Case Study Description of Deere & Co.: Sustaining Value
The question facing Deere & Co. is whether or not to adopt some of the organizational technologies of private equity investors (decentralized equity holdings, use of leverage to control the disposition of cash flows, the externalization of the capital budgeting process, partial spin-offs) to sustain over the next decade the supernormal returns created through more traditional means.
Swot Analysis of "Deere & Co.: Sustaining Value" written by Malcolm S. Salter, Marlowe Dayley includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Deere Externalization facing as an external strategic factors. Some of the topics covered in Deere & Co.: Sustaining Value case study are - Strategic Management Strategies, Budgeting, Manufacturing and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Deere & Co.: Sustaining Value casestudy better are - – technology disruption, digital marketing is dominated by two big players Facebook and Google, increasing commodity prices, there is backlash against globalization, increasing household debt because of falling income levels, increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies,
there is increasing trade war between United States & China, increasing energy prices, etc
Introduction to SWOT Analysis of Deere & Co.: Sustaining Value
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Deere & Co.: Sustaining Value case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Deere Externalization, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Deere Externalization operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Deere & Co.: Sustaining Value can be done for the following purposes –
1. Strategic planning using facts provided in Deere & Co.: Sustaining Value case study
2. Improving business portfolio management of Deere Externalization
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Deere Externalization
Strengths Deere & Co.: Sustaining Value | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Deere Externalization in Deere & Co.: Sustaining Value Harvard Business Review case study are -
Innovation driven organization
– Deere Externalization is one of the most innovative firm in sector. Manager in Deere & Co.: Sustaining Value Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Diverse revenue streams
– Deere Externalization is present in almost all the verticals within the industry. This has provided firm in Deere & Co.: Sustaining Value case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Deere Externalization digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Deere Externalization has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Organizational Resilience of Deere Externalization
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Deere Externalization does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Strategy & Execution industry
– Deere & Co.: Sustaining Value firm has clearly differentiated products in the market place. This has enabled Deere Externalization to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Deere Externalization to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Deere Externalization has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Deere Externalization has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Training and development
– Deere Externalization has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Deere & Co.: Sustaining Value Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Superior customer experience
– The customer experience strategy of Deere Externalization in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Deere Externalization has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Deere Externalization to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Deere Externalization is one of the leading recruiters in the industry. Managers in the Deere & Co.: Sustaining Value are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Ability to lead change in Strategy & Execution field
– Deere Externalization is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Deere Externalization in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Deere Externalization has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Weaknesses Deere & Co.: Sustaining Value | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Deere & Co.: Sustaining Value are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Deere & Co.: Sustaining Value, in the dynamic environment Deere Externalization has struggled to respond to the nimble upstart competition. Deere Externalization has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Deere & Co.: Sustaining Value, it seems that the employees of Deere Externalization don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Deere & Co.: Sustaining Value HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Deere Externalization has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Deere Externalization is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Deere Externalization needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Deere Externalization to focus more on services rather than just following the product oriented approach.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Deere Externalization supply chain. Even after few cautionary changes mentioned in the HBR case study - Deere & Co.: Sustaining Value, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Deere Externalization vulnerable to further global disruptions in South East Asia.
Workers concerns about automation
– As automation is fast increasing in the segment, Deere Externalization needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Slow to strategic competitive environment developments
– As Deere & Co.: Sustaining Value HBR case study mentions - Deere Externalization takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
No frontier risks strategy
– After analyzing the HBR case study Deere & Co.: Sustaining Value, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Capital Spending Reduction
– Even during the low interest decade, Deere Externalization has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Aligning sales with marketing
– It come across in the case study Deere & Co.: Sustaining Value that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Deere & Co.: Sustaining Value can leverage the sales team experience to cultivate customer relationships as Deere Externalization is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, Malcolm S. Salter, Marlowe Dayley suggests that, Deere Externalization is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Opportunities Deere & Co.: Sustaining Value | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Deere & Co.: Sustaining Value are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Deere Externalization can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Deere Externalization is facing challenges because of the dominance of functional experts in the organization. Deere & Co.: Sustaining Value case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Deere Externalization can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Deere Externalization can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Loyalty marketing
– Deere Externalization has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Deere Externalization to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Deere Externalization in the consumer business. Now Deere Externalization can target international markets with far fewer capital restrictions requirements than the existing system.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Deere Externalization can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Deere & Co.: Sustaining Value, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Deere Externalization can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Deere Externalization in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Buying journey improvements
– Deere Externalization can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Deere & Co.: Sustaining Value suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Deere Externalization can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– Deere Externalization can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Low interest rates
– Even though inflation is raising its head in most developed economies, Deere Externalization can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Threats Deere & Co.: Sustaining Value External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Deere & Co.: Sustaining Value are -
Stagnating economy with rate increase
– Deere Externalization can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Technology acceleration in Forth Industrial Revolution
– Deere Externalization has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Deere Externalization needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Consumer confidence and its impact on Deere Externalization demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
High dependence on third party suppliers
– Deere Externalization high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Deere Externalization.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Deere Externalization in the Strategy & Execution sector and impact the bottomline of the organization.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Deere Externalization business can come under increasing regulations regarding data privacy, data security, etc.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Deere Externalization can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Deere Externalization in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Increasing wage structure of Deere Externalization
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Deere Externalization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Deere Externalization can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Deere & Co.: Sustaining Value .
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Weighted SWOT Analysis of Deere & Co.: Sustaining Value Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Deere & Co.: Sustaining Value needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Deere & Co.: Sustaining Value is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Deere & Co.: Sustaining Value is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Deere & Co.: Sustaining Value is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Deere Externalization needs to make to build a sustainable competitive advantage.