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John Deere & Company was established in the year 1837 by the legendary John Deere, by then a blacksmith (Broehl, 1984). He built an empire as a manufacturer of agricultural equipment with his invention of a newly designed-plow as stated on the company website (“History”, 2013). Deere Company is intensely focused on agricultural tools as reflected in their production of farm equipment and development of efficient farming logistics, strategies, and products. As a blacksmith, Deere was decided to make repairs in the same plows again and again to see the outcome. Through experienced he determined that the wood and cast-iron plow used in the eastern United States was not up to the task of breaking through the thick, dark soils of prairie lands. He, therefore, endeavored to experiment with new plow designs and was able to sell three plows by 1838. In the course of 1839, he had produced 10 of such plows and 40 more by 1840. By 1843, demand for Deer’s plows drastically increased which forced him to partner with Leonard Andrus to produce more plows. By 1846, their plow-production had risen dramatically. That year, the two manufactured an estimate of 1,000 plows. That marked the real foundation of John Deere Company (Broehl, 1984).
In 1847, Deere found a market gap in Grand Detour, Illinois, which provided a viable opportunity. He thus sold his interest in the partnership to Andrus and moved to Illinois. There, Deere began importing British steel, which successfully sped up his plow manufacturing. His company made 1,600 plows in 1850. Due to this promising growth, he began producing other tools to complement the line of plows. Deere’s next move was to contract with Pittsburgh manufacturers to develop comparable steel plates, thereby avoiding the troubles of overseas importation. Based on a careful analysis of John Deere Company’s financial position and marketing strategies, I find that the current state of the organization is stable though there is still room for improvement. Favorable opportunities exist to accelerate future growth through investment in new projects that will create substantial value for the organization. To make that realistic, John Deere must take chances to protect their brands’ reputation by addressing potential performance issues in the product line. Global operations also could provide another strategy for John Deere’s growth. Those include Opportunities in India, China, and Brazil which present some of the most attractive options for Deere’s increased production and sale (Broehl, 1984).
Apparently, the primary focus of this strategic plan is to continue to pursue the global strategy aggressively while maintaining transparency and focus on building healthy business relationships for John Deere. This company must make their presence, mission, and core values explicit in foreign markets. Achieving this can be through increasing net profit margin, reinforcing brand image, strengthening dealership presence overseas, and John Deere brand gets marked by quality, innovation, integrity, and commitment (Deere & Co, 2013). These attributes have gotten linked with the iconic green and yellow colors that John Deere & Co. has been associated with since it was founded. Loyalty for the brand is what the company stresses more than anything. Today, the company continues to earn the trust of farmers due to the manufacturing of high-quality and innovative products that add efficiency to farming methods. If the brand’s loyalty gets reinforced globally, its reputation will penetrate the whole world thereby driving a continued growth. Strategic planning will involve the clear statement of the company’s mission and vision.
Mission and Vision
A vision statement is a definition of what the business will do and why it will exist tomorrow as well as the defined it will accomplish by a set date. A Vision Statement regards the current position of the organization. It serves to point the direction in which the organization wishes to go. However, it does not pinpoint how the business is going to get there. A vision statement is a layout of the most important primary goals of a company (Deere & Co, 2013). John Deere does not currently have a vision statement. It might prove very beneficial if it constructs one. One way to make a company’s vision is by the use of the company’s cover story. In more than 15 years what John Deere and business partners would desire to witness as a cover story is how the company's vision should have appeared. John Deere is a global reaching company, and it continually tries to enter other countries it isn’t in already. That in mind, the vision statement should comprise of the following: one of the elements of the vision should be its global initiatives. Also, the company deals with agricultural, turf, forestry, and construction industries. That should also be included in its vision statement as well. As such, the vision statement could read as follows: our goal is to be the world’s leading producer and seller of agricultural and construction equipment. We will accomplish this by providing the best available variety of materials and exceeding customers services in a ways that would foster a healthy relationship with them locally and internationally.
A mission statement describes what the company is and why they exist (Deere & Co., 2013). In other words, it is a formally summarized description of the aims and values of a business. Unfortunately, John Deere currently has no deductible mission statement. However, the mission statement is very crucial to the success of a business. For one, it can give a business a framework to use in evaluating opportunities and deciding whether they fit the core business model and strategy. Secondly, a mission statement can help in defining the company and in establishing the company brand. Thirdly, it leads the employees to focus their efforts along the suggest ideas that fit with what the business endeavors to accomplish in common. It will, therefore, be beneficial for John Deere to have a mission statement. A good starting point in deducing a mission statement is finding out what matters most to the company. The company values should be included in the mission statement so that they are not forgotten or strayed. The following details would be necessary for starting the Company’s mission. John Deere works in the agricultural, turf, forestry, and construction equipment industries. Having the industries that John Deere works in will give further clarity to the statement and direction to the employees. Therefore, the new mission statement should be to uphold our founder’s core values integrity, quality, commitment, and innovation while providing people worldwide with quality agriculture, turf, forestry, and construction equipment.
1. The company has experienced firm growth since the recession
Having withstood the recession, John Deere has enjoyed sustained growth in revenue since the end of the recession period. Primarily, the revenue growth is attributed to the higher shipment volumes and pricing increases driven by rising demand.
2. The company has seen success in terms of increased popularity
Overseas exposure, measured by the percentage of its revenue generated from outside the United States. Key geographies that support John include Canada, Europe, Brazil, Russia, China, and India. The significant increase in demand from these areas has put the company in a good position to increase its distribution network and international presence (John Deere, 2015) .
3. John Deere enjoys leadership in the production of agricultural equipment, construction industry
This company is the world’s leader in the manufacturing of agricultural and forestry equipment currently holding 35.4% market share.
4. Diverse product portfolio and strong brand equity
The company maintains a reputable brand name and has high brand equity worldwide. John Deer has gained popularity for product durability; thus the products hold their value and do not depreciate quickly. The wide variety of products allows John Deere to stay competitive and flexible as the industry demand changes both domestic and global markets. The success the company has experienced in the U.S. is due in large part Strong brand equity and product portfolio and will contribute to success overseas.
5. High brand recognition
The company has achieved strong brand recognition and has become distinctively recognized across all of its operating markets. This brand recognition helps to gain new customers and increases the goodwill of the company. That also contributes to ease the transition and expansion into global markets.
1. Fluctuating cash flows from operations
Fluctuations negatively affect activity and research development capital and have the potential to hinder the company’s ability to allocate funds toward market exposure plans. Low market capital resulting from this fluctuation puts the company in a position to face hardships of attracting new customers in international markets. Acquiring fresh and potentially reliable customers can be up to three times more expensive than retaining them (John Deere, 2015).
2. Operating profit reduction of construction and forestry operations
The construction and forestry section experienced a significant reduction in operating profit of $378 million in 2013 compared to $476 Million in 2014. That was largely due to lower shipment volumes, unfavorable product mix and increases in production costs within this segment (Deere & Co., 2013).
3. Small European market sales
Europe markets account for approximately 20% of total sales for John Deere. The company has experienced a reduction in sales over the past five years in these areas. Based on this reduction, the 2013 first quarterly sales of the company’s outside of the U.S. was 16%.
1. High exports that are promising to increase
Based on the global economic factors, the demand for their products has been steadily increasing over the past five years. The company has recorded $11.8 billion dollars in exports between 2009 and 2014. Developing countries overseas continue grow, and the company expects this to widen the chance of more sales (Deere, 2013).
2. High global demand for food and bio fuels, along with rising productivity in emerging markets
As the world economy continues to recover, population and income growth in emerging markets will strengthen global food demand. This demand will raise agricultural prices, which will increase demand for agricultural equipment as a result (John Deere, 2015).
3. Growth in foreign and domestic competition has caused the industry to implement new technologies and techniques
That has brought the opportunity to cut manufacturing costs and improve labor and productivity. Labor productivity has also increased due to increased mechanical automation. This techno-adjustment has significantly reduced the amount of labor hours required per product. The industry profit margins have been found promising due to this within the five-year time span (John Deere, 2015).
1. Downstream demand due to the increase or corporatization and consolidation of farms over the past five years
Major companies in this industry are vertically integrating and expanding globally through merging, acquisitions, joint ventures and strategic alliances. That poses a threat
2. The durability of farm equipment is increasing, thus reducing the rate of replacement
Most farm machinery can live for 10-20 years if properly maintained without requiring new ones.
3. Falling crop prices have squeezed margins for agricultural producers
Farm incomes are projected to decline within the next five years. The corn prices that sustained the growth for farmers within the previous five years are not expected to have a significant growth. This reduction of margins for agricultural products might result to low income to reinvest in farm machinery.
4. Financial restrictions and import taxes of the Brazilian market
As there seems to be a great deal of potential regarding the demand for products in foreign markets, Brazil presents some complicated legal factors to consider. There are strong regulations that nearly double the price of imported equipment such as tractor and combines. That requires companies to manufacture a high percentage in Brazil (John Deere, 2015).
The areas I choose in my SWOT analysis that I find essential to this strategic plan include the strengths and opportunities.
Strengths are the capital advantages that a firm has over its competitors. Three areas of strength of John Deer Company include strong brand recognition, an excellent Customer Relationship Management (CRM) system and strong financial position. Brand recognition acts as one of the strengths that mark the company from all others. An example of this is the green color of tractors and plows that enables one to recognize the company’s items just from a glance. The Strong financial position enables the company to bail itself out anytime there is a recession while excellent customer relationships advance the company sales due to customer trust.
A business opportunity is a favorable occurrence that promotes the growth of the company mainly through higher sales. Three of the areas presenting John Deere’s opportunities include the following. First is the capability to budge quickly into fresh rising market. Due to consistent power in the market, John Deere has the chance to penetrate local and international markets. This opportunity will make the company thrive everywhere in the world. Another opportunity is the high export that promises to increase. This opportunity provides a non-revisable chance of increasing sales quantity. Thirdly, the company has collaborations and tie-ups with global companies that will make it easier to access capital if in critical need, mutual support as well as the opportunity to diversify markets. The advantage of this is that whenever the local markets are unfavorable, the company still enjoys sales outside through support of collaborators (Broehl, 1984).
To measure the success of the strategic plan, I would make us of outcomes or in terms of sales quantities. Outcome measures entail the consideration of the result of the company. I would therefore base my judgment of success on account of the sales made and the proposed targets or standards.
Broehl, W. G. (1984). John Deere's company: A history of Deere & Company and its times. New York, N.Y.: Doubleday.
Deere & Co.(n.). 2010 Analysis.
Sherry Roberts is the author of this paper. A senior editor at Melda Research in research paper writing service. If you need a similar paper you can place your order for a custom research paper from online research paper help services.
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