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 - – technology disruption, wage bills are increasing, competitive advantages are harder to sustain because of technology dispersion, central banks are concerned over increasing inflation, there is increasing trade war between United States & China, there is backlash against globalization, increasing government debt because of Covid-19 spendings,
increasing energy prices, increasing commodity prices, 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 -
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.
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.
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.
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 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.
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.
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.
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.
Effective Research and Development (R&D)
– Cervus Equipment has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Cervus Equipment Corporation: Diversified Growth in Trucking - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
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.
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.
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 -
Interest costs
– Compare to the competition, Cervus Equipment has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
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 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.
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.
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.
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.
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.
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.
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.
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.
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.
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 -
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.
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.
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.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cervus Equipment in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
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.
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.
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Cervus Equipment 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.
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.
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.
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.
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 -
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.
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 .
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.
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.
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.
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 Cervus Equipment in the Leadership & Managing People sector and impact the bottomline 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.
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.
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.
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.
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.
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.
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 .
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.
