John Deere Project reportMGT406 – Dr. Daniel Simonet

Done by:

Muhammad Danish Azad - 44334Yashveen Aditya Hurry - 41373Sula Hashim Al Hashim -

42502Farah Abdul Hafeez - 36393

Executive SummaryThis report was commissioned to examine and analyze the trends and the competitive

environment of John Deere’s company. We conducted an industry analysis of the company in the

first part. Analysis included the relevant industry trends such as segmentation, cost and

technology aspects, competitors of the firm, and government and trade regulations. An industry

analysis shows how the firm matches itself to the industry and which factors made the industry

innovate in the past and in the present. John Deere offers products to industries such as

residential, agriculture, construction, landscaping & grounds care, golf & sports, forestry, and

engines & drivetrain. The mission and vision statement of the firm is clear and straightforward.

This approach alongside their experiences and the customer support system are the key resources

of the firm. John Deere should grow organically as this reduces the uncertainty. The major

sustainable competitive advantage of the firm is that it manufactures its own engines.

Part 1 - Industry AnalysisIndustry Analysis

John Deere operates in the heavy equipment and machinery segment, with global

construction, farming operations and sustainable logging on the rise for 2015, this segment is

growing at a healthy rate. The expected market for heavy machinery in 2015 stands to be $150

billion, manufacturers are continuously innovating to produce the most advanced machines to

grab a larger share of the market. John Deere’s main competitors include; New Holland,

Caterpillar, Case and JCB.

The heavy machinery industry has come a long way; the amount of technology that is put

into designing, production and operating such machines is vast, improvements have been

numerous, all in a bid to increase productivity. The market for heavy machinery is split into four

distinct groups, from Farming, to Construction, to Mining and consumer products. John Deere

puts more emphasis in its farming and consumer products than other manufacturers such as

Caterpillar or Case.

The farming market is expected to grow at 6% per annum as increased demand for food

and increase in world population. John Deere has a complete range of tractors to suit all farmers,

all with one goal, to increase the productivity of a farm. John Deere offers small, consumer grade

tractors to large acreage machinery. While other competitors offer similar sizes, with similar

pricing, only John Deere completely customizable for the client to suit his/her operations

specifically. Their machines are at the forefront of innovation, their ability to fit almost any

machine with customized farming software to track progress such as GPS tracking, or

tonnage/acre is a huge selling point, while improving running costs and making their machinery

more efficient and durable.

John Deere also has a large presence in consumer goods, known as their Turf division

such as Lawnmowers, small utility vehicles (side by side) and small tractors, which sets them

apart from its main competitors as almost no other competes in this segment. This allows John

Deere to tap into markets while holding a powerful brand name and reputation for tough, reliable

machinery.

The industry is changing to become more eco-friendly, and sustainable to meet with

numerous environmental regulations and consumer needs. John Deere engineers its products to

continuously meet these regulations by producing low emissions engines, adding renewable

materials in its build and disposing of large machinery sustainably once it has run its length. As

most trends are pointing towards automation, which reduces errors and increases productivity as

well as making their products safer, most competitors are following suit to meet these new

market expectations.

The market for heavy equipment stretches far and wide, from handheld hedge trimmers to

oversize mining equipment costing millions of dollars. John Deere is most active in farming and

consumer products, while it does have a presence in construction equipment, its product line is

not as vast as its competitors. The firm does not have any presence in very large machinery or

specialized equipment (marine engines, mining trucks). Only Caterpillar Inc, has such a presence

where it operates in almost all heavy equipment industries.

John Deere has faced increased challenges over the last decade, with more competent

products on the market offering almost the same level of technology as its own products, John

Deere has had to step up to make their products different from the rest. Manufacturers are

finding that creating newer, consumer products requires less investment and less time. New

Holland Construction now offers a range of light duty machinery to suit a number of customers.

Manufacturers are becoming more encompassed to design and build add-ons (Tillage, Seeding,

Rowers) for their products which have been previously built by a number of smaller firms, e.g.

John Deere produces a number of support products (snow ploughs, gritters) for municipalities

and government where before, no such products were offered and had to be sourced from other

specialized firms.

Porters Five Forces Model

Buyers - Buyers in the heavy equipment industry are generally made up of large scale

corporations, generally in the construction market. Farming corporations are also very large

customers and everyday consumers for the smaller, home-oriented products. Large corporations

tend to have plenty of bargaining power whereas small independent farms do not have so much

bargaining power although they can easily change to different brands. Governments are also big

customers, as they buy in bulk, hence have plenty of bargaining power and can work out much

better deals for their machinery.

Suppliers - Metals (Steel, Aluminium) are sourced from large foundries from Rio Tinto or

Alcan, Rubber for tires are sourced from established manufacturers such Michelin or

Bridgestone and are made exclusively for certain manufacturers. Plastics bought also from large

scale manufacturers, smaller components (seats, wipers) are outsourced. Most suppliers have

plenty of bargaining power as they are larger in size than most manufacturers. Only small

component suppliers have much less bargaining power as these products are not vital to the

production and can easily be sourced from other manufacturers.

Competitors - Competition is intense, manufactures from all over the world such Case, JCB,

Komatsu, CAT, all compete in the heavy equipment industry. It is to be noted that most

manufacturers tend to be market leaders in sub-segments of Heavy Equipment (John Deere -

Farming). Every brand has a distinct competitive advantage over its competitors, but no brand

truly stands out.

Substitutes - Heavy equipment has almost no substitutes, it is a very specialized market and

substitutes would consist of using man power as a substitute, but no other product exists to do to

the same job as heavy equipment.

Government regulations - on machinery does exist, all equipment must pass stringent

emissions tests, as well as a number of health and safety regulations before being able to operate.

No new entrants in Heavy Equipment, the development costs are much too high, and competition

is too fierce for another company. However, established brands such as Ford have recently

revived their heavy equipment sector by manufacturing tractors. Toyota also makes a number of

smaller heavy duty equipment such as forklifts.

The key success factors of the industry to making a dependable product is a strong brand

name, a very wide customer support unit that allows technicians from these firms to come to the

worksite and perform maintenance, as heavy duty equipment requires a lot of attention and care

to remain operational for long periods of time. Firms like John Deere have clients whose

operations are worth millions of dollars, such firms must be very flexible in their schedule to

rectify any problems that may occur in a very small time-frame.

Continuous investment in Research and Development leads to a more advanced, high-

tech, durable and cost efficient product. Firms such as CAT have invested heavily in oversize

heavy duty equipment designed for mining, and are now the market leaders in that sub-segment.

John Deere itself has invested heavily in its agricultural division, manufacturing top of the line,

state of the art technology that greatly reduces costs for the user. In the industry of heavy

equipment, having the most durable and high tech piece of equipment normally means more

sales.

Time reduction of operations, the less time it takes to fully build, support, design and

service such machinery, makes it more attractive to operators, as this reduces overall cost both in

short term and long term. Time reduction while maintaining efficient production, design lines

means the firm is becoming more efficient with its resources, thus can develop products better

and faster than it did.

Environmental Scan

Opportunities

In the industry environment that John Deere operates in three families of opportunities

seem to be most prevalent; favorable global trends, new customer segments, and technology

advancements (Deere and Co, 2014). Firstly, global trends comprise of population growth and

mass urbanization. Global population is expected to exceed 9.5 billion (~7b today) by 2050,

concentrated in Asia and Africa due to which agricultural output needs to be doubled by 2050 as

well. This growing trend provides opportunity to grow their agricultural division but to do so

also requires rate of productivity to grow beyond current rates considering the strained natural

resources (i.e. water and land). The need for higher rate of productivity is an opportunity to be

first movers into new more productive technological innovation, as they have done

previously as well.

The need technological innovation can also be applied to the trend of mass urbanization;

which states that by 2050 nearly 70% (50% today) of the world population will be urbanized.

This urbanization trend represents an opportunity for growth in their construction businesses

due increased infrastructure development. Additionally, global trends of urbanization and

population growth have created emerging middle classes in Latin America, China, India among

other developing economies; thus, creating opportunity for growth into new market segments

(Deere and Co, 2014)..

Threats

Some threats that John Deere is facing or may face in the future include a weakening

agricultural economy, changing environmental regulation and failure of critical international

ventures. Perhaps, due to the trend of mass urbanization company projections and forecasts for

2015 display lower sales and earnings because of the threat of falling demand for agricultural

equipment (Allen & ‘Deere and Company’, 2014). Secondly, John Deere’s primary revenues

rely on heavy equipment for the agricultural and construction industry. These heavy machines

are subject to pollution emission regulations by governmental regulatory authorities (e.g. U.S.

Environmental Protection Agency) which focus on “carbon monoxide, hydrocarbons, nitrogen

oxides, and particulate matter emissions (Deere and Company, 2015). A change in these

regulations invokes a threat of having to redesign existing products, loss of customers, ban on

existing technology etc.

Lastly, John Deere continuously committed to pursue global growth investments which

have the risk of failure. A significant example in the 2014 report states the company started two

new factories in Brazil and is pursuing a joint-venture with Hitachi. This country plays a critical

role in the goals for the Construction and Forestry division of John Deere thus making failure of

these ventures a major threat (Allen & ‘Deere and Company’, 2014).

Internal Scan

Key strengths

The key strengths of the company can be classified into a diversified product portfolio, strong

market/financial position, global presence and brand image as well as strength of supplier

network and after sales service. First and foremost, a key strength of the company is its

portfolio which is diversified into three categories but strengthens and sustains each other’s

existence. Global Growth Businesses (agriculture and construction) leverage global investments

and major growth, Complementary Businesses (turf and forestry) defend and grow share while

strengthening the channels for GGBs and lastly; Supporting Businesses (financial services,

power systems, parts, intelligent solutions) have proven to be reliable and profitable drivers of

equipment sales (Deere and Company, 2014). It is also important to note that their products have

a differentiated and innovative edge that adds a sustainable competitive advantage.

Secondly, the company is well-positioned in terms market and financial position and

holds a good global brand image in the 45 various countries it operates in. According to Forbes

(2015), John Deere holds the 70th place as the world most valuable brand. Moreover, despite

negative trends in the agriculture industry they recorded historically second-highest level of

profits in 2014 which puts them in a strong place to make further growth investments. John

Deere’s success can also strongly be attributed to its strong dealership network and after-sales

service (for e.g. as mentioned above; spare parts business backing up equipment sales) that holds

customer loyalty (Allen & ‘Deere and Company’, 2014).

Weaknesses

The key weaknesses to be considered for are reliance on the agricultural division, stunted growth

of forestry division and lack of brand awareness. The agriculture machinery division of the

company constitutes of the highest share of company’s revenues (Deere and Company, 2014).

The company has recorded a decline in the demand for agricultural machinery due to a weak

agricultural economy which states a weakness of the company for their reliance on this sector.

Furthermore, the forestry division constitutes a major share of the costs but still constitutes as a

Complementary Business that does not experience much growth and can be considered a weak

point. Last but not the least, although John Deere is recognized by Forbes as a valuable brand it

is not quite as widely known as some of their competitors such as; Caterpillar. This lack of brand

awareness can constitute a company weakness.

Part 2 – Company Strategy Analysis

Mission Statement/Strategic intent/VisionDeere & Company was established in 1837 by John Deere who is a "blacksmith and

inventor." The company has very strong core values, which are standards that they continually

work towards. These values are integrity, quality, commitment and innovation which are all

clearly seen through the products and services that they produce. Deere & Co. are manufacturers

and distributors of a complete line of different equipment targeted to "farmers and ranchers,

landowners, builders, and loggers." The products offered serve a wide range of industries

including residential, agriculture, construction, landscaping & grounds care, golf & sports,

forestry, and engines & drivetrain.

Machines offered under the residential category help serve individuals with gardens and

backyards of different sizes. These equipment includes a series of tractors and gator utility

vehicles. Furthermore, the company also innovated 4-wheel steering, which is great for yard

work as this makes the process more efficient as well as more convenient for their customers. In

terms of agriculture, the company allows the customers to choose from a wide variety of

equipment to be used in cultivating the land such as those used in harvesting materials, planting

& seeding, tillage and many more. These products are all necessary equipment for farming as

they help aid the process.

Deere & Co. also produces construction equipment’s such as crawler dozers, crawler

loaders, excavators, etc. These products are meant to target mainly construction companies, as

they are the ones who are responsible for constructing and building structures. As for

landscaping professionals there are a full list of products to choose from, all aimed at ground

care, installation and design. A few examples of these would be their snow removal equipment’s,

lawn mowers and track loaders. They also offer different attachments that can be used on

specific machines, this way their customers do not have to spend more money in purchasing

another machine when they can use the same machine with different attachments for different

purposes. Similarly, Deere & Co. produces products that take care of the maintenance of golf

courses and other sports courses as well, that are usually large in size. The latest product that

they have in the market is the “A Model Fairway Mowers” which is meant for the golf industry.

It offers superior quality cuts, more control and, ease in operation. Another industry that Deere &

Co. is in is the Forestry industry, allowing their customers, which in this case would be forest

owners to maintain their forest and hence, choose from many products such as the feller

bunchers and the skidders. The company also produces engines like industrial diesel engines and

generator drive engines as well as drivetrain components, which includes the pump, drives,

transmissions, axels and planetary drives. Their most popular products are those equipment’s that

have already been used, also known as second hand, this way construction companies can reduce

their costs by paying a lower price for a piece of machinery instead of paying a full price of one

that is brand new.

Apart from the tangible items that offered by Deere & Co., they also offer Financial

services to contractors that are looking for a little financial help purchasing their machines in

certain industries such as agriculture. The number one challenge however that the company faces

when it comes to financing is credit history as that is the number one most important aspect. If

the customer has a good history in terms of relationship with their lenders, commitment and

follow through then they are most likely to receive the company’s financial services.

Deere & Company’s mission is to continually work towards integrity, quality, commitment and

innovation. Also;

“For those who cultivate and harvest the land. For those who transform and enrich the

land. For those who build upon the land. John Deere is committed to your success.

This commitment extends globally with a focus on six key areas – the United States and

Canada, Europe, Brazil, Russia, India, and China. It's in these areas where at least 75%

of the world's future growth will occur. And because of our past, our passion, and our

purpose for helping you become more profitable and productive, John Deere is uniquely

positioned to be the equipment supplier of choice.”

The mission statements of the Deere & Co. stated above is clear and one can easily tell

what business they are in as they mention that they are the equipment supplier of choice. Also it

is easy to tell what type of equipment’s they are selling since they mention that they target those

who build upon the land. Their core values and purpose are also clear in that they want to help

people that are linked to the land but in the right ways.

Their vision is also to relentlessly improve their products and business efficiency in order

to achieve exceptional operating performance. Also by linking the goals of the employees, units

and division to the business’s objectives, it will help “harvest the power of aligned high-

performance teamwork”. The vision of the company is clear and simple, as they want to attain

excellent operating performance. This is directly linked to the company’s goals and objectives.

Additionally, they are also working towards harvesting high-performance teamwork within their

company.

Strategy

Generic Strategy: Differentiation

Two of the core values of John Deere are innovation and high quality which clearly states

the value that they aim to provide to their customers. The company aims to “design, build, and

service the engine and other vehicle systems to maximize performance, convenience, fuel

economy, and overall value” (Deere and Company, 2015). In the effort to provide the highest

quality products with an innovative edge John Deere can be said to be following a differentiation

strategy. Due to the vast offerings in their product portfolio this differentiation could also range

from upward (sophistication) to downward (simplification) differentiation. While some products

can be offered off the shelf, a lot of the heavy machinery the company provides is often designed

to the customer’s individual needs and preferences; making the product offering either simplified

or sophisticated.

The value added along the chain for the product to be differentiated can be attributed to

their Critical Success Factors and Foundational Success Factors which make up the company’s

strategy. The Critical Success Factors call for ‘deep customer understanding (DCU)’ of their

needs and translating those needs into products that hold ‘deep customer value (DCV)’. Adding

to that, a ‘World-Class Distribution’ system is aimed to creating a sustainable, professional and

profitable network of dealers that extended the value provided by being aligned to the customer.

Throughout, that chain ‘Developing Extraordinary Global Talent’ ensures highest levels of

performance and value to the customer. Alongside, the Critical Success Factors, John Deere’s

Foundational Success Factors also guide that differentiation that is their core of their success

since the company was founded. These factors include ‘Exceptional Operational Performance’,

‘Disciplined Shareholder Value-Added (SVA) Growth’; providing superior shareholder value,

and ‘Aligned High-Performance Teamwork’ that is aligned with the company strategy.

Differentiation: key resources and capabilities

When considering these key resources and capabilities we consider what the company

needs or has to sustain its strategy. Since the strategy of John Deere is providing highest quality

and differentiated products to their consumers, the key resources can be considered what the

company calls ‘John Deere Advantages’. The crux of these advantages comes from the fact that

John Deere Power Systems (a division of John Deere) manufactures its own engines specialized

for off-highway applications made specially to withstand high vibration, temperatures, and duty

cycles. From being one of the few manufacturers to design these specialized engines to the

having the experience to integrate them into all their products divisions gives them a unique

experience curve that enhances performance, cost control, efficiency and becomes their major

sustainable competitive advantage (Deere and Company, 2015).

The innovations John Deere has made through making their own specialized

engines have supported their differentiation strategy by putting on a sustainable competitive

edge. John Deere were the first to manufacture “a cooled EGR system with a VGT for off-

highway use” which is an exhaust system that has been utilized extensively over the years in the

car industry. Additionally, they managed to design their engines with no urea, which is a liquid

that reduces nitrous oxide emissions. This reduces a significant amount of components that need

to be added to their machinery. Their John Deere PowerTech engines come with

GreenEfficiency technology which significantly optimizes fuel efficiency, “cold-weather

starting, transient response time, extra power, peak torque, and low-speed torque”. Apart from

resources and experience capabilities in manufacturing they have 1800 service locations

throughout EU that provide spare parts, highly specialized assistance and advice to customers to

supplement their evolving engines. All in all, these manufacturing specializations alongside their

experience in integrating them and superior customer support systems are key resources and

capabilities that contribute to a sustainable competitive advantage (Deere and Company, 2015).

Competitive position

John Deere is a strong brand in North America, however on the world market, John Deere is a

rather small manufacturer. While CAT is the world leader due its very diverse product range,

John Deere excels in agriculture more as opposed to CAT in construction. For the year ending

2014, John Deere held 4.1% (Statista, 2014) of the global market, this still represents an increase

but it is rather marginal. The biggest threat are the Asian manufacturers (Hyundai, Sany) as they

are cheaper. However in North American markets, John Deere is the market leader when coming

to agricultural products, controlling 22.6% of the market as shown below. While this number

decreased, due to cheaper Asian competitors, it is still a very strong figure.

John Deere is one of few companies to offer unique configurations to their products, this kind of

customization is not cheap to implement, as it takes more time, slows down production line.

However using innovative methods so as not to slow down production, such as batch production

for specific configurations at a time, they have managed to keep their costs to a minimum and are

still very competitively priced on the market. John Deere’s differentiation does cost money,

despite being competitively priced, it does not have economies of scale as low as larger

manufactures such as CAT or Komatsu.

The reason for this is that John Deere makes everything in house in one location in the

United States. Major assembly is located in the Midwest, in Des Moines, Iowa or Waterloo for

most of the product line while smaller products are built in Moline, Illinois. All John Deere

products are built in the United States, except smaller products such mowers, which are built in

Mexico and Canada. This central location does reduce cost as everything is within reach of

another production floor, however, it means that only this location is responsible for every large

piece of heavy duty equipment. As compared to CAT, Liebherr, or Komatsu, they have factories

all around the world to supply certain products which are cheaper to build abroad.

For John Deere to truly be a threat to bigger corporations, expanding production into

other countries will over time decrease their costs and increase market share. Clients in this

segment tend to stick to one manufacturer for long periods due to loyalty programs that help

reduce the sticker price and maintenance. For John Deere, outside Forestry and Agriculture, they

do not hold such clients, but have the potential to do so.

Challenges to the firm

It is very hard for a company to live up to its legacy especially when we consider a

company like John Deere that is known to have existed for more than 175 years producing

quality goods through innovation (Prahalad, 2004). The heritage of achievement of John Deere

Company is deeply rooted in each of its employees, in every goods and service it offers and in

customers who uses their products and enriches themselves. John Deere is a company that has

established commitment in the market, which forms a distinction from other companies; hence

driving it towards high-performance levels. However, every company comes across a number of

challenges in its journey towards performance excellence, and John Deere Company is no

exception as it has had tackle a number tests that have proved to be significant in the long run.

John Deere being the premier designer, producer and distributor of quality farm and

forest machines has been struggling with its logistics system which incorporated a pool on

unnecessary procedures, and that has led to acute delays in their invoice, complaint from

majority of their customers and errors in their payments and accounts. These problems have had

significant effects and have not only affected the company but also its clients and all the matters

that link the two parties. Tackling such issues have proved to be challenging to the firm despite

the solutions being deemed significant for the foreseeable future of the company. For instance, if

a system in the company broke down because of a part that has malfunctioned, a call had to be

made to the head office that in turn would make the order to the relevant suppliers. This

challenge is of great significance to the company considering that its solution will go a long way

into solving the problem for a number of decades. The solution to the problem is deemed

significant as it will cater for the future system development of the company and will

acknowledge the projects issues of clients.

As a proposed solution to the challenge, the company can adopt a digital pen, which is

revolutionary special equipment that allows for easy and quick transformation of drawings and

notes written by free hand into a digital format. The device is the most suitable to the firm as it

can be used in any organization or business where employees use their free hand to take notes,

create drawings and complete forms. Moreover, a digital pen can also be customized in various

ways so that it can cater for each distinct application or a specific job.

The second challenge that is looming for John Deere Company is the projected decline in

sales in all the production sectors that is expected to result in reduction in income to nearly half

the maximum sales experienced in the last few years. For instance, the expected decline in sales

at one of its branches located in Moline is 17 percent (Camillus, 2008). The total earnings at that

exact company are expected to be approximately forty-three percent. This challenge has had

adverse significance to the firm as a number of workers have had to be laid off so that the

company can be able to run smoothly. This challenge shows that the agricultural sector is taking

a “breather” after it had a healthy economy filled with exceptional performance and profitability.

The projection of such challenge will assist the firm to plan so that it can meet its demand during

this period and sustain itself in the existing highly competitive market.

The other challenge that seems to be affecting John Deere Company in a great way is

their specialization on markets located in North America and not being in a position to transfer

the specialization to regions like Asia and Brazil. This challenge has been of significance to the

firm as it has been challenged to master the global industry, familiarize itself with some of these

new customers and their needs, and cater for the regulations governing local companies.

Seasonality is also the other big challenge for the company as the company has found it

hard to adjust its capacity in relation to the varying seasons (Quelch & Hoff, 1993). The firm,

hence, has to seek the services of willing workforce and suppliers who will ensure that the

company registers high overhead costs. This challenge is of great significance to the firm as it

will be able to control the sales it expects during low-income seasons. A seasonal market may

lead to extra expenses that may arise because of over production of farm machinery that may end

up depreciating.

John Deere firm has been in existence for long time, and continues to face challenges mostly

because of the technological advances. It is important that the company view these challenges as

of significance to the company in order to find the best remedy that will last for a long time.

Problems in inventory are due to technology advances, and which can only be solved fully if its

significance is established. Only companies that can counter their challenges are bound to

succeed in this competitive market.

Success and near future prospects

John Deere is deemed the market leader when coming to consumer and agricultural

segments, they have always been at the forefront, continuously innovating their product line in a

bid to make them better than their competitors. However, John Deere has lagged behind when

coming to large construction and off-highway machinery, their product range is not as diverse

nor the best in that market where competitors like CAT or JCB have dominated (Mining,

Construction). Despite having the resources and the infrastructure to be able to develop further

this segment, John Deere has opted to stick to its agriculture division.

In terms of broad success, John Deere is very successful, for the year ending 2014, it

reported profits of $3.5 billion and is currently listed as one of the most profitable and best

workplaces globally. John Deere has a very strong brand name in the Heavy Equipment market,

and its recent venture in leisure and outdoors products (golf, side by side) has boosted sales

healthily. John Deere has also invested heavily in its Forestry division, now providing state of

the art machinery for sustainable logging around the world. This is a promising sector as before,

such operations were not sustainable and forests were being culled to meet demand. John Deere

is one of the few manufacturers that offer such products for this purpose.

The forecast for the coming 5 years is positive, as markets are becoming more stable and

demand for construction, agriculture and consumer goods are increasing, John Deere is in a good

position to further capitalize on its advantages. With agriculture becoming more and more

automated and high tech, John Deere has all the necessary tools to cement its place in the market.

Identified growth optionsDeere & Co. is currently looking into expanding into new markets such as the China,

Brazil, Russia, India, America, Canada, and Europe. The company should try and grow

organically instead of going through cooperative strategy and alliances as this reduces

uncertainty. The have such strong core values such as integrity, quality, commitment and

innovation, and they may find difficulty in trying to apply it to other companies other than that of

their own because these usually takes time to build. Also, in thermos of alliances the partners

may not get along and this could dramatically affect the outcome of both companies. It is always

easier to grow from within the company or organically because the company is already used to

how things are being done and knows their own business inside out and also knows what is good

for itself. With organic growth they would also be able to take advantage of the growth

opportunities arising in the market fast unlike other growth options.

RecommendationsJohn Deere has excelled in agriculture, its products and innovations have made it the leader, in

this field. However John Deere can also venture into developing its power systems and engines

for other off-highway applications such as marine and diesel electric powertrains.

Diesel electric powertrains are engines mated to electric generators that provide power to a

number of systems or machinery, such as trains or mining machinery. While this would require

John Deere to design a whole new system, it can become a very lucrative division, especially in

emerging countries where electrified rail is not complete. Developing electric power systems is

not cheap, but it does handle two important aspects that can help John Deere in the future. Firstly

as consumers are becoming eco-friendly and more environmentally conscious, it is not too far

before we see hybrid heavy duty equipment in a bid to reduce emissions. Thus developing

electric powertrains in the near future can potentially save John Deere more capital in the long

term. Secondly, John Deere can tap into a market where railway usage is becoming more

frequent due to its simplicity and direct networks. Emerging markets are in need to replace their

power cars with newer, more advanced diesel-electric units due to the lack of electrification, a

market John Deere can surely succeed if they design a very competitive product. Competitors

like CAT are such firms that have already ventured and succeeded, CAT powertrains are

currently used in Montreal, Canada by the Agence Metropolitaine de Transport, which is a

suburban rail operator.

SWOT model recommendations

Although the company recognizes opportunities in the future for the agricultural industry

due to higher populations and construction industry due to mass urbanization. Yet, it has also

recorded a decline in sales in the agricultural division due to a weak agricultural economy. A

recommendation based on integrating the SWOT analysis could be a more geographical

approach to the issue. While mass urbanization may be trend in the more developed/developing

countries, the growing need for agriculture may be fulfilled by Third World countries. Given

that, it would be advisable for Deere and Company to relocate (not completely remove) and

focus their Agricultural Division and Construction Divisions (both of which are primary

contributors of revenues) into the geographic regions that would most demand it. This is similar

to the company focusing the Forestry division efforts in Brazil (Amazon forest). Some other

recommendations could be to pursue brand reinforcement strategies to create a higher brand

awareness.

References

Allen, S. R., Deere and Company. (2014). Chairman's message. Retrieved from Deere and

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