Case Study Description of Cervus Equipment Corporation: Diversified Growth in Trucking
Cervus Equipment Corporation, the major Canadian dealer group for John Deere and Peterbilt Motors Company equipment, had grown from CA$56 million in 2004 to close to $1 billion in 2014. It had achieved these results through an aggressive acquisition and growth-oriented strategy, by purchasing heavy-equipment dealerships representing John Deere, Bobcat, and other high-end original equipment manufacturers (OEMs). The company's move into the long-haul trucking industry, beginning with the acquisition of 16 Peterbilt truck dealerships in 2013, was timely, as the agricultural and construction sectors entered what many believed would be a prolonged downturn in its base in western Canada. However, these acquisitions and this move into the trucking industry presented significant challenges related to integration, leadership and management skills at the dealer level, OEM partner control, and the presence of established competitors that served the major vocational and fleet markets. The bottom line: Cervus Equipment required its transport division to drive profitable growth in 2016 and beyond. Daniel Doiron is affiliated with University of New Brunswick Saint John.
Swot Analysis of "Cervus Equipment Corporation: Diversified Growth in Trucking" written by Daniel Doiron, Davis Schryer includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cervus Equipment facing as an external strategic factors. Some of the topics covered in Cervus Equipment Corporation: Diversified Growth in Trucking case study are - Strategic Management Strategies, and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Cervus Equipment Corporation: Diversified Growth in Trucking casestudy better are - – cloud computing is disrupting traditional business models, there is backlash against globalization, increasing energy prices, geopolitical disruptions, wage bills are increasing, digital marketing is dominated by two big players Facebook and Google, increasing government debt because of Covid-19 spendings,
supply chains are disrupted by pandemic , increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Cervus Equipment Corporation: Diversified Growth in Trucking
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Cervus Equipment Corporation: Diversified Growth in Trucking case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cervus Equipment, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cervus Equipment 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 Cervus Equipment Corporation: Diversified Growth in Trucking can be done for the following purposes –
1. Strategic planning using facts provided in Cervus Equipment Corporation: Diversified Growth in Trucking case study
2. Improving business portfolio management of Cervus Equipment
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Cervus Equipment
Strengths Cervus Equipment Corporation: Diversified Growth in Trucking | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cervus Equipment in Cervus Equipment Corporation: Diversified Growth in Trucking Harvard Business Review case study are -
Sustainable margins compare to other players in Leadership & Managing People industry
– Cervus Equipment Corporation: Diversified Growth in Trucking firm has clearly differentiated products in the market place. This has enabled Cervus Equipment to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Cervus Equipment to invest into research and development (R&D) and innovation.
Diverse revenue streams
– Cervus Equipment is present in almost all the verticals within the industry. This has provided firm in Cervus Equipment Corporation: Diversified Growth in Trucking 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.
Strong track record of project management
– Cervus Equipment is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy in the Cervus Equipment Corporation: Diversified Growth in Trucking Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Superior customer experience
– The customer experience strategy of Cervus Equipment in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Cervus Equipment digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Cervus Equipment 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.
Ability to recruit top talent
– Cervus Equipment is one of the leading recruiters in the industry. Managers in the Cervus Equipment Corporation: Diversified Growth in Trucking are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Learning organization
- Cervus Equipment is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Cervus Equipment is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Cervus Equipment Corporation: Diversified Growth in Trucking Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Leadership & Managing People field
– Cervus Equipment 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 Cervus Equipment in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the Cervus Equipment are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Organizational Resilience of Cervus Equipment
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Cervus Equipment does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that Cervus Equipment 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 Cervus Equipment Corporation: Diversified Growth in Trucking | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Cervus Equipment Corporation: Diversified Growth in Trucking are -
High bargaining power of channel partners
– Because of the regulatory requirements, Daniel Doiron, Davis Schryer suggests that, Cervus Equipment 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.
Slow decision making process
– As mentioned earlier in the report, Cervus Equipment has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Cervus Equipment even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Lack of clear differentiation of Cervus Equipment products
– To increase the profitability and margins on the products, Cervus Equipment needs to provide more differentiated products than what it is currently offering in the marketplace.
Low market penetration in new markets
– Outside its home market of Cervus Equipment, firm in the HBR case study Cervus Equipment Corporation: Diversified Growth in Trucking needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Capital Spending Reduction
– Even during the low interest decade, Cervus Equipment 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Cervus Equipment Corporation: Diversified Growth in Trucking 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 Cervus Equipment has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Cervus Equipment Corporation: Diversified Growth in Trucking, is just above the industry average. Cervus Equipment needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
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 Cervus Equipment supply chain. Even after few cautionary changes mentioned in the HBR case study - Cervus Equipment Corporation: Diversified Growth in Trucking, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Cervus Equipment vulnerable to further global disruptions in South East Asia.
High operating costs
– Compare to the competitors, firm in the HBR case study Cervus Equipment Corporation: Diversified Growth in Trucking has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Cervus Equipment 's lucrative customers.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Cervus Equipment is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Cervus Equipment Corporation: Diversified Growth in Trucking can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Need for greater diversity
– Cervus Equipment has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Opportunities Cervus Equipment Corporation: Diversified Growth in Trucking | 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 Cervus Equipment Corporation: Diversified Growth in Trucking are -
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. Cervus Equipment can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Cervus Equipment can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Cervus Equipment 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. Cervus Equipment 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Cervus Equipment to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Cervus Equipment to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Cervus Equipment can develop new processes and procedures in Leadership & Managing People industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Manufacturing automation
– Cervus Equipment can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Cervus Equipment is facing challenges because of the dominance of functional experts in the organization. Cervus Equipment Corporation: Diversified Growth in Trucking 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Cervus Equipment can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Cervus Equipment 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, Cervus Equipment Corporation: Diversified Growth in Trucking, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Buying journey improvements
– Cervus Equipment can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Cervus Equipment Corporation: Diversified Growth in Trucking 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.
Better consumer reach
– The expansion of the 5G network will help Cervus Equipment to increase its market reach. Cervus Equipment will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Cervus Equipment can use these opportunities to build new business models that can help the communities that Cervus Equipment operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Creating value in data economy
– The success of analytics program of Cervus Equipment has opened avenues for new revenue streams for the organization in the industry. This can help Cervus Equipment to build a more holistic ecosystem as suggested in the Cervus Equipment Corporation: Diversified Growth in Trucking case study. Cervus Equipment can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Cervus Equipment Corporation: Diversified Growth in Trucking External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Cervus Equipment Corporation: Diversified Growth in Trucking are -
Shortening product life cycle
– it is one of the major threat that Cervus Equipment is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Cervus Equipment needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Cervus Equipment in the Leadership & Managing People industry. The Leadership & Managing People 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 international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Cervus Equipment 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 Cervus Equipment Corporation: Diversified Growth in Trucking .
Increasing wage structure of Cervus Equipment
– 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 Cervus Equipment.
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 Cervus Equipment.
Consumer confidence and its impact on Cervus Equipment 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.
Regulatory challenges
– Cervus Equipment needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Leadership & Managing People industry regulations.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Cervus Equipment Corporation: Diversified Growth in Trucking, Cervus Equipment may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Cervus Equipment can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Cervus Equipment with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Cervus Equipment will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
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 Cervus Equipment business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Cervus Equipment Corporation: Diversified Growth in Trucking 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 Cervus Equipment Corporation: Diversified Growth in Trucking 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 Cervus Equipment Corporation: Diversified Growth in Trucking 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 Cervus Equipment Corporation: Diversified Growth in Trucking 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 Cervus Equipment Corporation: Diversified Growth in Trucking 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 Cervus Equipment needs to make to build a sustainable competitive advantage.
