Question

According to Case 19- Deere & Company in 2014: Its International Strategy in the Agricultural, Construction, and Forestry Equipment Industry, how have the Deere and Company’s business strategy choices strengthened or weakened its competitive position in the agricultural and construction equipment industry? Is Deere and Company’s international strategy best characterized as a multi-country, global or hybrid? Please explain.

Answer 1

The company's primary challenge in 2014 was how to best defend against the competitive pressures stemming from its chief rivals in the agricultural and construction equipment industries who were also preparing for rapidly expanding industry growth.

Deere and Company's Strategy in 2014 :

Deere & Company's farminh equipment product lines were aimed at supporting the farming of every owner of Deere equipment and compelling the thought of "should'vshould've got a John Deere" among those who farmed with rival equipment. Farming was arguably the most time sensitive industry since harvesting windows could be limited to a matter of a few days. In addition, farming seasons were limited to specific months when weather was favourable to various types of crops.

Deere's strategy of producing the highest quality, most reliable farm equipment and offering farmers the highest level of customer service resulted in fiscal 2013 being the company's best financial year ever.

Deere & Company's strategic intent was to achieve $50 billion in sales by fiscal 2018 and 12 percent profit margins by fiscal 2014. Deere's strategy was keyed to expanding its business globally and enhacing its complementary businesses while supporting the overall business. In doing so, the company believed its critical business factors (CBFs) consisted of better understanding consumers at a root level, delivering value, offering a world class distribution system, and grooming and hiring extraordinary international associates. The CBFs were predicated on building from the foundation already in place, consisting of Deere's exceptional business performance, optimal shareholder value added growth and aligned high performing team oriented associates. The company evaluates the health and performance of its operations on an ongoing basis and as necessary, made appropriate adjustments to further improve customer value.

The company identified challenges moving forward. Specifically, Deere foresaw capturing more customers across six identified key regions ( United States/Canada, European Union, Brazil, Russia, China and India), with a focus on meeting each country's local farming and agricultural equipment needs while leveraging global economies of scale. The company was strategizing forward progress without encountering any headwind. The comapny planned to increase its market share in developed markets. At the time, Dheere was number two in market share in North America, a ranking it hoped to strengthen and increase. Perhaps a continuos focus on technology and increased customer services, coupled with competitive pricing would help the company increase its market share.

Deere's strategy in each of its two heavy equipment divisions was to learn more about its customers local needs and translate the knowledge into products and services that delievered superior customer value. The agriculture and Turf division was Deere's largest division and was the focus of its new product development activities. The Construction and Forestry division remained profitable in spite of a slowing demand for construction machines. Deere's Financial Services division also experienced financial success. In 2013, the division achieved net income of $565 billion. The loan and lease portfolio of Deere & Company grew by approximately $5 billion.

Strategies:

1. John deere is implemeting a strategy that will increase its international presence in an effort to increase global sales. Dheere has identified several key factors to rationalize the focus on global markets. Deere is focussing its growth in six global regions:

A. North America, Europe, Brazil, Russia, India and China.

B. John Deere sees opportunities within these regions due to a global increase in population and trending economic growth.

2. All individual employee, unit, and divisional goals are integrated with the company's overall business business goals which align them with a culture of temwork as opposite to individualism.

3. John deere is targeting four additional strategies to meet the demanda of stakeholders, specifically to accomplish their sustainable SVA growth initiative.

The 4 initiatives that Deere will focus on are : Deep Customer Understanding, Delievering Customer value, world class distribution system and Growing Extraordinary Global Talent.