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 - – increasing energy prices, wage bills are increasing, cloud computing is disrupting traditional business models, increasing household debt because of falling income levels, banking and financial system is disrupted by Bitcoin and other crypto currencies, challanges to central banks by blockchain based private currencies, competitive advantages are harder to sustain because of technology dispersion,
increasing commodity prices, 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 -
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.
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.
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.
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.
Low bargaining power of suppliers
– Suppliers of Cervus Equipment in the sector have low bargaining power. Cervus Equipment Corporation: Diversified Growth in Trucking has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Cervus Equipment to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Cervus Equipment has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Cervus Equipment Corporation: Diversified Growth in Trucking 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.
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.
Highly skilled collaborators
– Cervus Equipment has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Cervus Equipment Corporation: Diversified Growth in Trucking HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Cervus Equipment is one of the most innovative firm in sector. Manager in Cervus Equipment Corporation: Diversified Growth in Trucking Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
High brand equity
– Cervus Equipment has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cervus Equipment to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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 -
No frontier risks strategy
– After analyzing the HBR case study Cervus Equipment Corporation: Diversified Growth in Trucking, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People 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.
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Cervus Equipment Corporation: Diversified Growth in Trucking, it seems that the employees of Cervus Equipment 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 cash cycle compare to competitors
Cervus Equipment has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
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.
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.
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.
Aligning sales with marketing
– It come across in the case study Cervus Equipment Corporation: Diversified Growth in Trucking 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 Cervus Equipment Corporation: Diversified Growth in Trucking can leverage the sales team experience to cultivate customer relationships as Cervus Equipment is planning to shift buying processes online.
Workers concerns about automation
– As automation is fast increasing in the segment, Cervus Equipment 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.
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Cervus Equipment Corporation: Diversified Growth in Trucking, in the dynamic environment Cervus Equipment has struggled to respond to the nimble upstart competition. Cervus Equipment has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 -
Loyalty marketing
– Cervus Equipment 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.
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.
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.
Learning at scale
– Online learning technologies has now opened space for Cervus Equipment to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
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.
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.
Leveraging digital technologies
– Cervus Equipment 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.
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 Cervus Equipment 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.
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.
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 Cervus Equipment in the consumer business. Now Cervus Equipment 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, 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.
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.
Using analytics as competitive advantage
– Cervus Equipment has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Cervus Equipment Corporation: Diversified Growth in Trucking - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cervus Equipment to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 -
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.
Stagnating economy with rate increase
– Cervus Equipment 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.
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.
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.
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.
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 .
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.
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
– Cervus Equipment has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Cervus Equipment needs to keep up with the evolution of technology in the Leadership & Managing People 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.
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.
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.
Environmental challenges
– Cervus Equipment needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Cervus Equipment can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
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 .
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.