...Case Study of John Deere Contents OVERVIEW OF JOHN DEERE 3 A. PRODUCTS 3 B. MARKET CONDITIONS 4 C. COMPETITIVE LANDSCAPE 6 II. 2012 FINANCIAL STATEMENT ANALYSIS 7 A. REVIEW OF INCOME STATEMENT AND BALANCE SHEET 7 B. REVIEW OF KEY FINANCIAL RATIOS 11 C. REVIEW OF FINANCING ACTIVITIES 16 D. RECOMMENDATIONS – Business Performance Improvement 19 E. RECOMMENDATIONS – Buy/Sell/Hold Strategy 20 III. APPENDIX 21 IV. EXHIBIT 2 - ACCOUNTING POLICIES 22 V. Bibliography 24 VI. DEERE & COMPANY – 2012 10K financial statements 25 A. CONSOLIDATED INCOME STATEMENT 25 B. CONSOLIDATED BALANCE SHEET 26 C. CONSOLIDATED STATEMENT OF CASH FLOWS 27 * OVERVIEW OF JOHN DEERE PRODUCTS John Deere & Company is a publicly traded company headquartered in Moline, IL. The company’s roots trace back into the 1800’s when John Deere began with an idea to assist farmers and would forever change the agricultural industry. Today with over 66,000 employees and a corporate family that has nearly 650 companies’ worldwide, Deere ranks number 85 on Forbes list of top 1,000 companies. With over $56 billion in assets and a market value that tops $31 billion, Deere’s financial position is very strong. We will present a detailed analysis of the firm to see how it stacks up against the Caterpillar, the market leader. We will exam key financial ratios and finally give a recommendation on whether the stock is a buy, sell or hold. Deere operates its business...
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...It is common knowledge that John Deere is one of the largest manufacturers of agricultural equipment. Many people looking from the outside think they have a well-oiled machine, which make superior agricultural products. According to Sprinkle and Williamson (2004), the entire industry took a severe downturn in the 1980's. In reaction to this cycle, Deere presented innovative ways to inspire employees and raise moral. Like many companies, John Deere used a standard hourly compensation for their employees. John Deere decided to install a team-based gain-sharing plan that it believed would encourage more cooperation, innovation, and higher levels of motivation from its employees. (Retrieved 10/12/07) Much like the Good Sport scenario, management needed to find a way to promote teamwork and employee participation. Management reached out to the design group at Good Sport, the development and design teams found ways to use existing processes to manufacture the new product by using existing parts and manufacturing with little additional cost or change to production methods. Because the corporate culture at Good Sport promoted teamwork, solutions developed resolved the issues between departments. In John Deere's case, management realized they had a wealth of knowledge and experience within their front line employees. In many companies, the employees usually hold trade secrets in the production process. The John Deere employees were no different. Management needed a way to open the doors...
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...1. What are the Strengths and Weaknesses of the existing cost system at JDCW? The Weaknesses are as given below: • The current costing system followed at JDCW is not effective for individual parts bidding and costing. • The allocated Machine Hours are not supported by the product unit which thus leads to improper allocation of costs. • By using only three overhead rates the current costing system doesn’t calculate the true production costs as the other activities of the production process are not taken into consideration. • The current costing system doesn’t compute material variances which doesn’t honor the accuracy of the costing structure. For more accurate measure, the variance calculations should be included in the weekly report. • The costing system has not been changed or modified since its inception. Initially it was designed for direct labor intensive production process with minimal overhead costs. Now the company has changed its production process to automated system which has increased the overhead costs. The increase in overhead costs is due to more supervision, maintenance etc. • Using the current costing system the JDCW management continually under-costs its low volume parts and over-cost its high volume parts. The Strengths are as given below: • The existing system is strong, simple and easy to maintain. The allocation of overhead is done on the basis of direct labor and direct machine hours. • The existing system was working satisfactorily...
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...Operational Management: John Deer Case Study The company that has been chosen for this case study is John Deere Equipments. This company was founded by John Deere in 1837 and was incorporated in 1868 as Deere & Company. John Deere started this company as a one-man blacksmith shop and it is now a worldwide corporation that has its offices in more than 160 countries and employs more than 46,000 people. John Deere is one of the oldest industrial companies in the United States and it is guided by the original values of quality, innovation, integrity, and commitment that John Deere instilled at the beginning. The business strategy of John Deere, in their own words is: “We aspire to distinctively serve customers — those linked to the land — through a great business, a business as great as our products. To achieve this aspiration, our strategy is: Exceptional operating performance, Disciplined SVA growth, Aligned high-performance teamwork Execution of this strategy creates the distinctive John Deere Experience that ultimately propels a great business and, for all with a stake in our success, delivers...Performance That Endures” (1). The company is always striving to give its stakeholders the maximum value for their money by continuous improvement and growth in all sectors of the company. The company is organized into four manufacturing divisions: · Agricultural Equipment – products for farms; · Commercial and Consumer Equipment – equipment related to lawn and ground care, residential...
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...Russ Britton Mrs. Watters English 400 9/8/14 John Deere and the Company John Deere was born in Rutland, Vermont, on February 7, 1804. He was raised by his mother basically his whole life. Growing up, he wanted to be a blacksmith. He fulfilled his dream at age 17 as a blacksmith’s apprentice. A few years later, he was doing it on his own. His next twelve years were very busy after that. In 1837, Deere moved west to Grand Detour, Illinois. As he was there he opened up his own blacksmith shop. As a blacksmith, he experienced working on other plows that had been created for farming. John quickly realized that these plows needed to be remade. Here he began to start creating his own plows and he sold three plows by 1838. He had produced ten more plows by the next year. and even forty more by 1840. The demand for these plows were high, therefore he partnered up with Leonard Andrus to produce even more. In 1846, they sold close to one thousand plows that year. A few years later, Deere noticed that Grand Detour wasn’t good enough for him. As a result, he packed up and moved to Moline, Illinois. Moline is located by the Mississippi River, which gave him access to even more opportunities. He was able to offer cheap transportation and water power. John started to get british steel because it is sturdy. That immediately sped up his operation. His company made around 1,600 plows in the year of 1850. In 1858, he transferred his leadership of the company to his son, Charles, who was turned...
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...Business Analysis on Deere & Company McKenzie R. Mayfield Tarleton State University Dr. Nathan Heller October 31, 2015 Author Note I attest that this document is an original creation submitted in accordance with the requirement for the Comprehensive Written Project (CWP) in Seminar in Business Strategy (GB-5388) during the Fall 2015 academic term. Abstract This document provides an in depth company analysis of Deere & Company (DE). In the first segment of the analysis, an overview of John Deere’s history, product and service offerings, corporate strategy, and a synopsis of the heavy equipment production industry will be evaluated. The second segment includes a financial overview and analysis of the three most recent years at Deere & Company. In order to do so, balance sheets, income statements, and key financial ratios will be collected and evaluated. In the third segment, this paper will examine the heavy equipment market, current industry averages, economic climate, and financial and strategic statuses of competing businesses. After the analysis is complete, a SWOT analysis (strengths, weaknesses, opportunities, and threats) will be conducted in order to identify key success factors and driving forces. Based on the results of the SWOT analysis, the final segment of this document will make recommendations about the strategic actions that Deere & Company should take in the future. Keywords: [Click here to add keywords.] Comprehensive Business Analysis on Deere & Company When...
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...Executive Summary John Deere & Company was founded in 1837 by a blacksmith named John Deere who built an empire as a manufacturer of agricultural equipment with his invention of a newly designed plow as stated in the company website (“History”, 2013). Deere is deeply rooted in the agriculture sector which is reflected by their manufacturing of farm equipment and development of efficient farming strategies, logistics, and products. The company has grown to be one of the world’s largest and most recognized manufacturers of agricultural, construction, and forestry equipment. After a thorough analysis of John Deere’s financial position and marketing strategies, the state of the organization is strong but there is still room for improvement. Key opportunities exist to accelerate future growth through investment in new projects that will create important value for the organization. John Deere must protect the brand’s reputation by addressing potential performance issues in the product line. Global operations are also a critical sector of John Deere’s growth strategy. Opportunities in India, China, and Brazil present the most attractive option for increased production and sale. The main focus of this strategic plan is to continue to aggressively pursue the global strategy while being very transparent and focusing on building strong business relationships. John Deere & Co. must make their presence, mission, and core values well known in foreign markets. This can be achieved...
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...JOHN DEERE AND COMPLEX PARTS INC. I. Summary of Findings Deere & Company is the global leading manufacturer for forestry and farm equipment, but also produces other equipment such as for construction, commercial and consumer. The company’s total assets amounted to over $34 billion, and thus proves that the company produces quality products patronized by plenty consumers. Deere & Company has been working with Complex Parts, Inc. for a very long time, which earns $3.5 million from the former. They have been working together for the past 10 years. Deere aims to be of world quality, with strong supplier relationships by the use of the Achieving Excellence Program (AEP). The program is an evaluation process regarding suppliers in the business, which results to stronger supplier relationships for better equipment quality in the long run. The performance of Complex Parts gets good scores from the AEP, although is weak in some parts, such as responsiveness, which challenges Deere between choosing a new supplier or changing their standards in the program. II. Background Information Deere & Company was founded by John Deere in 1837, and is headquartered in Moline, Illinois. They are the world’s leading manufacturer of farm and forestry equipment, and also produce construction, commercial and consumer equipment. Other products and services produced by Deere included equipment financing, power systems, special technologies and healthcare. In 2007...
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...Running head: DEFINING MARKETING AND MARKETING MIX Defining Marketing and Marketing Mix Defining Marketing and Marketing Mix An organization ability to market itself to consumers satisfying a need or a desire for specific product or service drives success. One can argue that an organization of any size needs some form of marketing to withstand the elements of time and competition. The forms of marketing can vary from an organizations consumer’s spreading a word of mouth advertisement to an organization ability to spend millions of dollars on advertising on its products or services. An example of an organization spending millions of dollars on advertising is the upcoming super bowl commercial that everyone has grown to expect. Therefore, an organization willingness to spend millions of dollars for 30 seconds of airtime is demonstrating how important marketing is to promote goods or a service to consumers. An organization uses various forms of marketing to sell the service or goods that customers want. Some consumers are not even aware they wanted a specific product until they had seen it through a form of marketing. So this is why understanding marketing is so important when leading an organization. Marketing is a process in which an organization learns and understands what its consumer’s wants and desires are for specific goods or services. The element of the ability to market goods and service often drives the...
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...Assignment # 3 Case 5 John Deere and Complex Parts, Inc. Summary Deere & Company was formed in 1837, with its headquarters set up in Moline, Illinois and were considered as a pioneer in manufacturing farm and forestry equipment, construction, commercial and consumer equipment. Their broad range of products and services included equipment financing, power systems, special technologies. In 2006, supplier evaluation team members of Deere Inc. Moline unit were united to discuss the performance of Complex Parts. For the past 10 years, Complex Parts, Inc. had been playing a key role in Deere’s sales with an annual approximation of U.S. $3.5 million. Their contribution to Deere Inc. included supplying them a key manufactured part, which required significant engineering input and testing. Even though other suppliers could produce this part, Complex parts Inc. took charge of it by actively involving with Deere Inc.’s sales engineers weekly, associating with their cost reduction strategies. And keeping up the Deere Inc.’s design changes and globalizing their quality plan. But during the past year, Complex Parts had provided questionable service to the Moline unit and now the unit manager John has been analyzing whether to continue business with Complex Parts, Inc. or to source it from a new supplier. Deere Inc. had a dynamic supply management strategy in place, known as Achieving Excellence Program (AEP). The program was about giving Deere and its suppliers the necessary...
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...DSCI 434-53 Chapter 3 Case Study – John Deere The product development process should be how John Deere’s vision becomes reality. Not only this, but it should be how societies needs are ordered and provided through innovated design and engineering. The case study for Deere and Company, Scott is hired as the new supply chain management manager. Upon hire Scott is confronted with many problems. Deere and Company plans to triple its market share by focusing on the product development of the skid-steer machine. The skid-steer machine is supposed to sell more than 60,000 units amounting to $1.2 billion by 2000-2001. Deer and Company wants take back control of the design and manufacturing from New Holland and improve it. Scott and Deere Company face numerous amounts of challenges within this case. The first being that Scott needs to get suppliers involved in the development phase of the product design. The relationship between customers, manufactures and suppliers should be established early in the product development process. This is critical because decisions are made not only for the functionality of the product but also for the customer. The impact would be a significant loss of revenue and sales because the product wasn’t designed up to the consumer’s standards. The idea to implement supplier integration this phase for the skid-steer machine is to make a new business model to stay competitive in the increasing global competition. I think Scott should look for suppliers who...
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...Operational Management: John Deer Case Study The company that has been chosen for this case study is John Deere Equipments. This company was founded by John Deere in 1837 and was incorporated in 1868 as Deere & Company. John Deere started this company as a one-man blacksmith shop and it is now a worldwide corporation that has its offices in more than 160 countries and employs more than 46,000 people. John Deere is one of the oldest industrial companies in the United States and it is guided by the original values of quality, innovation, integrity, and commitment that John Deere instilled at the beginning. The business strategy of John Deere, in their own words is: “We aspire to distinctively serve customers — those linked to the land — through a great business, a business as great as our products. To achieve this aspiration, our strategy is: Exceptional operating performance, Disciplined SVA growth, Aligned high-performance teamwork Execution of this strategy creates the distinctive John Deere Experience that ultimately propels a great business and, for all with a stake in our success, delivers...Performance That Endures” (1). The company is always striving to give its stakeholders the maximum value for their money by continuous improvement and growth in all sectors of the company. The company is organized into four manufacturing divisions: · Agricultural Equipment – products for farms; · Commercial and Consumer Equipment – equipment related to lawn and ground care, residential...
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...In the John Deere case Scott Nolan has faced a challenge when he accepted the job. His supervisor has requested him to identify and justify which suppliers to integrate in the product development phase, and specify how to construct the interactions with the chosen suppliers. The target of Scott Nolan is to have the new plant up and running smoothly by the target date of July 1998. The market was growing about 15-20% per year and was projected to reach $1.2 billion, or 60,000 units by year 2000-2001. In 1995-1996, John Deere had been outsourcing their manufacturing to Holland, although New Holland produced their own competing skid loaders. New Holland had agreed to sell only the excess capacity to manufacture the same product. Since the market demand was increasing John Deere needed to make more Skid Loaders, although New Holland refused to do so, in return, John Deere had decided to design and manufacture their own skid loaders directly, and become the leading manufacture of Skid Loaders. A solution for John Deere to manufacture directly is to build a new building in Knoxville, TN. In April of 1996 JD in invested in a $35 million site to directly design and manufacture the Skid Loader. By taking back the manufacturing and design of the skid loader, John Deere can really take control of their costs and profits. Since New Holland was a main competitor, John Deere can now differentiate their product from others in the market. John will be able to make their design specific...
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...John Deere and Complex Parts, Inc. 1 On Friday, November 22, 2006 Blake Roberts, Hayley Marie, Stan Eakins, and John Pearson, one of John Deere’s supplier evaluation teams, were discussing the performance of Complex Parts. They had provided questionable service to John Deere’s Moline unit over the past year, and they were wondering if this merited giving Complex Products’ business to a different supplier. They needed to recommend a course of action to their project manager next week. Company Backgrounds Deere & Company, headquartered in Moline, Illinois, was founded in 1837 and in 2007, they conducted business in over 110 countries and employed approximately 47,000 people worldwide. They are the world’s leading manufacturer of farm and forestry equipment, and also produce construction, commercial, and consumer equipment. Other products and services produced by Deere include equipment financing, power systems, special technologies, and healthcare. Net sales in 2006 were over $19 billion with total assets of more than $34 billion. Cost of goods sold in 2006 was approximately $15 billion. Complex Parts, Inc. had been a supplier of John Deere for the past 10 years with annual sales to their Moline unit of approximately $3.5 million. They supplied Deere with a key manufactured part requiring significant engineering input and testing. Two other Deere suppliers were capable of supplying this part; however, Complex Parts was providing all of Deere’s needs at the time...
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...organization receive in turns of funding and management support? Is IT a “value adding” area? Or merely a “cost center”? I used to work for John Deere in Coahuila, Mexico. What is very interesting is that approximately 10 years ago the IT administration barely existed, as they didn’t even have a CIO. In that time, maintaining operational data centers running was more than enough. Today, the expectations from the CIO are much more. John Deere expects that the CIO be a business leader, not only an administrator of TI; JD expects that he leads a complex critical mission as any other operation in the company and work shoulder to shoulder with the business units to help improve the performance and efficiency of the company. The IT administration is led by the CIO and the CIO reports directly to the CEO. The CIO is involved in the steering committees because he is the one who has the ability to deliver technology solutions to the business requirements. If the CIO weren’t involved in the strategic planning process it would be very difficult for him to contribute to the transformation of the organization using Information Technology. Therefore, besides his own experience in the area, the CIO also has a financial background to be able to demonstrate the tangible benefits of investing in Information Technology. This big decision that John Deere took back then, makes me think that the IT management receives good funding and management support. 2. Think about a recent IT investment...
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