John Deere Case Analysis
By undergoing an internal analysis a company will determine how well their strategy is working, to determine if the company is competitive in use of it’s resources and if their customer value proposition is attractive enough to create profits. Through this analysis of a company, managers are able to identify what strategic concerns they have due to their company being inferior or superior to their rivals. An organization can realize their strengths, weaknesses, threats and opportunities through a thorough evaluation of their capabilities, resources and competitiveness. Using this a company can find remedies to solve their problems from the previous evaluation and counteract any threats from their rivals. After conducting an internal analysis the main goal is to maximize the company’s earnings and market standing by utilizing the information gathered to create and strengthen their planning and decision-making. All the following information will reflect the analysis and internal situation of John Deere, a leader in the industry of agriculture and forestry equipment manufacturing.
In 1837, Deere and company began manufacturing and marketing farming equipment. John Deere who was a blacksmith and inventor started forging steel plows for mule-drawn walking plows. The company started doing well after they acquired a motorized tractor producer called Waterloo Boy in 1918. This acquisition completely changed the Deere & company’s business model but this was necessary due to their competitors revolutionizing agriculture. At first the company’s change in strategy plummeted with only selling 79 tractors in total for the year of 1921. Deere then started to expand internationally by opening an assembly plant in Mexico and acquiring a German tractor manufacture and Spanish harvester manufacturer in 1956. In 2015, is when John Deere was the biggest agricultural equipment and machine manufacturer in the world with operations in more than 26 countries and in that same year Forbes had ranked them 70th of the World’s Most Valuable Brands.
Strategy ; Competitive Approach:
Deere ; Company aimed to support the farming of every owner of there equipment and wanted others to think “I wish I had a John Deere,” over their rivals. Farming being one of the most time-sensitive industries due to their restricted harvesting times and unpredictable seasons Deere had to have a strong strategy. It included producing the highest-quality, most reliable farming equipment all while offering their customers the best customer service. After their best fiscal year in 2013, the company’s strategic plan was to achieve $50 billion sales by 2018 fiscal year and 12% profit margins by 2015 fiscal year. Unfortunately, this was not the case when 2014 hit the company’s profit margin was less than 9% and they realized that the 2018 year sale goal would be unattainable. Another aspect of their strategy was to expand the business globally and enhance its complementary business. To do this Deere ; Company decided to focus on it critical business factors (CBFs) that consisted of better understanding their customers at a deeper level, offering a world-class distribution system and renewed international associates and partners. This company prides itself on integrity, quality, commitment and innovation, which all concedes with their overall goal to offer consumers farming products keeping all those traits in mind. Through the examination of their business divisions, dealership collaboration, product innovation, corporate responsibility, manufacturing operations and their rivals the strategy and competitive approach will be more defined.
Deere and Company worked out of three primary business divisions in 2015: Agriculture and Turf Equipment, Construction and Forestry Equipment, and Financial Services/Power Systems/Global Parts/Intelligent Solutions Group. In their two heavy equipment divisions their strategy was to figure out their customers needs and ways to communicate their knowledge of products to the consumers. Deere focused majority of its product development initiatives on it’s largest division (agriculture and turf equipment).
Deere and company dedicate a majority of their success to their amazing relationships with their dealers all over the world. By having an effective distribution system and aftermarket support system their company was able to stay ahead of their rivals. In the years of 2011-2013, Deere increased the number of dealerships by 50 percent in the independent states while adding new distribution centers in South Africa and Argentina. In addition to those plans they also wanted to expand their distribution centers to areas like Brazil and India.
Production innovation was one of John Deere’s biggest challenges. Though the use of technology to Deere would better manage their company and be able to communicate and interact to end users better. With the introduction of the MyJohnDeere platform, which is a wireless data transmission system that allows Deere to collect data and use it for analysis for equipment performance and customer behavior. Also, Deere focused on manufacturing equipment add-ons to so that their products became more versatile.
With the introduction of nine advanced agricultural models Deere was about to give more depth to their product lines that helped with their overall goal of continued growth and profitability. Deere’s hybrid-electric construction equipment was the first of their kind and gave them a competitive edge over their competitors in the industry. Deere’s goal was to increase product efficiency with their increased product innovation tactics. While increasing their technology use they also focused on reducing their emissions and continuing to meet customer’s needs of power, reliability and fuel efficiency.
Since being the world’s leading manufacturer in forestry and agricultural equipment, Deere and company have many rivals. With a market share of 35.4 percent in 2013, which was also their best fiscal year it’s primary competitors includes CNH Industrial N.V., New Holland, AGCO Corporation, Massey Ferguson, and Caterpillar Inc.
Agricultural equipment manufacturers at the time knew that technology would be the new driving force for their companies. Also, the need for better customer service and longer useful life for their equipment is what they need to get to the top of their industry.
The major problem with Deere and company is that since their best fiscal year in 2013, they have had declining revenues and earnings since. Although, the demand for the industry had not gone down due to their product innovation, dealership collaboration, customer service, and all those stated above Deere and company still remained at the top. Deere introduced a lot of technological advanced products for the agricultural and construction industries that helped boost productivity.
Due to an increasing population and consequential global growth in the demand for grain products and grain-dependent foods