DEER & CO. 7
Strengths,Weaknesses, Opportunities, and Threats (SWOT) analysis, is a usefultool in helping to position an organization to be competitive in amarket. Strengths and weaknesses are often internal to anorganization, while opportunities and threats generally relates toexternal factors. The following is a SWOT analysis for Deere &Co., a company in Agricultural, Construction, and Forestry EquipmentIndustry.
The scope of operation. Deere & Co. operates in the global market place with heavy presence in countries like China, Brazil, Russia, India, and others across the globe. In the recent past, 2013, international markets has accounted for more than 35% of the company’s revenue and are likely to make up greater percentages as the living standards of these emerging markets improve. Domestic manufacturing operation is also well established in the United States. Well established domestic and international operations will increase products supply in the market, and hence contribute to domestic and international demands. This positions Deere & Co. to increase its market share in the Agricultural, Construction, and Forestry Equipment Industry. In 2013, it was the world’s leading manufacturer with a market share of 35.4%.
Long period in the market. The company has been in the market for a long time, since 1837 to date, and remain to be the largest agricultural equipment and machinery manufacturer in the world with operations in more than 26 countries. It has thus gained substantial experience in the industry thus making it to be known as high quality producer, most reliable farm equipment manufacturer, and offering farmers the highest level of customer service.
Innovation, Having been named among the top 100 innovators by a leading business media group on the basis of patents and technology developments, positions Deere & Co. to have a reputation of high quality producers, and with most reliable farm equipment. Production of the highest quality, most reliable equipments and highest level of customer service, resulted in fiscal 2013, being the company’s best financial year.
Corporate Social Responsibilities (CSR). Deere & Co engages in CSR activities that have helped in increasing its visibility, a positive image and reputation. Such CSR activities includes helping to improve educational opportunities, helping to develop better communities in the locations where Deere & Co. is based, volunteering by employees to assist in execution of social initiatives and many more.
Farming is seasonal. Farming seasons are limited to specific months thus limiting reducing the sales of agricultural equipment to certain periods. However, when sales for agricultural equipment decreases resulting from seasonal influence, the sales of construction and forestry equipment may remain stable.
Lack of specific specialization. Although having a variety of equipments helps to remain active in the market when the demand of some equipment decreases, it can be a threat as well. For example some clients would prefer to purchase from a company that specializes in a particular product type, as specialization of one specific product, is mostly associated with expertise.
Global population increase. The global population is expected to exceed 9 billion by 2050. As the global population increases, agricultural production rate is expected to grow in order to satisfy the growing population thus creating increased demand for agricultural equipment and services.
Increased urbanization and the rise of the living standards. Population living in urban areas is expected to increase from 50% in 2014 to 70% by 2050. Increased urbanization creates a need for infrastructure development and hence the rise for demand for construction equipment and services.
Dealership collaboration. In the past Deere & Co. has attributed most of its success to its relationship with its dealers throughout the world. In 2013, dealership increase by 50% between 2011 and 2013 in the Commonwealth of Independent States, cooperative banking relationships in seven African nations and retailing financing presence in over 40 countries, accounted for more than 90% of the company’s sales. Establishment and maintenance of ongoing relationship with dealers across the world should be emphasized, is as it has proved to be a great opportunity to increase the company’s market share.
Advancement in technology is also an opportunity that assures continued demand for agricultural, construction and forestry equipment. It also creates a room for being innovative to fill the gaps in the market.
Customer loyalty. Many years of experience, since 1837, high quality equipment, high quality customer service, and after sale services, are factors likely to continually contribute to customer loyalty. Highest quality and most reliable equipments, and highest level of customer service contributed to fiscal 2013 being the company’s best financial year ever. Upholding such is beneficial.
Competition. Although Deer & Co. is ranked among the world’s leading manufacturer of agricultural, construction and forestry equipment, with a greater market share, 34.4% in 2013, stiff competition from tractors and agricultural equipment companies like CNH Industrial N.V., AGCO Corporation, Caterpillar Inc. and others remain to be a major threat.
AGCO Corporation. AGCO Corporation has in the recent past held a strong market presence in the emerging markets such as Brazil, and Latin America. Also, AGCO has so many dealers 13,00 in North America, 340 in South America, 1160 in Europe and Middle East , 300 in Asia Pacific. These are threats to Deere & Co. because it has as well invested heavily in these markets. Deere & Co. must also increase efforts to be competitive in dealership so as acquire a bigger market share.
Caterpillar Inc. Innovation and constant new products, for example the 2013 innovation of small to medium sized tract-type tractors for use in construction and mining industries resulted to sales and operating profit of $18 billion and $1.8 billion respectively. Their innovation is likely to attract more clients to them. Also, Caterpillar’s strategy focusing on quality and after sales service creates stiff competition.
Despitethe strengths that positions Deere & Co. to hold a big marketshare, there is a stiff competition from the major competitors andtherefore the company must be aggressive so as to acquire andmaintain a greater market share. To achieve this goal, there is needto develop a strategy that capitalizes on opportunities in theindustry. The strategy should be developed with the aim to yieldcompetitive advantage in the domestic and emerging internationalmarkets.
Badal,A., & Gamble, J. E. (2014). Deere& Company in 2014: Its internal strategy in the agriculture,construction, and forestry equipment industry