Deere & Company
MGT-4329
Dr. William Reisel
Current Situation
Introduction
John Deere is the brand name of Deere and Company, which is an American corporation
that manufactures agricultural, construction, and forestry machinery. The company also
manufactures diesel engines, drivetrains used in heavy equipment, and lawn care equipment. The
company mission “Since 1837, John Deere Company has seen a great many changes in its
business, its products, and its services. Change always comes with opportunity, and Deere has
always been ready and willing to embrace it. Yet, through it all, John Deere is still dedicated to
those who are linked to the land – farmers and ranchers, landowners, builders. And Deere has
never outgrown, nor forgotten, its founder’s original core values: integrity, quality, commitment
and innovation. Those values determine the way we work, the quality we offer, and the
unsurpassed treatment you get as a customer, investor, and employee.”
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Strategies and Objectives
The company has certain strategies and objectives in order to complete their mission.
“The proposed strategy for John Deere and Company is related diversification strategy, this
strategy involves diversification of products and services to improve the competition and also
enhance market share”
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We can see Deere and Company main strategy is related diversification
in order to be competitive in the market. Some objectives of the company include, “By being the
agricultural, turf, forestry, and construction equipment partner of choice throughout the world,
we can reach our goals of sustainable SVA (Shareholder Added Value). By relentlessly
improving our products and our business efficiencies, we’ll achieve exceptional operating
performance. And, by linking employee, unit, and divisional goals to John Deere’s overall
business objectives, we’ll be able to harvest the power of aligned high-performance teamwork.”
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The main objective of Deere and Company is to be the number one choice in the market
throughout the world. John Deere does this by having certain policies in place to achieve their
overall mission. These policies include all employee and partners to be committed to integrity,
quality, commitment, and innovation.
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These policies are what give the people the direction to be
the best in the industry.
Top Management
The board of directors at Deere are an active board and the main thing the board
contributes is “Generating prosperity, enabling human flourishing, and contributing to a higher
quality of life around the world.”
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Deere’s key directors are Samuel R. Allen; CEO, Vance D.
Coffman; Retired Chairman of Lockheed Martin Corporation, Alan C. Heuberger; Senior
Manager BMGI, Charles O. Holliday Jr; Chairman Royal Dutch Shell, and Dipak C. Jain; Co-
President/Global Advisor China Europe International Business School.
Deere’s top management is very skilled. Their CEO is Samuel R. Allen. Allen was
named President and Chief Executive Officer in August 2009. He was appointed President and
Chief Operating Officer of the company and a member of the Deere & Company Board of
Directors in June 2009. Previously, he served as President, Worldwide Construction & Forestry
Division and was responsible for the global operations of John Deere Power Systems. (5) Then
there is Max A. Guinn who is the President of Construction. “Since joining the company in
1980, Guinn has held positions of increasing responsibility in quality services, supply
management, and manufacturing in the agricultural, construction, and forestry businesses. He
was named General Manager, John Deere Seeding Group in 1995 and General Manager,
John Deere Dubuque Works in 1996.” (5). Next there is Cory J. Reed President of Financial
Services. “Cory J. Reed is President, John Deere Financial, a position he was appointed to in
November 2016. In this role, he supports Deere’s equipment businesses by ensuring that
customers in all key growth geographies have access to competitive and convenient financing”5.
James M. Field President of Agriculture and Turf. “James M. Field is President,
Agriculture & Turf Division – Americas, Australia, and Global Harvesting & Turf Platforms, a
position he has held since September 2012. Field is responsible for the customer-focused sales
and marketing regions of the United States, Canada, Australia, and New Zealand, the Latin
American Region.”5 .These top managers are very active in their respected fields. We can see
from the quote “Designing the organization is simply implementing the new vision and
strategies. Successful leaders are actively involved in the business processes. John Deere
implements teams, systems, and other processes that will support their direction and vision.
They try to make sure that the business and corporate levels are consistent in their views and
directions.”
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.The type of culture between the top and lower management at Deere and Company
is a nurturing culture but good work is expected of the company.
Social Responsibility
Deere and Company is committed to being socially responsible. We see from the
reference “We support higher living standards and a sustainable environment for people
everywhere through our commitment to those linked to the land.”
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.Deere provides funds to
combat world hunger and assists in community development. Also Deere and Company has a
program called John Deer Inspire which provides education to help the less fortunate.
Employees at Deere and Company volunteer their time to achieve higher and sustainable living
standards around the world.
Deere’s Stock Performance
John Deere’s stock price in 2015 was $79.42, $100.95 in 2016, and in 2017 the stock
price was $150.25.
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John Deere’s market cap has increased significantly in the last three years.
Their market cap in 2015 was only $23 billion, increasing to $32 billion in 2016, and then
increasing again in 2017 to $51 billion.
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Return on investment has also improved since 2015. In
2015 the return on investment was 3.28%, 2.63% in 2016, and 3.58% in 2017
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. Another reason
Deere stock is attractive is because their earnings per share has been increasing greatly in the
past three years. In 2015 the stocks EPS was 1.08, 4.81 in 2016, and 6.68 in 2017
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.
Societal Environment
Economic
Deere has shown significant growth in net sales, revenue, and operating profit. In 2016,
the John Deere’s company net sales and revenue were about $26.6 billion. 2016 was the same
year that the fortune global 500 company had a net income of just over $1.5 Billion
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.
Additionally, by 2018, Deere hopes to achieve a record revenue of $50 Billion. North America is
Deere’s biggest market and it makes up more than 60% of the company’s annual sales. However,
Deere hopes to increase its international presence by opening factories in China, Brazil, and
Russia
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.
Deere expects the demand for farm equipment, especially in North America to reduce
because of the continual lingering of farm income below the average. In 2016 due to the same
reasons mentioned above, the company’s industry sales declined by 15% to 20%. However, the
company is relying on South America, especially Brazil, to be at the forefront of its growth.
Currency depreciation in Brazil and Argentina has enabled farmers in these two countries to
realize a higher gain; therefore, the company has seen higher tractor sales in these regions
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.
Technological
The John Deere Company has not remained behind on the current digital craze. In 2015,
John Deere introduced the TruSet technology, and since 2018, this technology has been
incorporated in newer machinery models as well as older John Deere models.
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The TruSet
technology avails pressure, depth, and mapping control to `farmers, hence providing them with
an on the go control of most tillage functions. The John Deere TruSet technology is a
technological breakthrough in farm equipment and offers the company a competitive advantage
over its rivals
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.
Environmental
The John Deere Company takes its environmental responsibility seriously and this guides
product development. The company is continually on the lookout to design products that have a
reduced energy and water consumption
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. For instance, the John Deere, 2017 L-Series Skidders
is designed to deliver one of the best horsepower, stability, and durability in the market, as well
as have a significantly reduced environmental footprint. The L-Series skidders employ the
Continuously Variable Transmission (CVT) technology that enables its engines to run at a
synchronous speed hence reducing fuel consumption. Moreover, the company’s new F44OR
fixed chamber baler is designed to deliver up to 24% better fuel efficiency
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.
Legal- Political
John Deere aims to expand its global presence, and the greatest problem it faces is the
political uncertainty in some regions in the wider world. John Deere is building three factories in
China, and as most people know, the Chinese government seems to favor domestic firms over
international ones
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. For example, for John Deer to sell tractors in China, it had first get s spot on
the Government’s subsidies list, and it took over a year to get onto that list. Moreover, the
Chinese government somehow finds a way to regulate the setting up and locations of new
businesses.
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However, John Deere states that the Chinese government has been supportive of
the company because it understands the company hopes to help its farmers. The company has
also faced some political difficulties in Russia. The current Russian political climate is not
considered transparent; Russia has been ranked 186 out of 196 countries with the greatest
political risk in business. Currently, John Deere in under investigations for bribing Russian
officials hence breaking the Foreign Corrupt Practices Act (FCPA)
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.
Social-Demographic
The Deere Company hopes to capitalize on the growing trends where populations shift
from rural to urban areas, especially in emerging economies. The shift mentioned above will spur
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