Question

This is for the case 19 Deere in Crafting Strategy & Policy 20 edition

Your answer has to be supported by factual information (show sources) and your analysis. Be clear, specific, and to the point. Assume your readers are the executives of this company Deere.

Please do not lecture about the concepts but rather discuss through analysis providing any internet or book sources

At the end of each question, summarize and provide conclusions

Please answer as many as you can but in with each question please go into full detail.

Thank you soo much!

1. How strong are the competitive forces confronting Deere in the global market for agricultural and construction equipment? Do a five-forces analysis and identify the key driving forces and key success factors to support your answer.

2. How have Deere’s business strategy choices strengthened or weakened its competitive position in the agricultural and construction equipment industry? Discuss how the company’s senior management has chosen to increase the horizontal or vertical scope of the firm.

Answer 1

1. The five force analysis is shown below:

Bargaining Power of Customers: For the most part, farmers who own Deere equipment are loyal to the brand and would only buy parts that fit the brand name. A unique difference in buying a Deere is that everything comes complementary by color and fit. Also during the Great Depression in 1932, when its revenues plunged to $8.7 million even though Deere & Company was losing money, the company’s management chose not to repossess farm equipment owned by farmers unable to make payments during the Depression—a decision that would solidify its bond with the farmers for generations. This can be seen in the fact that Deere & Company was the world’s leading manufacturer of agricultural and forestry equipment, with a market share of 35.4 percent in 2013.

Bargaining Power of Suppliers: Deere’s has manufacturing plants in the United States, located in seven states (Iowa, Illinois, North Dakota, Georgia, Louisiana, Missouri, and Wisconsin). Also, expansion plans called for new manufacturing locations in key markets that were to be completed in 2013 and ready in 2014 to support increased production. Deere’s international manufacturing operations reach over Mexico, India, Argentina, China, Canada, and Europe.

Industry Rivalry: Deere & Company primary competitors in the tractors and agricultural equipment industry were CNH Industrial N.V., the maker of Case and New Holland tractors and construction equipment; AGCO Corporation, the maker of Massey Ferguson and other brands; and Caterpillar, Inc. The competition is very intense. It has been seen that most of the manufacturers are focused on becoming market leaders in the sub-segments like Deere is in farming. There is no brand which truly stands out but every brand has a competitive advantage over its competitors.

Threat of Substitutes: This force is not strong enough in this heavy equipment industry. Because there is no substitute which can perform the job of Heavy equipment. And Man Power cannot be its substitute.

Government Regulations: The equipment needs to pass through stringent emission tests as well as they need to follow the health and safety regulation before being operational in the market.

The key success factors in this industry are:

• Strong brand name
• Continuous investment in the Research and Development
• Efficient Operation system of manufacturing

2. Deere & Company set a goal to achieve $50 billion in sales by 2018 and 12 percent profitmargin by 2014. These seem to be lofty goals for this organization. The key for Deere was to expand business globally and improve its complementary businesses. Deere also understood the importance of delivering value, understanding customers, and offering a world-class distribution center. Deere also sought to increase its customer base across the key regions (U.S., Canada, EU, Brazil, Russia, China, and India). The company was achieving this goal with little resistance as Deere was ranked number two in market share in its industry. The leaders at Deere realized they could improve the market share in North America as well. The choices the company has made has strengthened its competitive advantage. I think the company chose to increase the horizontal scope of the firm. The company is seeking to grow and is attempting to enhance its presence in newer markets