each should compete. Sprigwell has three businesses. Gardens bring in about $164 million a year at a 24 percent gross margin. Seed pods and nutrients bring in about $58 million at 41 percent. Accessories, grow-light extensions, trellises and cleaning kits, bring in about $16 million at 45 percent. Inside the pod business sits the company's own filling operation in eastern North Carolina, which handles about 60 percent of Sprigwell's pods; contract fillers supply the rest.

The Plant's Return

The plant cost about $18 million in 2019. It saves about $1.46 million a year compared with buying the same pods from contract fillers, about 8 percent before tax on the capital it ties up. Sprigwell's hurdle rate for new investment is 11 percent. On return alone, the plant would not be built today. But a low return does not settle the question, because an asset can earn little on its own and still make a business stronger. Two tests decide it.

The Better-Off Test

Porter (1987) proposed that a corporate move should pass a better-off test: owning the asset must give the business a competitive advantage it could not get otherwise. The question is whether owning the plant makes Sprigwell's pod business better off than buying filling from contractors.

The evidence says not much. The Unit 3 audit found the plant a competitive parity: at least four contract fillers in the Southeast already fill pods for other brands, at quality Sprigwell's own tests rate as equal. The plant does not fill pods faster than contractors, and it does not make pods that owners prefer. Its only benefit is the cost saving, which is real but below the hurdle rate. And the plant ties Sprigwell's pod design to the plant's equipment; two pod redesigns in the last four years were delayed because the plant's lines needed refitting.

The plant saves money, but it slows the one thing Sprigwell needs to do faster: change its pods.

What this part is doingNaming the plant's hidden cost to pod design shows the better-off test weighs more than the savings line.

The Best-Owner Test

Campbell et al. (1995) argue that a corporate parent should own a business only if it is the best owner, able to add more value than any other owner could. The plant runs at about 55 percent of its capacity, because Sprigwell's pod volume does not fill it. A contract filler serving several garden and seed brands could run the same plant at 85 percent or more, spreading fixed costs over more pods. Such a filler is the better owner. Sprigwell adds nothing to the plant that a filler could not add, and a filler would add volume Sprigwell cannot.

Two Precedents

Two real cases illustrate the logic, used narrowly. In 2021, Traeger, a pellet grill maker, bought Apption Labs, the maker of the Meater wireless meat thermometer. Traeger was buying a connected-cooking capability, an app and device data, close to the center of its strategy. That is the kind of asset a consumer products company has reason to own, and it parallels Sprigwell's grow data and app, which the case recommends keeping.

In October 2023, Kellogg Company separated into two companies, Kellanova, focused on snacks, and WK Kellogg Co, focused on North American cereal. Management judged that the two businesses would be worth more apart, each with its own priorities and investors. The pod plant is a much smaller case, but the reasoning is similar: an asset that does not share the parent's strategic priorities may be better served by an owner whose priorities it does share.

Neither precedent proves the recommendation, and both involve companies far larger than Sprigwell. They show that owning capability close to the customer, and separating assets whose best owner is someone else, are both established corporate moves.

Recommendation

Sprigwell should sell the Wilson plant to a contract filler, with a five-year supply agreement covering all of Sprigwell's pod volume at prices close to the plant's current cost. Sprigwell should keep everything that touches the customer: pod designs, seed blends, the growing-medium formula, the app, the grow data and the subscription. Collis and Montgomery (1998) describe corporate advantage as coming from resources that create value across a firm's businesses, and Sprigwell's valuable resources, its retailers and its data, are about customers, not about filling pods.

What the Sale Gives Up and Gains

Sprigwell would give up about $1.46 million a year in savings, partly offset by the supply agreement's prices, and some control over pod production. It would gain about $14 million in sale proceeds, which could fund the subscription's $6.8 million budget, faster pod redesigns and a cleaner focus on the parts of the business the strategy depends on. The supply agreement should include quality standards, a right to audit and a clause allowing Sprigwell to move volume if the buyer fails them.

What Stays Inside the Pod Business

Selling the plant does not mean leaving pods to others. The parts of the pod business that create Sprigwell's margin are the seed blends chosen for each plant, the growing medium that keeps seeds viable for eighteen months, the pod and lid design that fits Sprigwell's trays and the timing of each shipment from the grow data. None of these happens in the plant. Seed selection and medium formulation sit with a team of four in Raleigh, the design sits with the product group and the timing will sit with the new consumables unit. The plant performs one step, filling and sealing, that Sprigwell can specify and audit without owning. Keeping the knowledge and selling the machinery is the split this case recommends, and it matches the Unit 3 finding that the company's lasting advantages are about knowing customers, not making pods.

Timing the Sale

The sale should close before the subscription's second phase, so that proceeds are available when spending rises, and after the supply agreement is signed, so that pod supply never depends on a negotiation in progress.

Limits

The sale price is an estimate. A filler may demand a longer supply commitment or a lower price. And selling the plant removes a fallback if contract fillers become scarce; the supply agreement and a second contract filler for 20 percent of volume would limit that risk.

What this part is doingPairing each limit with a protection shows the recommendation was built to survive its own risks.

References

Campbell, A., Goold, M., & Alexander, M. (1995). Corporate strategy: The quest for parenting advantage. Harvard Business Review, 73(2), 120-132.

Collis, D. J., & Montgomery, C. A. (1998). Creating corporate advantage. Harvard Business Review, 76(3), 70-83.

Porter, M. E. (1987). From competitive advantage to corporate strategy. Harvard Business Review, 65(3), 43-59.

Reading the MT 460 Unit 7 instructions

MT460 Unit 7 asks for a corporate-level analysis: which businesses or major assets a company should own. Start with the portfolio, each business's revenue and margin, because the question is about ownership rather than competition. Compute the return of the asset in question against the company's hurdle rate, then go beyond return with the better-off test, whether ownership gives the business an advantage it could not otherwise get, and the best-owner test, whether another owner could add more value. Real precedents can illustrate the logic if used narrowly and accurately. Recommend what to keep and what to sell, and describe how the transaction should protect the business, such as a supply agreement. Discuss timing and limits. About six pages with a portfolio summary, the two tests, a precedent section and a recommendation is a typical structure.

How this MT460 Unit 7 example is built

The case opens with Sprigwell's three businesses and locates the plant inside pods. The plant's return is computed against the hurdle rate, with a note that a low return alone does not decide the question. The better-off test, from Porter, finds the plant adds only a cost saving and slows pod redesigns, under a highlighted line on that hidden cost. The best-owner test, from Campbell and colleagues, finds a contract filler could run it at far higher utilization. Two precedents follow: Traeger buying the Meater maker for connected-cooking capability, and Kellogg separating into Kellanova and WK Kellogg Co. The recommendation sells the plant with a five-year supply agreement and keeps everything that touches customers, citing Collis and Montgomery. Later sections list what stays inside the pod business, when to close the sale and the limits.

Reading the MT460 Unit 7 grading rubric

Corporate strategy cases are graded on whether the ownership decision rests on the right tests. Instructors credit a portfolio summary that frames the question as ownership. Computing return against the hurdle rate is expected, but papers that stop there lose analysis marks; the better-off and best-owner tests carry the argument. Evidence that ownership slows or speeds the business, beyond cost, is often rewarded. Precedents earn credit when accurate, sourced and used narrowly, rather than as decoration. A recommendation that separates what to keep from what to sell, with protections such as a supply agreement, shows practical judgment. Timing and limits show the student has thought about execution. Porter's corporate strategy article and parenting advantage research are the expected sources.

MT460 Unit 7 help: mistakes that cost points

The commonest Unit 7 weakness is deciding on return alone, selling anything below the hurdle rate and keeping anything above it. Another is applying the better-off test only to cost savings, missing effects on speed or flexibility. Students often use famous deals as precedents without checking facts or explaining the parallel. Recommendations frequently say sell without addressing what the company needs to keep or how supply will be protected. Before submitting, write one sentence for each test, beginning with the words owning this asset makes the business, and another beginning with the best owner of this asset is. If either sentence is weak, the case needs more evidence. Then check that every precedent you cite is accurate and that you say exactly what it does and does not show.

Get an MT460 Unit 7 example written to your instructions

Upload the corporate-level case or the company your Unit 7 prompt names, together with the rubric and any tests your section requires. A composite case analysis comes back comparing each unit's return with its capital, applying the ownership tests and citing real precedents accurately and narrowly. The first custom sample is free, in 24-48h. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.

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MT460 Unit 7 questions, answered

What is the better-off test?

One of the tests for corporate-level moves, associated with Porter's work on diversification: a business should be owned only if owning it makes that business, or the rest of the company, perform better than it would otherwise. Revenue added is not enough. Your textbook may frame it as parenting advantage or synergy, and the prompt will usually say which framework to use.

Can a composite case use real companies as examples?

Yes, if the facts are accurate, sourced and used narrowly. A real acquisition or spin-off works best as evidence for one point, such as when owning an accessory maker made sense or when two businesses were separated. Attributing motives a company never stated, or stretching a precedent beyond what happened, weakens the paper more than leaving it out would.

Is divestment always the answer when a unit earns below the hurdle rate?

No. A low-return unit may protect something valuable, such as supply during shortages or a capability the core business needs. The case has to show whether that protection could be bought more cheaply, often through a contract. Divestment wins when a contract delivers the same protection and someone else would pay more to own the unit.

Where can I find a free MT460 Unit 7 sample paper?

This page carries the full MT460 Unit 7 case on whether a composite garden maker should sell its pod plant, with the better-off and best-owner tests.

Why does the plant fail the best-owner test in the MT460 Unit 7 sample?

It runs at about 55 percent of capacity on Sprigwell's volume, while a contract filler serving several brands could run it near 85 percent and spread its costs.