Imm.john Deere

7/28/2019 Imm.john Deere

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International Marketing Management term paper

ON

JOHN DEERE

SUBMITTED BY

MUTHU KUMAR. M

1PT11MBA21


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CONTENTS

1)INTRODUCTION

2)STP ANALYSIS OF JOHN DEERE

3)DYNAMIC ENVIRONMENT OF JOHN DEERE

4)PRICING STRATEGIES OF JOHN DEERE

5)OPERATIONAL DIFFERENCE IN DIFFERENCECOUNTRIES


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COMPANY & INDUSTRY PROFILE

Nothing Runs Like A Deere

Since 1837, the John Deere brand has been an iconic American symbol of quality and value.

Unlike many American corporations, John Deeres success is measured in generations, rather

than years or quarters. Tied to the crafts of agriculture and construction and guided by a

genuine partnership with those who profit from the land, John Deere has defined its industry

through continued innovation and service.

Now, after a 170-year race to become the worlds leading manufacturer of heavy machinery

for farmers and contractors, John Deere is getting a second wind. Refocused after a strategicshift in corporate direction in 2001, John Deere has set out on a new path to significantly

increase the value it provides to its shareholders. Within the agricultural and construction

machinery category, John Deere comfortably held a top spot in the minds of customers by

consistently producing high-quality products and intently handling service issues. However,

the organization suffered from the seasonal ebbs and flows inherent in the agricultural

sectorits most profitable and largest division . In addition to the pressures of a seasonal

business, the organizations internal operations were nearly vertical. Inefficient teamwork and

communication processes plagued the organization and isolated the value of best practices

within the operational and manufacturing silos.

Since 2001, John Deere has worked to streamline the organization, rallying around ultimate

performance yardstick: Shareholder Value Added (SVA) . John Deeres renewed focus on

SVA has improved the efficiency and profitability of the organization by striving to achieve:

1. Exceptional operating performance

2. Disciplined SVA growth

3. Aligned, high-performance teamwork

By measuring success across the organization in terms of these three objectives, John Deere

has rewarded shareholders with consistently strong performance across the business cycle

and through the economic downturn.


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Company Overview

John Deere organizes its operations into three core categories: Agriculture & Turf,

Construction & Forestry, and John Deere Credit Accounting for 79% of total revenues,Agricultural and Turf equipment makes up the majority of John Deeres operations. As of

their October 31st fiscal year end,

revenue was down 18.7% with gross profit and earnings-per-share (EPS) also falling 21%

and 56%,

respectively.1 While the $5 billion sales decline during 2009 was the largest year-over-year

in company history, net income of $900 million ranks among the highest in the companys

history.

SWOT ANALYSIS

Deere & Company, usually known by its brand name John Deere , is an American

corporation based in Moline, Illinois, and the leading manufacturer of agricultural machinery

in the world. In 2008, it was listed as 102nd in the Fortune 500 ranking. Deere and Company

agricultural products, usually sold under the John Deere name, include tractors, combine

harvesters, balers, planters/seeders, ATVs and forestry equipment. The company is also a

leading supplier of construction equipment, as well as equipment used in lawn, grounds and

turf care, such as ride-on lawn mowers, string trimmers, chainsaws, snowthrowers and for a

short period, snowmobiles.

The company's slogan is "Nothing runs like a Deere" and has a picture of a deer as a logo, a

word play pun on "nothing runs like a deer."

Additionally, John Deere manufactures engines used in heavy equipment and provides

financial services and other related activities that support the core businesses.


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Strengths

* Cost advantage

* Asset leverage* Innovation

* Online growth

* Market share leadership

* Strong management team

* Strong financial position

* Pricing

Weaknesses

* Bad communication

* Diseconomies to scale

* Low market share

* Weak management team

Opportunities

* Acquisitions

* Asset leverage

* Financial markets (raise money through debt, etc)

* Innovation

* Product and services expansion* Takeovers

Threats

* Competition

* Economic slowdown

* External changes (government, politics, taxes, etc)


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Target Market Segmentation

The segmentation decision involves decomposing a market into homogenous subgroups and

selecting target segments within operating divisions. The riding lawn mower productcategory provides valuable insight into John Deeres approach to market segmentation. In our

evaluation, the Agriculture and Turf Division targets three major consumer segments:

Commercial Farmers

Landscaping Professionals

Do It Yourselfers (DIY)

This segmentation decision allows John Deere to build a product portfolio that expands

quality and functionality based on end user demands. Within the riding mower product

category, the main consumer segments are Landscaping Professionals and DIYs. These

segments have important ramifications on channel selection for John Deere because they

deviate from the companys core agricultural customers.

Positioning

John Deeres famous positioning statement, nothing runs like a Deere, communicates both

differentiation from the competition and meaningfulness within the target segment. This

statement reinforces the key quality attributes inherent in John Deeres reputation and

positions the brand as a source of value for the consumer. From a job completion perspective,

John Deere claims that its tractors get the job done faster than the competition, a message that

John Deere promotes in the product catalogue.

Targeting

John Deere targets all kinds of farmer, from big to small farmers. Their products are

designed such that they cater all the needs of the farmers. Also, the company has various

earths moving equipment and these products are targeted mainly to the US customers.


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Dynamic environment

Deere & Company, usually known by its brand name John Deere (NYSE: DE), is an

American corporation based in Moline, Illinois, and the leading manufacturer of agricultural

machinery in the world. In 2008, it was listed as 102nd in the Fortune 500 ranking. Deere and

Company agricultural products, usually sold under the John Deere name, include tractors,

combine harvesters, balers, planters/seeders, ATVs and forestry equipment. The company is

also a leading supplier of construction equipment, as well as equipment used in lawn, grounds

and turf care, such as ride-on lawn mowers, string trimmers, chainsaws, snowthrowers and

for a short period, snowmobiles.

The company's slogan is "Nothing runs like a Deere" and has a picture of a deer as a logo, a

word play pun on "nothing runs like a deer."

Additionally, John Deere manufactures engines used in heavy equipment and provides

financial services and other related activities that support the core businesses.

The company was founded in 1837 by John Deere, who developed and manufactured the first

commercially successful cast-steel plow.

Politics

Globalization has been a current trend to every industry which also includes the apparel and

fashion industry in which is due to the construction of import international facilities and

establishment.

It has been noted that when products are traded regulations and policies are present. With

these regulations and policies, companys operations may be impaired. Some countries also

control the entrance of foreign companies which would also affect the process of operation of

these companies. Large tax implementation is one of the controls that government usually

pursues. With such government control many companies are impaired and usually can not

operate on those countries.


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In the case of the regulations in the retail industry it has negative impacts because the

regulations in the retail industry could easily be changed beyond the established limit and will

affect the business adversely, in addition companies such as target will obtain higher costs in

expenses due to the changes.

Furthermore, changes and transformation in overtime regulations and the share of the retail

stores in the healthcare bill. It has a huge effect on GAP negatively or positively. In the case

of the regulations in the retail industry it has negative impacts because the regulations in the

retail industry could easily be changed beyond the established limit and will affect the

business adversely, in addition companies such as target will obtain higher costs in expenses

due to the changes. The healthcare bill, on the other hand, will have positive effects on GAP

because the bill will aid in controlling the prices of the medicines in the market which in

return will help the consumers, as well as the company.

Economic

During the period of 2004 to 2006, a change in consumer preferences in apparel is more

apparent. Many underground sales of unbranded apparel are very common. It even extends to

the export of these apparel to many Asian countries.

Another factor that would affect the external environment of Target is the US economic

growth; the rapid or slow growth may have a positive or negative impact on the business. If

the growth is fast then consumers will have higher purchasing power, on the other hand, if the

economy is very slow then it will also have an effect on the attitude towards purchasing

products. Another is the low-cost destinations sourcing; it will either affect the economy

positively or negatively. Positive, in the sense wherein the company will have more

consumers because of the cheaper products offered. On the other hand, the local suppliers

would be affected because the company prefers outsourced products.


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Socioeconomic

With the increasing globalization of business, society has also been more concern with thedegradation of the environment and a continuous concern for the benefit of the employees.

The society has call for attention to industries for social responsibility. This includes human

right protection of corporate employees, consideration for the health and safety of consumers,

and contribution to local communities.

And with the increasing global environmental issues that arise with the globalization, people

are now increasingly aware of the effects of the continuous industrialization.

Another factor is the rise of the population of the retiree, companies such as GAP wherein it

has numerous employees will have a hard time obtaining more employees, the retirement of

employees is rapidly getting higher while the replacement does not increase.

Technological

It has been noted that apparel and fashion industry has experience a rapid technological

changes over the years. This fast changes has lead to a more sophisticated, with a significant

apparel and fashion items present in the present time. To provide comfort and aesthetic value,

while still being friendly to the environment, these new fashions use the latest developments

of many different technologies.

The utilization of new software and technology for faster production and marketing, which is

more helpful and useful because it makes the job of the employees and management easier

and error free.


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organizational structure

The organizational structure of a business has a great effect on how the business is run. The

organization needs to look at all of these structures and decide which one fits their business

best. They should first decide if they want to have a centralized or decentralized strategy and

which one would be more beneficial to them.

John Deere has chosen to be centralized and very orderly. They are organized by eight total

divisions. These divisions include agricultural, construction, turf, forestry, financial services,

power systems, parts services, and intelligent solutions. Organizing their businesses in this

manner gives each division the advantage of concentrating on the needs of their particular

industry. For example the agricultural team has recently developed a line of row tractors that

enable the operator to widen or shrink the space between the wheels at the push of a button

from inside the cab. This allows for the tractors to drive down the rows of fields much easier

and be adaptable to each individual farmers rows. The turf division does not need to worry

about driving down rows but instead should look for ways to take pressure off the ground so

that they don't leave indentations in the earth because they are usually working on soft

ground.

The disadvantage of this type of business structure would have to be that it is expensive to

hire duplicated personal for each division. It can also lead to divisions not sharing ideas if

they are competing against each other. John Deere doesn't seem to have to much of a

problem with this because they are organized by industries. Forestry generally doesn't have

to much to do with agriculture and vice versa. This prevents the divisions from competing

for the same customers.


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Pricing strategies adopted by John Deere:

John Deere & Co. (DE) is slashed on farm tractors prices as part of a strategy to chip

away at Agco Corp.'s (AGCO) leading market share in the American market. Agco

Chairman and Chief Executive Martin Richenhagen said he's reluctant to engage in a pricewar with Deere, but added that Agco is determined to maintain its market share and would

resort to retaliatory price cuts if Deere's discounting persists in America. "They're trying to

buy market share," he said during remarks to reporters. "They're very aggressive on pricing.

This is something we haven't done yet."

A Deere spokesman said that the company does not comment on its prices in sepcific

markets. While a price war between equipment manufacturers would provide farmers with

lower costs for tractors and harvesting combines, profit margins for machinery manufacturers


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would suffer and a price war could potentially destabilize the industry. Deere, the world-

leader in machinery sales, is targeting overseas markets for additional sales growth. The

Moline, III. Company is making a push to expand sales in South America, Russia and India.

Agco, whose brands include Massey Ferguson, Fendt and Challenger, is a distant third in the

global farm machinery market behind Deere and CNH Global NV (CNH). But Georgia-based

Agco maintains a strong presence in several key machinery markets, including Brazil and

France, which is Europe's largest market for high-horsepower tractors. In Brazil, Agco's share

of the tractor market reached as high as 60% at the peak of the last equipment cycle. But

demand in Brazil cooled in 2010 and Agco ended the year with 53.7% of the tractor market,

according to equipment shipment data supplied by Brazil's Authorities. Analysts expect a

10% decline in industry-wide equipment sales in Brazil this year. But Deere has been

outperforming the Brazilan market lately, increasing its monthly tractor shipments from a

year earlier, while overall industry shipments retreat. Agco and CNH Global have largely

followed the industry trend with lower year-over-year monthly shipments. Agco's share of the

tractor market was 52.7% in March, down from 53% in February. Richenhagen maintains

that monthly market share data is typically volatile and not an accurate reflection of the

results of Deere's discounting strategy. He said Agco continues to have advantages over

Deere in South America that should help Agco combat Deere's price-cutting. "John Deere has

always been in South America. But we have a better brand image. We have better

distribution," he said. "So far, we haven't had to do something special." But Richenhagen said

Agco could launch a counter attack on Deere in North America--where it dominates the

market--if Deere doesn't back off its pricing strategy. "I'm not in favor of these price battles,"

he said. "But we could reduce our tractor prices by 15% in America. It wouldn't kill us

because we are comparably small there, but it would be a big problem for Deere." Agco stock

was recently up 0.56% at $51.71 a share.

From the above price battle, one can conclude that John Deere has been following a

Discount Pricing strategy where they want to capture the market by providing tractors at

lower price than their competitors thereby want to capture the markets worldwide with the

same strategy.


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Operations of John Deere: India and Overseas

In India, the farm lands are rather small compared to that in USA or other big

countries. This has prompted John Deere to come out with different variants of tractors (bhp)

to cater to the Indian Market.

Also, due to less use of technology in India, the tractors produced for India have

rather less technological superiority. Whereas in USA, farmers prefer tractors with advanced

technology. Thus the company manufactures tractors with superior technology to cater to US

and other developed market.

Also, John Deere has only restricted itself by releasing only tractors to the Indian

market. Whereas, to the US market, the company has various other agricultural equipment.

This is done as there is not much demand for agricultural equipment in India as it is there in

the US markets.

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Imm.john Deere