assignment

where it also competed with a line of tractors, articu-

lating dump trucks, backhoe loaders, motor grad-

ers, excavators, and bulldozers. The company also

manufactured and marketed forestry equipment, turf

equipment, and diesel engines for marine and con-

struction equipment uses. The company’s primary

challenge in 2014 was how to best defend against the

competitive pressures stemming from its chief rivals

in the agricultural and construction equipment indus-

tries, who were also preparing for rapidly expanding

industry growth.

COMPANY HISTORY Deere & Company began manufacturing and mar-

keting farming equipment in 1837 when John Deere,

a blacksmith and inventor, began forging steel plows

for mule-drawn walking plows. The company added

corn planters, wheeled sulky ploys, and cultivators

during the late 1800s, but its walking plow accounted

for the majority of its business until the company

acquired motorized tractor producer Waterloo Boy

in 1918. Deere’s acquisition of Waterloo Boy dra-

matically changed the company’s business model

and scope of operations, but it was a necessity since

Ford Motor Company was revolutionizing agricul-

ture with the manufacture and sale of Fordson farm

Deere & Company in 2014:

Its International Strategy in the

Agricultural, Construction, and

Forestry Equipment Industry

Alen Badal Author and Researcher

John E. Gamble Texas A&M University–Corpus Christi

Deere & Company had its best-ever year in fiscal 2013 with record net income for the third con-secutive year. The company’s sales and earn- ings of $37.8 billion and $3.54 billion, respectively,

resulted from the success of its global strategy keyed

to product innovation and quality, operating excel-

lence, and best-in-industry customer service. Deere

introduced dozens of technologically advanced agri-

cultural and construction products during 2013 that

helped boost productivity and lower the costs of its

customers in farming and construction.

The company’s prospects for even stronger

financial performance were good as the global

demand for agricultural products was expected to

double by 2050. International markets such as China,

Brazil, and Russia already accounted for more than

35 percent of the company’s revenues in 2013, and

they would likely make up a much larger percentage

of sales in the long term as living standards in emerg-

ing markets improved. Deere & Company had rec-

ognized the importance of international expansion

as early as 1956, when it first established operations

outside the United States, but it was accelerating its

efforts to prepare for rapid increases in the demand

for food in international markets. The company built

or acquired new plant capacity in Brazil, Germany,

and China in 2013 and had plans for seven new fac-

tories in international markets in 2014.

Deere & Company achieved its record-setting

year despite a slowdown in the construction industry,

CASE 19

Copyright © 2014 by Alen Badal and John E. Gamble. All rights

reserved.

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C-286 PART 2 Cases in Crafting and Executing Strategy

tractors. Ford sold more than 34,000 farm tractors in

1918 as farmers across the United States easily rec-

ognized how machinery could boost productivity in

agriculture.

Deere’s shift in strategy began with disastrous

results, with the Waterloo Boy brand selling only 79

tractors in 1921. The first John Deere–branded trac-

tor, the Model D, was launched in 1923 and was so

popular that it remained in the company’s product

line for 30 years. Deere added more models to the

product line throughout the 1920s. The appeal of

the company’s Model D, GP, Model 1, and Model 2

tractors allowed its revenues to soar until the depths

of the Great Depression in 1922, when its revenues

plunged to $8.7 million. However, even though

Deere & Company was losing money, the company’s

management chose not to repossess farm equipment

owned by farmers unable to make payments during

the Depression—a decision that would solidify its

bond with farmers for generations.

The company expanded internationally in

1956 when it opened an assembly plant in Mexico

and acquired a German tractor manufacturer and

a Spanish harvester manufacturer. Deere & Com-

pany expanded further internationally when it con-

structed a tractor and implement manufacturing

plant in Argentina in 1958, built a plant in France

in 1961, and acquired a cultivator manufacturer in

South Africa in 1962. By 1963, John Deere was the

world’s largest producer of farm and industrial trac-

tors and equipment. The company also began sell-

ing lawn and garden tractors that year. In 2014, with

its world headquarters in Moline, Illinois, Deere &

Company remained the largest agricultural equip-

ment and machinery manufacturer in the world,

with operations in more than 26 countries. The com-

pany’s income statements for fiscal 2011 through

fiscal 2013 are presented in Exhibit 1 . Deere &

Company’s balance sheets for fiscal 2011 through

fiscal 2013 are presented in Exhibit 2 .

OVERVIEW OF THE TRACTOR AND AGRICULTURAL EQUIPMENT INDUSTRY The tractor and agricultural equipment industry was

projected to grow at an attractive rate for decades

because of increasing urbanization and rising stan-

dards of living in many countries around the world.

By 2050 the global population was expected to

exceed 9 billion, up from approximately 7 billion in

2014, with Asia and Africa experiencing the great-

est increases. It was also expected that a growing

middle class would emerge in Latin America, China,

and India, among other developing economies. Thus,

agricultural output was projected to double by 2050

in order to maintain pace with the increase in global

population, which would require the rate of produc-

tion to grow. Also, an increase in urbanization would

stir a need for infrastructure development, with

the percentage of the world’s population living in

urban areas increasing from 50 percent in 2014 to

70 percent by 2050. The increase in urbanization

was expected to result in increases in the demand for

construction services and equipment.

The long-term macro-economic trends were

favorable for the $41.6 billion tractor and agricul-

tural industry, which had grown annually by 3.9 per-

cent between 2009 and 2014. The industry consisted

of dairy farm equipment and sprayers, dusters,

blowers, and attachments, with harvesting machin-

ery representing the largest segment—see Exhibit 3 .

The steady growth in the industry since 2009

was brought about by favorable sociocultural forces

and economic conditions that included farm inter-

est rates supported by the U.S. federal government

and subsidies of various sorts in countries outside

the United States. Also, the weakening U.S. dollar

and a rising demand for exporting helped rebuild the

farming industry.

The farming industry was consolidating as large

conglomerates took over smaller farms. As a result,

total volume increases and economies of scale were

taking place in the industry, along with more vertical

integration across supply chains. A demand for bet-

ter optimization of farming also resulted in reliance

on technology to reduce operating costs and increase

farming output. Precision agriculture was a growing

trend in the industry that allowed farmers to spot-

treat fields using aerial photography and geographic

information systems (GIS) technology to precisely

water, seed, and harvest in less time.

Industry Competition The tractor and agricultural equipment industry

comprised more than 1,000 companies, with the top

four generating half of all revenues. Industry pro-

duction was concentrated primarily among Deere &

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CASE 19 Deere & Company in 2014 C-287

Period Ending: Oct 31, 2013 Oct 31, 2012 Oct 31, 2011

Total revenue $37,795,400 $36,157,100 $32,012,500

Cost of revenue 25,667,300 25,007,800 21,919,400

Gross profi t 12,128,100 11,149,300 10,093,100

Operating expenses

Research and development 1,477,300 1,433,600 1,226,200

Selling, general, and administrative 4,426,100 4,198,500 3,884,700

Operating income 6,224,700 5,517,200 4,982,200

Interest expense 741,300 782,800 759,400

Income before tax 5,483,400 4,734,400 4,222,800

Income tax expense 1,945,900 1,659,400 1,423,600

Minority interest (300) (6,900) (7,900)

Net income $ 3,537,300 $ 3,064,700 $ 2,799,900

Source: www.finance.yahoo.com .

EXHIBIT 1 Deere & Company Income Statements, Fiscal 2011–Fiscal 2013 (in thousands)

Company, CNH Industrial N.V., and AGCO Cor-

poration. Mergers affected the industry, with CNH

Industrial N.V. having gone through a merger with

KamAZ in 2010 and Fiat Industrial in 2013. Exter-

nal factors, such as emission standards, continue to

become more stringent in the United States. Quality

control, research and development, and adoption of

new technological advances were all strategic fac-

tors in the industry.

Agricultural equipment manufacturers were

driving the use of technology with larger, more

sophisticated equipment. Equipment manufactur-

ers also recognized the importance of customer

service and support and equipment financing as

farming consolidated to a smaller group of farming

corporations.

The average useful age for farming equipment

was estimated to be 10 to 20 years. A preference

of farmers was to prolong the life of equipment by

purchasing replacement parts. The industry was

expected to continue production of replacement

parts for equipment and reap the profits of the seg-

ment. Interest rates on farm equipment loans had a

direct impact on sales; lower rates and incentives

helped boost sales of higher-end equipment.

Profits had increased over the five-year 2009–

2014 period, with revenues increasing despite ris-

ing steel costs, which manufacturers had passed on

to buyers. The weakened U.S. dollar had increased

export sales for U.S. companies. An average industry

profit was projected as 6.2 percent of revenue. Wages

in the industry had decreased as a result of the

increased automation of the manufacturing process,

which lessened dependence on labor. Because of

technological advances in manufacturing, deprecia-

tion costs as a percentage of industry revenue had

increased for manufacturers. Product quality, inno-

vation, customer service, branding, and performance

were essential areas rivals competed on. Generally,

price competition between the three rivals was low;

as a result, competition centered on overall value

instead of price. Competitor barriers to entry into the

industry ranged from low to medium; however, with

such fierce competition among the top three, entrants

were surely challenged.

Globalization had a significant effect on func-

tions within the industry. Lower wages and over-

all production costs increased revenues. Between

2009 and 2014, both AGCO and Deere & Company

increased their percentage of revenue generated inter-

nationally; CNH’s tractor sales increased 25 percent

in Latin America during 2011, with combined sales

growth of 30 percent.

International Markets for Agricultural Equipment The declining U.S. dollar made it more affordable to

export equipment from the United States. In 2013,

total imports to the United States were estimated at

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C-288 PART 2 Cases in Crafting and Executing Strategy

Period Ending: Oct 31, 2013 Oct 31, 2012 Oct 31, 2011

Assets

Current assets

Cash and cash equivalents $ 3,504,000 $ 4,652,200 $ 3,647,200

Short-term investments 1,624,800 1,470,400 787,300

Net receivables 35,039,200 31,426,400 27,501,600

Inventory 4,934,700 5,170,000 4,370,600

Total current assets 45,102,700 42,719,000 36,306,700

Long-term investments 221,400 215,000 201,700

Property, plant, and equipment 9,124,100 7,539,700 6,502,300

Goodwill 844,800 921,200 999,800

Intangible assets 77,100 105,000 127,400

Other assets 1,825,800 1,485,500 1,210,900

Deferred long-term asset charges 2,325,400 3,280,400 2,858,600

Total assets $59,521,300 $56,265,800 $48,207,400

Liabilities

Current liabilities

Accounts payable $ 9,240,800 $ 9,288,500 $ 8,090,800

Short/current long-term debt 12,898,000 9,967,300 9,629,700

Total current liabilities 22,138,800 19,255,800 17,720,500

Long-term debt 21,577,700 22,453,100 16,959,900

Other liabilities 5,537,100 7,694,900 6,712,100

Minority interest 1,900 19,900 14,600

Total liabilities 49,255,500 49,423,700 41,407,100

Stockholders’ equity

Common stock 3,524,200 3,352,200 3,251,700

Retained earnings 19,645,600 16,875,200 14,519,400

Treasury stock (10,210,900) (8,813,800) (7,292,800)

Other stockholders’ equity (2,693,100) (4,571,500) (3,678,000)

Total stockholders’ equity 10,265,800 6,842,100 6,800,300

Total liabilities and stockholders’ equity $59,521,300 $56,265,800 $ 48,207,400

Source: www.finance.yahoo.com .

EXHIBIT 2 Deere & Company Balance Sheets, Fiscal 2011–Fiscal 2013 (in thousands)

$10.5 billion, while exports were estimated at $11.8

billion. Canada was the largest U.S export market,

with a 34 percent share of exports, while Mexico,

Australia, and Brazil were the next-largest export

markets for U.S. agricultural equipment manufac-

turers. Germany was the largest exporter of farm

equipment to the United States, accounting for 16

percent of U.S. imports. Canada, China, and Japan

were also significant exporters of farm equipment to

the United States—see Exhibit 4 .

Deere & Company’s Strategy in 2014 Deere & Company’s farming equipment product lines

were aimed at supporting the farming of every owner

of Deere equipment and compelling the thought of

“should’ve got a John Deere” among those who farmed

with rival equipment. Farming was arguably the most

time-sensitive industry since harvesting windows could

be limited to a matter of a few days. In addition, farming

seasons were limited to specific months when weather

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CASE 19 Deere & Company in 2014 C-289

EXHIBIT 3 Product Segmentation of the Tractor and Agricultural Equipment Industry, 2013

Dairy farm equipment, sprayers, dusters, blowers

and attachments, 9.6%

Harvesting machinery,

24.2%

Parts sold separately,

22.3%

Total: $41.6 billion

All other tractors and agricultural machinery and

attachments, 19.5%

Haying machinery and attachments,

12.3%

Planting, seeding and fertilizing machinery and

attachments, 12.1%

Source: Adapted from IBISWorld, February 2014.

EXHIBIT 4 Leading U.S. International Trade Partners for Agricultural Products, 2013

All others, 46%

Brazil, 4%

China, 13%

Germany, 16%

All others, 45%

Canada, 14%

Japan, 12%

Mexico 8%

Australia 7%

Canada, 34%

Total: $11.8 billion Total: $10.5 billion

Imports to the United StatesExports from the United States

Source: Adapted from IBISWorld, February 2014.

was favorable to various types of crops. Deere’s strat-

egy of producing the highest-quality, most reliable

farm equipment and offering farmers the highest level

of customer service resulted in fiscal 2013 being the

company’s best financial year ever.

Deere & Company’s strategic intent was to

achieve $50 billion in sales by fiscal 2018 and 12 per-

cent profit margins by fiscal 2014. Deere’s strategy was

keyed to expanding its business globally and enhanc-

ing its complementary businesses while supporting the

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C-290 PART 2 Cases in Crafting and Executing Strategy

Power Systems/Global Parts/Intelligent Solutions

Group. Deere’s strategy in each of its two heavy-

equipment divisions was to learn more about its cus-

tomers’ local needs and translate the knowledge into

products and services that delivered superior cus-

tomer value. The Agriculture and Turf division was

Deere’s largest division and was the focus of its new

product development activities. The Construction

and Forestry division remained profitable in spite

of a slowing demand for construction machines.

Deere’s Financial Services division also experienced

financial success. In 2013, the division achieved net

income of $565 billion. The loan and lease portfo-

lio of Deere & Company grew by approximately $5

billion.

Dealership Collaboration Deere & Company attributed much of its success to its relationship with

its dealers throughout the world. It emphasized the

necessity of having an effective distribution and

aftermarket support system. In the Commonwealth

of Independent States, the number of dealerships

increased by 50 percent between 2011 and 2013. The

company also added new parts distribution centers

in South Africa and Argentina and had additional

expansion plans to begin operations in India and Bra-

zil. Deere established cooperative banking relation-

ships in seven African nations where additional sales

opportunities were projected. Also, the company had

a retailing-financing presence in over 40 countries

that accounted for more than 90 percent of its sales.

Product Innovation Deere & Company focused on the use of technology to better assist end users

with managing and using their equipment. This was

achieved via the MyJohnDeere platform. This wire-

less data transmission system enabled the collection

of data that was used for analysis by John Deere, in

regard to the mechanical performance of equipment,

and by customers, in regard to production metrics.

In addition, Deere focused on manufacturing dozens

of equipment attachments, such as those utilized for

demolition and landscaping.

Increases in product lines also helped the com-

pany with its goal of continued growth and profit-

ability. In 2013, Deere introduced nine advanced

agricultural equipment models, as well as flex-fuel

premium lawn tractors, commercial mowers, and

Deere’s first hybrid-electric construction equipment.

The company focused particularly on increasing effi-

ciency and incorporating technology while reducing

overall business. In doing so, the company believed

its critical business factors (CBFs) consisted of bet-

ter understanding consumers at a root level, delivering

value, offering a world-class distribution system, and

grooming and hiring extraordinary international asso-

ciates. The CBFs were predicated on building from

the foundation already in place, consisting of Deere’s

exceptional business performance, optimal shareholder

value-added growth, and aligned high- performing,

team-oriented associates. The company evaluated the

“health and performance” of its operations on an ongo-

ing basis and, as necessary, made appropriate adjust-

ments to further improve customer value. Ultimately,

the overarching goal was to offer consumers farming

products that were representative of a company with

integrity and commitment to manufacturing innovative

products of the highest quality.

Deere’s purpose was to be fully committed to

those “linked to the land.” The company’s manag-

ers believed that many opportunities existed for the

company, such as an increase in the global popu-

lation and income growth, which would require

infrastructural needs on a global basis. Additional

opportunities included new consumer segmentation

and advances in technology.

The company identified challenges moving for-

ward. Specifically, Deere foresaw capturing more cus-

tomers across six identified key regions (United States/

Canada, European Union, Brazil, CIS/Russia, China,

and India), with a focus on meeting each country’s

local farming and agricultural equipment needs while

leveraging global economies of scale. The company

was strategizing forward progress without encounter-

ing any headwind. The company planned to increase

its market share in developed markets. At the time,

Deere was number two in market share in North Amer-

ica, a ranking it hoped to strengthen and increase. Per-

haps a continuous focus on technology and increased

customer services, coupled with competitive pricing,

would help the company increase its market share.

Alternatively, maybe the solution was to focus on

additional research and development and enhance its

domestic manufacturing plants and products while also

focusing on optimally manufacturing equipment to

meet the specific country demands of farming abroad.

Deere & Company’s Business Divisions In 2014, the company had three primary businesses:

Agriculture and Turf Equipment, Construction and

Forestry Equipment, and the Financial Services/

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CASE 19 Deere & Company in 2014 C-291

garden and turf care products, while the plant in

Augusta, Georgia, manufactured the 5E, 5EN, and

5M Series tractors. The Fuquay Varina, North Caro-

lina, plant made golf equipment and turf mowers.

International Manufacturing Operations Expansion plans called for new manufacturing loca-

tions in key markets that were to be completed in

2013 and ready in 2014 to support increased produc-

tion. Deere opened three locations in China to sup-

port construction equipment, engines, and large farm

equipment; two locations in Brazil, one of which

was in conjunction with Hitachi, for construction

equipment; one location in India for manufacturing

farm equipment; and one in Russia for manufactur-

ing seeding and tillage machines. Additional plans

included expansion into Germany to manufacture

cab production and into Brazil to manufacture large

tractors. In the United States, the company’s expan-

sion included new factories in Moline and Valley

City, North Dakota, and extensive modernization at

existing plants. Deere sold its landscape operation

and purchased a manufacturer of ultra-wide planters.

Deere’s international manufacturing operations

spanned Mexico, India, Argentina, China, Canada,

and Europe. Two plants in Mexico (Saltillo and

Torreon) manufactured a variety of agricultural trac-

tors. Power systems were manufactured in Fleury-

les-Aubrais, France. Tractors, diesel engines, and

header models for grain harvesting were built in

Granadero Baigorria, Santa Fe, Argentina. The Pune,

India, plant manufactured small agricultural trac-

tors, while additional tractors were manufactured in

the Mannheim, Germany, plant. The Zweibrücken,

Germany, plant manufactured harvesting equip-

ment, and the Horst, Netherlands, plant manufac-

tured spraying equipment. Forwarders and wheeled

harvesters were built in the Joensuu, Finland, plant.

The Edmonton, Alberta, Canada, plant produced

remanufactured equipment. Consumer and com-

mercial lawn equipment was manufactured in Gum-

mersbach, Germany.

DEERE’S RIVALS IN THE TRACTOR AND AGRICULTURAL EQUIPMENT INDUSTRY Deere & Company was the world’s leading manu-

facturer of agricultural and forestry equipment,

with a market share of 35.4 percent in 2013. Its

emissions and meeting consumers’ requirements for

power, reliability, and fluid and fuel efficiency. In a

highly notable achievement, Deere’s larger engines

were certified as meeting the strict U.S. and European

emission standards. Deere had reduced the emissions

level of all its engines by over 99 percent since 1996

as a result of redesigning virtually all of its engines.

Awards, Achievements, and Corporate Re- spon sibility Deere & Company was named one of the top-100 innovators by a leading business

media group on the basis of its patents and technol-

ogy developments. The company received additional

awards and recognition from organizations through-

out the world, including special recognition for its

new Chinese-made combine, which took top honors

at China’s largest machinery venue.

In 2013 Deere focused on identifying solutions

to world hunger, improving educational opportu-

nities, and helping to develop better communities

in the locations where it operated. In most cases,

Deere & Company employees volunteered to assist

in the execution of its social initiatives. For exam-

ple, to further the company’s social mission, more

than 3,000 U.S. employees prepared approximately

960,000 packaged meals for those in need in 2013,

and 20 employees spent a week in northwest India

training small farmers in new farming methods. In

2013, Deere & Company was named for the fifth

time to Fortune ’s “Most Admired Companies” list.

Domestic Manufacturing Operations Deere’s manufacturing plants in the United States were located

in seven states (Iowa, Illinois, North Dakota, Georgia,

Louisiana, Missouri, and Wisconsin). Deere manufac-

tured tractor cabs and other assemblies in its Waterloo,

Iowa, plant. Large combine harvesters and hydraulic

cylinders and planting equipment were manufactured

in East Moline, Illinois. The plant in Valley City, North

Dakota, manufactured tilling and seeding equipment.

The Davenport, Iowa, plant manufactured wheel

loaders, motor graders, dump trucks, and forestry

equipment. In neighboring Dubuque, Iowa, produc-

tion consisted of backhoes, crawlers, tracked forestry

equipment, and skid-steer loaders. The Springfield,

Missouri, plant manufactured engines.

The Ankeny, Iowa, plant manufactured spray-

ers, while hay and pull-type mowers were made in

Ottumwa, Iowa. Cane harvesting equipment and

scrapers were made in Thibodaux, Louisiana. The

plant in Horicon, Wisconsin, produced lawn and

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C-292 PART 2 Cases in Crafting and Executing Strategy

equipment market in 2013. The company’s tractors,

combines, planters, grain storage silos, and other

agricultural equipment was sold in 140 countries.

Sales from North America accounted for approxi-

mately 25 percent of the company’s revenues in

2013. The company held a strong market presence

in emerging markets, such as Brazil and other Latin

American markets. Approximately 60 percent of its

revenues were generated from tractor sales under

brands such as Massey Ferguson, Fendt, and Chal-

lenger. The company had approximately 1,300

dealers in North America, 340 dealers in South

America, 1,160 dealers in Europe and the Middle

East, and 300 dealers in the Asia-Pacific region.

A summary of AGCO’s financial performance

between 2009 and 2013 is presented in Exhibit 6 .

Caterpillar, Inc. Caterpillar, Inc., manufactured construction and min-

ing equipment, diesel and natural gas engines, gas

turbines, and diesel-powered locomotives. The com-

pany also built and marketed small to medium-sized

track-type tractors for use in the construction and

mining industries. In 2013, the company’s construc-

tion industry division recorded sales and operating

profit of $18.5 billion and $1.8 billion, respectively.

The company’s construction equipment sales in North

America for 2013 were approximately $7 billion, with

sales in the Asia-Pacific region approximating $4.7

billion; sales in Europe, Africa, and the Middle East

slightly exceeding $4 billion; and sales in Latin Amer-

ica approximating $2.7 billion. In 2013, the compa-

ny’s revenues for its energy and power systems were

approximately $20.1 billion, its mining machinery

primary competitors in the tractors and agricul-

tural equipment industry were CNH Industrial N.V.,

the maker of Case and New Holland tractors and

construction equipment; AGCO Corporation, the

maker of Massey Ferguson and other brands; and

Caterpillar, Inc.

CNH Industrial N.V. CNH Industrial N.V., based in Basildon, United

Kingdom, held an 11.7 percent market share and

was Deere & Company’s primary rival in agricul-

tural equipment. CNH Industrial was formed in

2013 as a result of a merger between CNH Global

and Fiat Industrial. The company marketed agri-

cultural equipment under 12 global and regional

brands, and it had 62 manufacturing plants, 48

research and development centers, and 6,000 deal-

ers in 190 countries. The company’s farming/agri-

cultural and construction equipment was marketed

under such brands as Case IH Agriculture, New

Holland Agriculture, and Steyr. CNH Industrial also

manufactured and marketed trucks, busses, and other

commercial vehicles under the Iveco and Heuliez-

Bus brands. The company’s total revenues in 2013

were €25.8 billion. Approximately 62 percent of the

company’s revenues and 94 percent of its operating

profits were generated from the sale of agricultural

and construction equipment in 2013. Exhibit 5 pro-

vides a summary of the company’s financial perfor-

mance for 2009 through 2013.

AGCO Corporation AGCO Corporation, based in Duluth, Georgia, held

an approximate 4 percent share of the global farm

2013 2012 2011 2010 2009

Net revenues €25,778 €25,785 €24,289 €21,342 €17,968

Trading profi t 1,985 2,063 1,690 1,096 322

Operating profi t (loss) 1,868 1,846 1,633 1,021 (19)

Profi t (loss) before taxes 1,507 1,460 1,162 567 (470)

Profi t (loss) 917 900 694 369 (503)

Total assets 40,941 38,861 38,572 34,873 30,872

Total equity 5,556 5,376 5,252 4,556 5,718

Source: CNH Industrial 2013 annual report.

EXHIBIT 5 Financial Summary for CNH Industrial N.V., 2009–2013 (in millions of euros)

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CASE 19 Deere & Company in 2014 C-293

emerging and new markets and utilizing technol-

ogy to both help production and provide real data

to customers that would support increased produc-

tivity. Deere management believed that in order

to continue to achieve global business success,

the company needed to understand its custom-

ers at a deeper level and deliver greater customer

value. Management also understood that Deere’s

employee-associates and dealer allies were criti-

cal elements in its plan for long-term success. The

overall aim was to deliver quality, stemming from a

company with stellar integrity that was committed

to providing innovative products and services for

consumers.

Specifically, the company planned to advance

operations and increase market share across six

key markets: the United States and Canada, Bra-

zil, China, Russia, India, and the European Union.

However, the company’s chief rivals all recognized

the same trends in the macro-environment and the

same opportunities for growth in revenues in prof-

its. Deere & Company management would be

compelled to develop an international strategy that

yielded competitive advantage in domestic and rap-

idly growing emerging markets to capitalize on the

industry’s opportunities.

revenues were approximately $13.3 billion, and its

financial services revenues were nearly $3.2 billion.

A summary of Caterpillar’s financial performance for

2009 through 2013 is presented in Exhibit 7 .

Caterpillar’s strategy was focused on best-in-

industry quality and after-the-sale service. The com-

pany maintained 178 global dealers, with an average

dealer relationship of more than 88 years. The com-

pany’s relationship with its dealers and its commit-

ment to unmatched parts availability ensured that

the 3 million Caterpillar products around the world

were in top-notch operating condition and were able

to keep construction projects on schedule. Caterpil-

lar’s strategy was also focused on developing new

products and improving the company’s cost structure

to boost profitability. Even though Caterpillar was

the industry leader in construction equipment sales,

it experienced a dramatic decline in sales and profit

in 2013 due to a slowdown in global construction.

THE FUTURE FOR DEERE & COMPANY Deere & Company’s strategy seemed on track in

2014 as the company focused its efforts on entering

2013 2012 2011 2010 2009

Net revenues $10,786.9 $9,962.2 $8,773.2 $6,896.6 $6,516.4

Gross profi t 2,390.6 2,123.2 1,776.1 1,258.0 1,071.9

Income from operations 900.7 693.2 610.3 324.2 218.7

Net income 592.3 516.4 585.3 220.2 135.4

Total assets 8,438.8 7,721.8 7,257.2 5,436.9 4,998.9

Total equity 4,044.8 3,481.5 3,031.2 2,259.2 2,394.4

Source: AGCO Corporation 2013 annual report.

EXHIBIT 6 Financial Summary for AGCO Corporation, 2009–2013 (in millions)

2013 2012 2011 2010 2009

Net revenues $55,656 $65,875 $60,138 $42,588 $32,396

Operating profi t 5,628 8,573 7,153 3,963 577

Net profi t 3,789 5,681 4,928 2,700 895

Total assets 84,896 88,970 91,218 63,728 59,842

Source: Caterpillar, Inc., 2013 annual report.

EXHIBIT 7 Financial Summary for Caterpillar, Inc., 2009–2013 (in millions)

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