Question

In: Accounting

Compare and contrast Deere and company and Caterpillar Inc's global strategic plan based on the information...

Compare and contrast Deere and company and Caterpillar Inc's global strategic plan based on the information in the annual report from two years ago.

And Propose which company would be better to invest in, based on the above comparisons.

Solutions

Expert Solution

Global strategic plan of Deere, as per its annual report of two years ago, is based on innovation and evolution. Using advanced technology the company is developing next generation of tractors across the world that will be aligned with the work of its customers and that will prove highly meaningful to their lives. To insulate the company from any economic downturns it has been keeping a tight rein in its costs and even having a lean and asset light balance sheet. These steps have enabled Deere to become a balanced company as well as a broader company powering it to earn profits even when the economic conditions are not favorable. The key pillar of the company’s global strategic plan has been developing a wide range of revenue sources and developing a robust as well as durable business model. The company has widened its product line up across the globe and what this has done is that it has enabled the company to broaden its operations and mitigate its economic risks. The company is supporting its strategy through meaningful acquisitions of other companies in different parts of the world. These acquisitions are being done with the objective of adding more value to the company’s business model and operations.

Caterpillar, on the other hand, is focusing on profitable growth that will be supported by operational excellence, expanded offerings of products and services. The company is seeking operational excellence by making use of a data driven approach. This approach will help the company to identify and then prioritize key business opportunities. Going forward the strategy of the company is to focus on its core areas and the company will gradually dilute its operations in its non-core areas. The company is realigning its working model with its business partners so as to create more value across the entire supply chain. The company also will focus on de-centralizing its structure so as to be able to increase the speed of decision making and to give its managers more authority and accountability.

Based on the above comparisons I think that Caterpillar will be a better company to invest in. This is because Caterpillar is focusing on increasing its competitive advantage by focusing on its core strengths and core business areas. It is letting go of non-core businesses and this is being done to add more value across the board. On the other hand Deere is focusing on developing a wide range of revenue source and this may backfire as presence in multiple business segments can cause the company to lose focus. It may also create confusion in the mind of the customers and this will be value dilutive in the long run.


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