Comprehensive Business Analysis on Deere & Company
McKenzie R. Mayfield
Tarleton State University
Dr. Nathan Heller
October 31, 2015
Author Note
I attest that this document is an original creation submitted in accordance with the requirement for the Comprehensive Written Project (CWP) in Seminar in Business Strategy (GB-5388) during the Fall 2015 academic term.
Abstract
This document provides an in depth company analysis of Deere & Company (DE). In the first segment of the analysis, an overview of John Deere’s history, product and service offerings, corporate strategy, and a synopsis of the heavy equipment production industry will be evaluated. The second segment includes a financial overview and analysis of the three most recent
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However, emerging factors which include rapid technological innovations, greater global competition, an increase in government regulation, and unpredictable economic conditions may pose as a threat to Deere and Company’s future endeavors.
This paper thoroughly examines Deere & Company from multiple perspectives. First, a review of the company’s history, products and service offerings, corporate strategy, and a summary of the agricultural and construction equipment industry will be provided. Next, the Deere and Company’s current financial position will be examined. This includes reports of John Deere’s earnings, cash flows, assets and debt management, profit margins, and future projections. These financial statistics will then be compared to the primary competitors of John Deere in order to show the company’s financial viability. After the analysis is complete, a SWOT analysis (strengths, weaknesses, opportunities, and threats) will be conducted in order to identify key success factors and driving forces. Based on the analysis, strategic recommendations that Deere and Company should leverage in order to avoid potential threats and to maintain its position as an industry leader.
Company Analysis
History
After American blacksmith, John Deere, saw the inefficiencies cast-iron plows were in the thick Midwestern sod, he fashioned a polished steel plow in his Grand Detour, Illinois
In 1976, Deere & Company was among the world’s leaders of farm and industrial equipment. The majority of Deere’s success was attributed to the light crawler tractor market with over 50% market share. It was at that time Deere earned a reputation for manufacturing reliable small tractor equipment. Deere evolved into producing and manufacturing the larger industrial equipment in phases, beginning in small forestry operations. As farmers and smaller operators sought to diversify their businesses, Deere offered newly innovative attachments and crawlers, and was now seeking to integrate into the large tractor market in phase five. In this phase, Deere introduced the JD750 bulldozer, a heavy contracting
"It's the kind of company we are determined to become. Our goal is to build a business and an investment worthy of the quality products we make and the uncommonly dedicated people who make them." The growth of Deere & Company mirrors the growth of large-scale farming in the American Midwest but luckily, thanks to global expansion, the brand is not solely dependent on the declining US farming market. In the last ten years, Deere has built, acquired or formed joint ventures for on-site manufacturing in Germany, China, Brazil, India, South Africa, Finland, Sweden and Mexico. Meanwhile, Deere & Company hasn't abandoned its own community. The company contributed to the redevelopment of downtown Moline, Illinois, which had gone into a dilapidated period when manufacturers like Farmall, J.I. CASE, and Caterpiller went under or pulled out of the area in the recession of the 1980s, dealing a serious blow to the blue-collar work base of the Quad City area. Since the mid-90s, downtown Moline has begun a steady climb out of a decade of seediness and disrepair. With the help of Deere and its construction of the John Deere Commons and the John Deere Pavilion, which has an impressive display of antique farming equipment, an architectural and business renaissance of sorts has come to the downtown area along the river. One of the latest developments of Deere has been the creation
Caterpillar’s main industry of machinery has many barriers to entry which makes it difficult for new organisations to enter the market. It is a mature and highly competitive industry with few dominant competitors who have cemented their position over the decades. Furthermore, these corporations have sustained a competitive advantage over any new entrant that tries to enter into the industry.
Products. John Deere has a wide portfolio of products, with lawn equipment, farming machinery, and construction equipment, as well as consumer products targeting at the enhancing the brand image and social unity of the equipment users and their family. The consumer products include apparels, hats, and boots for men, women, and kids, and a wide range of toys for kids. It also includes household items, party items, school items, and accessories for the equipment and machinery. These are sold through its dealers, John Deere online store, and those of online dealers such as Rungreen.com. In addition, John Deere is widely exposed to the existing market through social networking sites such as Facebook and Twitter, and through educational videos and product demonstration videos on YouTube and blogs. The logo is green and yellow color, signifying agriculture and construction. Businesses buy the products for farming and construction, while families buy them to work their lawn. Consumer motive is functional with utilitarian need, though some consumers might buy the premium products for hedonic reason to satisfy their need for expression.
“Deere tried covering the moldboard and cutting a plowshare from salvaged steel. Steel surfaces tended to shed the thick soil and were burnished by the abrasive action of the soil.” (Publication: Encyclopedia of World Biography Document: John Deere) It was a success because soon afterwards his new steel plows were being used and farmers were coming to him for their needs again. The customers did not come to him fast, of course it took time for customers to come back and find about his steel plow. There was a problem that John could not find enough of steel, but it worked out when he negotiated with a couple of people and made over 1000 steel plows with the steel he
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.
Approximately 1,600 plows were made in the year of 1850 (John Deere). John Deere also started making many different tools to help improve the steel plow for farmers. With the changing of technology in the farming industry there is an abundance different tools to help farmers. “Since 1837, John Deere has delivered innovative products of superior quality built on a tradition of integrity,” says the John Deere
By the 19th century, American frontiersmen were moving west. The farmers experienced much heavier and stickier soils than they had been accustomed to in the east. The soil would stick to the moldboard and a man would have to stop and scrape it off every few steps. (Anderson) “A strong man using a modern spade still took an estimated ninety-six hours to till an acre of land” (Drache 2). The cast iron plows with a wooden moldboard had worked great in the light, sandy soils of New England, but something different was needed in the west. This is where John Deere had to step in.
This document and all of the materials contained within are strictly for study assignment purposes to fulfill MBA course BUSN 620 Strategic Management on August 01, 2011-September 25, 2011 requirements.
Deere & Company, together with its subsidiaries (John Deere), incorporated in 1958, operates in three business segments: agriculture and turf segment, construction and forestry segment, and credit segment. The agriculture and turf segment, created by combining the former agricultural equipment and commercial and consumer equipment segments, manufactures and distributes a range of farm and turf equipment, and related service parts. The construction and forestry segment manufactures, distributes to dealers and sells at retail a range of machines and service parts used in construction, earthmoving, material
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John Deere is an iconic one hundred and seventy-seven year old company and maker of agricultural machinery headquartered in Moline, Illinois. What started as a small business operation has sprung into a multibillion-dollar global operation. In 2013 alone, the company boasted sales of $37.80 billion. Founded in 1837 by a blacksmith, the company originally only built plows, and did not assemble their first tractor until they purchased a small tractor company, Waterloo Boy, in 1918. Now the green and yellow machinery is recognized around the world.
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