1. JOHN DEERE
STRATEGIC BUSINESS ASSESSMENT
Presented by
Jackson Belcher
Carson Hall
Tim Lewis
Ian Schranze
Charles Worrilow

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Table of Contents
I. EXECUTIVE SUMMARY………………….…………. 3
II. COMPANY OVERVIEW………………………….…... 4
III. FINANCIAL ANALYSIS……………………..……..…. 5
i. RATIO ANALYSIS 5
ii. INVESTMENT RECOMMENDATION 9
iii. BANKING PERSPECTIVE 10
IV. STRATEGIC MARKETING ANALYSIS…..….…… 12
i. IMMEDIATE ENVIRONMENT 12
ii. MACRO ENVIRONMENTAL FACTORS 22
iii. STRATEGIC MARKETING MIX 26
iv. SALES FORECASTING 30
V. STRATEGIC OPERATIONS………………….…….. 32
i. ORDER WINNERS & QUALIFIERS 32
ii. PROCESS, FACILITIES, & LOCATION 34
iii. SUPPLY CHAIN INTEGRATION & OUTSOURCING 36
iv. TECHNOLOGY AND SYSTEMS 38
v. INFASTRUCTURE 40
vi. SUSTAINABILITY AND CORPORATE SOCIAL
RESPONSIBILITY 42
VI. MANAGERIAL ACCOUNTING ANALYSIS……… 48
i. COST BEHAVIOR ANALYSIS 48
ii. PROCESS ANALYSIS 48
iii. BALANCED SCORECARD 50
VII. SWOT ANALYSIS……………………….…………… 54
VIII. FUTURE OUTLOOK………………….…………...… 57
IX. REFERENCES………………………….…………….. 59
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I. Executive Summary
Over 175 years ago, John Deere had one goal in mind: to create a culture that delivers core
values of integrity, quality, commitment and innovation to the people dedicated to the lay of the
land. Deere and Company strives to differentiate itself in the marketplace through these values,
but also seeks ways to enhance its performance and ultimately deliver the highest quality
products to its customers. Deere has embraced the ever-increasing technological and
manufacturing advancements in their industry.
John Deere is an American corporation that has three main business operations: agriculture and
turf, construction and forestry, and financial services. The agriculture and construction market is
a very competitive one, forcing John Deere to compete with companies like Kubota, Caterpillar,
AGCO, and Volvo Construction Equipment. Due to the economic conditions in the industry, the
competitive environment within each segment brings both opportunities and challenges to John
Deere. Over the past decade, Deere has made efforts to increase its global manufacturing
capacity to compete with the other companies in the industry.
Historically, Deere’s main focus has been on agriculture and turf equipment. In 2014, Deere’s
operating profit in this segment was more than triple the amount of its financial and construction
and forestry segments. However, the massive focus on agricultural and turf machinery has
actually held John Deere back from reaching its full potential. This can be attributed to the rapid
decline in value-farmed crops. Because the values of corn and grain products are declining,
farmers have not been able to generate enough income to be able to afford the type of equipment
Deere provides. Although Deere is preparing for losses in its agricultural and turf segment, the
company’s construction and forestry division is on pace to increase its revenue. As the need for
higher housing and infrastructure increases, Deere’s manufacturers of construction equipment
are ready and waiting to meet customer demands.
While John Deere is expecting an increase in revenue from its construction and forestry segment,
it will not make up for how much Deere is losing from its overbearing agriculture and turf
division. Due to the unstable economic state of the farming industry and its weak financial
standing, one must consider John Deere & Company stock a sell.

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II. Company Overview
Deere & Company and its subsidiaries, collectively known as John Deere, is a multinational
company that can be categorized into three different business segments. These segments include:
agriculture and turf equipment, construction and forestry equipment, and financial services
(credit). The agricultural and turf and construction and forestry market segments specialize in
both the sale to commercial and residential consumers. Through these business segments, John
Deere has become one of the largest equipment manufacturers in the world. The company is a
world leader in providing advanced products and services to those individuals whose work is
linked to the land; whether that may be harvesting, cultivating, enriching or building to meet the
ever-increasing, global consumer appetite.
Since 2013 fiscal year, the company’s total sales have dropped 34.6% from $34.998 to $25.990
billion. John Deere has experienced a continual decline in total revenue. The primary
discretionary issue of the decline in revenue is the poor farming community. The 40% drop in
domestic farmer’s incomes has had a direct effect on John Deere’s agriculture and turf market
segment sales. Experts suggest the sale of farming equipment is projected to decrease another
25-30 percent. Projections show that Deere and Company’s forestry and construction sales are
estimated to increase by another five percent as of next year; gradually offsetting the significant
decline in agriculture and turf equipment sales.
All of John Deere’s business segments are affected by a multitude of different variables
including general economic factors in both domestic and global markets. To name a few, the
changes in customer confidence and foreign currency exchange rates all have a direct effect on
the company as a whole. In addition, government spending and taxing could negatively affect the
economy, therefore having a direct impact on employment as well as consumer and corporate
spending. These are all inevitable challenges that John Deere currently faces. While these factors
are unavoidable, John Deere does have direct control over certain expenses. Over the past
decade, John Deere has invested millions of dollars in its global expansion of property, plant, and
equipment. Initially, there were hopes of immediate returns from these investments. Like all
things nothing is for certain. This investment was a high risk, high reward situation, but for
Deere they have yet to see such reward. This global expansion has only furthered the company’s
debt. The main contributing factor behind the increased debt includes the lack of liquid capital in
the company.
By having a diversified product portfolio, John Deere is able to mitigate the negative impact of
the weak farm economy. In years past, John Deere has encountered problems with its continual
accumulation of finished goods inventory. However, John Deere has taken the initiative to
reduce this inventory by reconfiguring its distribution process. Deere & Company has set out to
craft a supply chain that will lead to lower costs and better customer service, while coping with
the extremely seasonal nature of the business.

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III. FINANCIAL ANALYSIS
The following section analyzes the company’s financial standing compared to one of John
Deere’s major competitors, Caterpillar, as well as the industry average. The liquidity, asset
management, debt management, and profitability ratios provide a strong financial analysis of
Deere and Company.
Stock Repurchase/Economic Factors
John Deere has been executing a stock repurchase since 2004, with the most significant
announcement in May 2008 claiming the company would be buying back $5 billion in stock. In
determining the EPS ratio, an important factor for John Deere is the average common shares
outstanding. This repurchase and increases in net income are the two factors attributable to John
Deere’s successful earnings per share ratio. In December 2013, John Deere announced it had
increased its share-repurchasing program by $8 billion. So far, the company has bought back
about $11 billion, or 242.3 million shares (“Deere Boosts”, 2013). John Deere has a market
capitalization of $25 billion, so the company has repurchased roughly a third of the company in
stock. In fiscal year 2014, John Deere’s EPS was $9.15, compared to an industry average of
$3.25. John Deere has used repurchasing of stock and an increase in net income to obtain an EPS
ratio almost three times that of the industry.
In addition to the earnings per share ratio, the dividends per share ratio has been directly affected
by the buyback program. Ever since John Deere has started the program, the company has
increased the amount of dividends per share every year. In addition, John Deere recently
announced that the dividends per share for the 2015 fiscal year is $2.40 (Dividends, 2015). This
shows a drastic difference because from 2010 to now, which the dividends have been raised by
114%. In fiscal year 2014, DPS for John Deere was $2.32 and the industry average was $1.22.
For the past five years, John Deere has been constantly well above the industry average. This is
again attributable to the stock program, as well as a high dollar amount of dividends that are
being paid out to the stockholders.

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Using the same reasoning from dividends per share as well as earnings per share, John Deere’s
price per earnings ratio has seen a decline since 2010, with a slight increase in the past fiscal
year. The ratio was 17.38 in 2010, and it is currently 9.34. Generally a high P/E ratio means that
investors are anticipating higher growth in the future. The higher the P/E ratio, the better the
investors feel about investing in the company. Therefore, earnings are very important to
consider. After all, earnings represent profits, and that’s what every business strives for. The
problem with this ratio is that the P/E uses historical data and it is not necessarily accurate about
the future growth of the company. As shown in the graph below, the stock price for John Deere
for the past five fiscal years has fluctuated a great amount, especially when the stock price was a
bit below $50 in February 2010, and then in March 2011, the stock price was just below $100.
Besides the major increase from 2010 to 2011, the price of the John Deere’s stock has been
pretty stable; therefore, the P/E ratio has been a good indicator of the company’s history.
Efforts to Decrease Inventory
In 2000, John Deere began taking measures to decrease its large amount of inventory. It worked
with a logistics management company, SmartOps, to develop software allowing John Deere to
reduce inventory. This software allows companies, like John Deere, to have a better grasp on
when demand will be at its highest for products, thus permitting a more efficient way to stockpile
inventory (“Supply”). In 2005, just two years after the software was implemented, John Deere’s
finished goods inventory decreased by a staggering $890 million (“SmartOps”, 2005). Due to
this decrease in inventory, John Deere has been able to improve the average days it takes to sell
its products. In 2014, John Deere sold inventory almost twice as much as the industry, selling
every 62 days compared to the industry average of 113 days. This is extremely favorable in an
industry where large inventory can result in a high cost for a business. If a company has less
inventory to start with, it will not take as long to sell all of it. This is the premise for John
Deere’s approach. Another measure of asset management impacted by this decrease in inventory
is the inventory turnover ratio. With less inventory, the inventory turnover ratio will be driven
upwards. Because it takes John Deere fewer days than the industry to sell its inventory, the
company will naturally turn inventory over more times per year. In 2014, John Deere turned

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inventory over 20% more frequently than the industry, 8.56 times compared to 7.11 times. John
Deere has also been able to improve its inventory turnover ratio since 2012, while the industry
average has been declining.
Measures of Liquidity
The current ratio represents the ability of a company to pay off short-term debts. The ideal
current ratio would be one because that means the company would be able to pay off its short-
term debts, if need be. John Deere has one-third of the ratio of current assets to current liabilities
as compared to the industry. With only a 60% ratio of current assets to current liabilities, John
Deere is facing extremely tough times without a source of liquid capital. The quick ratio is a
better measure of liquidity because it subtracts out inventory from total current assets. When
comparing John Deere’s quick ratio to the industry it does not appear to be as bad as the current
ratio proves. This is because of the inventory management program mentioned above. However,
John Deere still has less than half of the current assets comparable to current liabilities than the
industry, at .4620 and .9965, respectively. John Deere matches the downward trend of the
industry standard for quick ratio, but the company has not managed to match the upward trend
since 2011.
Property, Plant and Equipment
In recent years, John Deere has been expanding its global footprint. It has opened new factories
in India, Brazil, Russia and China because of the high growth markets in these countries.
Because of this expansion, John Deere’s fixed asset holdings have increased exponentially over
the past few years. This includes an increase of property, plant and equipment holdings from
$5.7 billion in 2010 to $9.6 billion in 2015. Post 2013, there has been a decrease in sales revenue
due to lack of farmers income as mentioned above. These two factors have lowered the fixed
asset turnover ratio from John Deere. In 2014, John Deere only generated $3.76 of sales for
every one dollar invested in fixed assets, compared to the industry average of $5.41 per dollar of
fixed assets. John Deere is doing a very poor job of managing its new fixed assets, which have
become a huge investment for the company.
Although John Deere has exceeded its competitors through its inventory system as mentioned
above, the poor management of fixed assets is conveyed in the total asset turnover ratio. In this
ratio, one can see that John Deere is consistently performing at half of the rate of the industry
average, .59 and 1.16, respectively in 2014. This ratio proves that John Deere is not using its
assets efficiently. Although it can hope that the global investments begin to pay off and start
generating revenue, John Deere’s spending on property, plant and equipment is continuing to
grow with no signs of improvement in revenues. These signs suggest a consistent decline in the
fixed and total asset turnover ratios. In an industry that relies heavily on assets, this is not a good
sign for the future of John Deere.
In order to make the purchases of the new factories on a global scale, John Deere has had to take
on a lot long term debt, including a large amount of long term borrowings. Although the
company’s assets have also increased, the debt ratio shows that John Deere financed almost 85%
of its assets with debt in 2014. Compared to the industry average of 58%, this ratio portrays
extremely poor debt management on the part of John Deere. These large long-term borrowings

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are even more visible in the second debt ratio which looks specifically at long-term debt as
opposed to all debt. John Deere produces 17% more of its assets with long term debt than the
industry. This large amount of debt has led to an inability on the part of John Deere to be able to
pay it off. The company’s times interest earned ratio, although improving 50% in the past five
years, is still less than one third of the industry average. John Deere can only pay off its debt 8.23
times compared to the industry’s ability to pay off debt 25.96 times.
When comparing these debt ratios and return on equity, it is visible that the ROE is
misconstrued. Even though the ROE is a good indicator of profitability, it shows that John Deere
is getting a net income 30% higher than the industry average based on its equity. On the surface,
this appears to be a good thing, but the large amount of debt has fabricated a different capital
structure allowing for a smaller amount of common equity in the denominator. One can see in
the figure below the ROE seems to be driving the debt ratio and the two correlate together.
Although the ROE is not entirely accurate, John Deere’s profit margin compared to the industry
shows that the company is not doing as poorly as the other measures would suggest. John Deere
is actually performing better than the industry when looking at profit margin. In 2014, John
Deere had 8.8% of net income per sale compared to the industry average profit margin of 6.8%.
Credit Sales
The large investments in foreign factories and the financial services sector of the company have
lead to a poor debt management. John Deere Financial Services provides credit sales, crop
insurance and wholesale services. Even though John Deere has a huge amount of sales on credit,
the company’s day sales outstanding ratio is relatively good. In 2014, John Deere collected cash
every 33 days, while it took the industry 67 days to collect accounts receivable. Compared to
Caterpillar, John Deere is doing extremely well. However, this could be due to Caterpillar selling
more expensive equipment that takes a longer time for customers to pay off. In an industry that
has most of its revenue coming in through credit sales, it is good to have your accounts turnover
quickly. John Deere has a significant advantage by collecting its accounts 11 times per year, six
more times per year than the industry.

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Investment Recommendation
Given the data and outside information, an analyst would recommend to sell any stocks currently
held and not to purchase outstanding stock for John Deere. The liquidity ratios, current and quick
ratios, show that the company does not hold many assets compared to their liabilities. Without
liquid assets, mainly cash, there is no way for a stock to be attractive for an investor. Although
ROE and EPS look superior to the industry on the surface, this is due to the high levels of stock
repurchasing activities on behalf of Deere & Company. However, John Deere does seem to hold
a high profit margin compared to the industry. In 2013, Deere started the process of buying back
$8 billion worth of common stock, artificially increasing the value of the company (John, 2013).
We see this artificial value unfold when looking at the price per earnings ratio in which John
Deere shows a steady decline, while the industry has shown growth. Although John Deere
manages its inventory extremely well compared to the competitors, large global undertakings
have proved detrimental to the company’s standings for fixed assets. Because of huge purchases
in global property, plant and equipment John Deere’s debt ratios have increased. The financials
show that John Deere uses debt to finance 85% of its assets. This is not promising for potential
investors.
Decreasing trends are expected to continue over the next few years. John Deere has estimated a
20% decrease in sales revenue from $31,112.20 in 2014 to an expected $26,110.20 in 2015
(“Value Line Deere & Co.”, 2015). Although John Deere holds a 78.32% market share of
agricultural and farming equipment, the USDA predicts a 40% decrease in domestic farm
incomes (Davis, 2015). This will prevent consumers from having the resources or the need to
purchase new equipment. This decreasing demand does not boast well for the future of John
Deere stock.
Another factor that would show an investor to stay clear of John Deere stock is the security
market line with regards to the expected and required return. We can see in the figure above that
on November 16, 2015 the expected return is 3.11% less than required return. This is a clear
representation that the stockholder should sell any stock that they currently own because the
stock is overvalued and price should be expected to drop to bring the market back to equilibrium.

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Management’s/Investment Banking Perspective
John Deere has been breaking barriers and innovating in the agricultural and machinery industry
for 146 years. John Deere has developed many new ideas in recent years to keep themselves at
the competitive level, especially when there are many young companies trying to bring
themselves into the market. The company has put a large amount of time and money into
evolving these new areas to make sure its technologies are on par with the competitors. In order
to achieve this goal, Deere must create new ways to maintain the separation of themselves
against the competitors. John Deere is involved in many different and difficult markets selling to
all types of consumers. This creates a challenge because all of the different product lines have
unique and dissimilar customers.
The technology John Deere has developed has shown the industry of what the company is
capable of achieving. However, the company is struggling to gain more revenue and is showing
signs that the company is in store for more hard times. According to the U.S. Department of
Agriculture, domestic farm incomes in 2015 will drop close to 40% over the year-ago period, to
nearly $60 billion. The Department of Agriculture came to this conclusion by analyzing the
market trends in corn and soybean products. In addition, there is an adequate supply of grain in
silos both in the United States and other countries around the world. One reason for this is that
the new machinery that John Deere and other competitors are creating now are very efficient and
can be run longer because of driverless commercial tractors. Adding to that, the new software
that allows companies to track the tractors and monitor the production allows every farmer to be
the most productive, so they can maximize every profit dollar (“John Deere Intelligent”).
Domestic demand for the larger tractor models will be lacking in the 2015 year. To cope with the
less demand for bigger tractors, consumers will keep a steady pace for the smaller-size
equipment. Overall, John Deere is expected to have a decrease in sales of about 20% during 2015
(“John Deere 10-K”, 2014).
Another key market, South America, also continues to display a poor consumer appetite for
heavy equipment. In October 2011, John Deere announced that the company would be building
two factories specifically designed for the emerging market for the forestry sector in South
America. In February 2014, John Deere celebrated the opening of two large manufacturing
facilities in Brazil to build backhoe loaders, wheel loaders and excavators. In the past year and a
half, higher interest rates on government-sponsored financing in Brazil is making it a battle to get
the number of sales up (“John Deere Inaugurates”, 2014).
According to industry analysts, Deere and Company has been able to capture 78.32% of the farm
equipment market. The industry right now is a perfect time to merge with other companies or
consolidate two sections. In early November 2015, John Deere bought a division of Monsanto
Company's Climate Corporation called Precision Planting. Precision Planting products specialize
in seed spacing, better depth control, and better root systems. This acquisition allows John Deere
to increase customer flexibility and customization on the tractors that consumers demand (Davis,
2015).
John Deere’s direct competitors have also been fighting to increase sales in recent years. The
economy is making it hard for companies in this industry to attract customers. The economy has

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been especially hard due to the five-year low price of grain, more efficient tractors in the market,
and large buy-backs of stock.
Through research and analysis, it has been determined that John Deere’s business has been
struggling in the recent years. The companies inventory management program and stock
repurchase have helped the company tremendously. However, holdings in global property, plant,
and equipment have not paid off for the company. Long-term debt will become a huge issue if
the company cannot bring in cash through its business. Therefore, an investor would be
recommended to sell this stock, especially with the downward trends in farming and agricultural
markets.

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IV. MARKETING
The section below highlights each one of John Deere’s business segments. In addition, it also
illustrates the competitive environment within each segment, provides a breakdown of their
product mix, and illustrates John Deere’s position within its market in comparison to its top
competitors.
Immediate Environment
John Deere has operations that are segmented into three separate businesses: agriculture and turf,
construction and forestry, and financial services. The graph above illustrates John Deere’s
operating profit in the fiscal year of 2014, separated by each of these business segments. For this
industry, the most important competitive factors across all three segments include: product
performance, innovation and quality, distribution, customer service and price (10k Statement).
Right off the bat, John Deere’s number one competitive advantage is its brand. According to
Forbes, John Deere ranks with in the top 100 of the worlds most valuable brands. This is great,
but without excelling in any of the other factors, the brand means nothing.

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Agriculture and Turf Segment
The agricultural segment manufactures and distributes a full line of equipment and related parts
including large, medium and small utility tractors, loaders, combines, corn pickers, cotton and
sugar cane harvesters, as well as seeding and application equipment including sprayers, nutrient
management and soil preparation machinery, hay and forage equipment that include self
propelled forage harvesters. The turf segment manufactures and distributes turf and utility
equipment that includes riding and push lawn mowers, golf course equipment and vehicles along
with a broad line of associated value added products including integrated agricultural
management technology systems as well as other outdoor power products. Included in this
segment, a global operating model is put in place to help the company grow while also, at the
same time, increasing its competitiveness within the market. This model also separates each
target market into four different areas of customers, specifically designed to create an
understanding with customers, which results in the type of customer service John Deere has
always been known for. Also included in this model, Deere’s equipment operations are separated
into five different platforms:
1. Crop harvesting: combines, cotton and sugarcane harvesters and related front-end
equipment and sugarcane loaders.
2. Turf and utility: utility vehicles, riding lawn equipment, walk behind mowers,
commercial mowing equipment, golf course equipment, implements for mowing, tilling,
snow and debris handling, aerating and many other residential, commercial, golf and
sports turf care applications; and other outdoor power products
3. Hay and forage: self-propelled forage harvesters and attachments, balers and mowers
4. Crop care: tillage, seeding and application equipment, including sprayers, nutrient
management and soil preparation machinery
5. Tractors: loaders and large, medium and utility tractors
John Deere also purchases certain products from other manufacturers for resale. The segment
offers additional products and services to better satisfy their customers. Two examples of this
are:
1. John Deere Landscapes: distributes irrigation equipment, nursery products and landscape
supplies, including seed, fertilizer and hardscape materials, to landscape services.
2. John Deere Water: manufactures and distributes precision agricultural irrigation
equipment and supplies.
This segment of the business also provides integrated agricultural business and equipment
management systems. In December 2013, Deere partnered with BASF, the worlds leading
chemical company, to develop sustainable yield enhancement solutions. Deere and BASF have
responded to the needs of farmers around the world. Together, the two companies have provided
enhanced field scouting services and tailored agronomic advice designed to help growers turn
data into management decisions more efficiently. “The real value comes from helping growers to
interpret this data so they can make more precise and efficient decisions about their crops and
operations,” says Markus Heldt, President of BASF’s Crop Protection division. Instead of
focusing on already existing tools, Deere and BASF have concentrated its research and

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development efforts on these innovative solutions that address the demand of growers across the
entire crop production industry. In addition to this partnership, Deere has also made efforts to
acquire Monosem, the European market leader in precision planters. With this acquisition,
Deere now has access to the company’s facilities both in France and the United States.
Agricultural Solutions and Chief Information officer, John May, commented on the reason for
this acquisition saying, “Monosem is admired for its innovation and success in precision planter
technology that helps farmers increase production. Acquiring this market leader positions John
Deere to serve more customers worldwide.” Like every advanced piece of machinery, a strong
foundation must be put in place to support these enhancements. In June, Deere collaborated with
King Agro, an expert in carbon fiber manufacturing. By using carbon fiber in the manufacturing
of its machines, specifically in its sprayers, it allows farmers to take advantage of its tremendous
strength and durability. Also, because carbon fiber is much lighter than previous materials such
as steel, it has also reduced equipment induced soil compaction. Although this is great to see,
Deere is only selling equipment with carbon fiber enhancements to its markets in South America.
This may have a negative effect on sales in the near future.
Deere also sells a number of different machines under the name of other brands. One of these
brands, Frontier, sells cotton harvest, hay, landscape, and livestock equipment along with a
variety of different attachments. In addition to this, the German brand, Sabo sells push mowers
and skidders, while the Chinese company, Benye, sells a variety of different machines and
tractors. Although these products are sold under its own specific brand name, John Deere owns
them all.
Places to Buy
John Deere is very selective when choosing its suppliers and dealers. In the process of choosing
a supplier of its beloved products, Deere must match with its core values. If the supplier doesn’t
value integrity, quality, community and innovation, John Deere will almost never move forward
in developing a relationship. Deere sells its agricultural and turf equipment through independent
retail dealer networks as well as mass retailers. These mass retailers are the familiar sounding
Home Depot and Lowe’s. In addition to this, if customers want a more unique product, Deere
offers an online customization tool.
Competitive Environment for Agriculture and Turf Segment
The competitive environment for the agriculture and turf segment includes the AGCO
Corporation, CNH Global NV, Kubota Tractor Corporation and The Toro Company. These
competitors have product lines very similar to that of John Deere’s. Deere faces a very
competitive environment because all of these competitors have influences in the high growth
market areas such as Brazil, China, India and Russia. John Deere has made efforts to try and
increase its global manufacturing capacity to compete in these markets. However, sales in the
first nine months of 2015 fell 25% (“2015 News Releases and Information”, 2015). An
overview of each competitor is briefly outlined below with an emphasis on operating margins
and net profit margin.
John Deere
 Operating Margin: 11.98% (as of 2015)

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 Net Profit Margin: 6.55% (as of 2015)
 Net sales in 2014: $36.067 billion
AGCO Corporation
AGCO Corporation is significant competitor of John Deere within the Agricultural Machinery
industry as it is the industry’s third largest manufacturer with a four percent market share. Like
Deere, AGCO is an international manufacturer and distributor of agricultural equipment
including a range of machinery and service products. As of 2015, the ACGO operating margin
(4.65%) and net profit margin (3.05%), both significantly lower than Deere. ACGO’s net sales
for 2014 were $9.7 billion.
CNH Global NV
CNH is another global leader that produces and sells agricultural equipment. In 2014, CNH
Global’s agricultural equipment business contributed almost 50% of the company’s top line,
while also contributing to 84% of its profits. On a global level, CNH is the second largest
manufacturer of agricultural equipment, Deere being at the top. In addition, CNH’s operating
margin in its agricultural segment is almost double of AGCO’s (7.88%). Although this is true,
CNH’s operating margin is still much lower than John Deere’s. Its net profit margin (-2.38%), is
also considerably lower than Deere’s. In addition to this, its total net sales for 2014 were $31.2
billion, while Deere’s were $36.067 billion.
Kubota Tractor Corporation
The Kubota Tractor Corporation is a tractor and heavy equipment manufacturer based in Osaka,
Japan. Kubota manufacturers many similar products to Deere in the agriculture and turf segment.
Like Deere, Kubota was established to improve the quality of life of its customers by providing
them with environmentally friendly equipment. The Kubota Corporation has a major influence
globally, selling its products in more than 130 different countries. In terms of operating and net
profit margins, Kubota is actually performing much better than Deere. With an operating margin
of 13.82% and a net profit margin of 9.02%, it is obvious that Kubota is one of Deere’s most
noteworthy competitors.
The Toro Company
The Toro Company is another global leader that produces innovative solutions for outdoor
environment. Like Deere, The Toro Company manufactures turf and ground equipment to assist
golf courses, professional contractors, farmers, rental companies, government and education
institutions, as well as homeowners. With a similar purpose, it too was established to help
customers who care for the lay of the land. From an operating and net profit margin standpoint,
Toro stands above John Deere (13.03% and 8.75% respectively). In 2014, the company had net
sales of $2.2 billion.

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Construction and Forestry Segment
Compared to the agricultural and turf division, Deere’s construction and forestry segment is
fairly new. However, over the 50 years it has been in existence, Deere has made tremendous
efforts to grow this division and now has 600 dealer locations worldwide. The construction and
forestry segment manufactures and distributes a wide variety of machines and service parts that
include earth moving equipment, material handling and timber handling machines, specifically
backhoe loaders, crawler dozers and loaders, four-wheel drive loaders, excavators, motor
graders, articulated dump trucks, landscape loaders, log machines, and feller bunchers. The
Dubuque factory, located in Iowa, is Deere’s biggest manufacturing factory in the United States.
The market for this segment includes production scale and construction workers. Deere realizes
these customers need equipment that will be able to keep up with the way they work: long hours,
7 days a week. Having said this, Deere’s value added service for construction and forestry
equipment, JD Link, remotely connects owners and managers to their equipment. It provides
alerts to users providing access to certain machine information such as location, utilization,
performance and maintenance data to manage where and exactly how the equipment is being
used. This new tool, included in a number of different backhoe loaders and bulldozers helps
Deere’s customers to be more efficient by avoiding downtime, which leads to lower costs.
In addition to the JD Link feature, Deere has also joined the smart phone world by creating its
own application called “GoPush.” Specifically designed for crawler dozer customers, this
application, according to Deere, “brings convenience to the job site, with features to enhance
productivity and efficiency.” To the company, the goal of this app was to make managers of job
sites more knowledgeable of what was going on around them. These managers and other
worksite leaders now have access to critical information, right on their smartphone. This
information being: daily service information, suggestions on how to go about certain projects,
maintenance checklists, machine manuals, as well as an icon glossary to help familiarize
employees with the panels on machines (“2015 News Releases and Information, 2015). To reach
out to more markets within this segment, Deere partnered with Japanese construction
manufacturer, Hitachi. Over the past 13 years, Deere and Hitachi have worked together by
agreeing to manufacture its products in an integrated market. Deere has agreed to distribute
Hitachi construction and mining equipment in North, Central and South America, which in turn,
has allowed them to do the same thing in Japan as well as other Asian markets.
Places to Buy
Because the equipment in this segment is often very expensive, Deere offers incentives to
customers by providing both short and long-term rentals. John Deere recently purchased Nortrax
Incorporated to broaden the Deere dealership network. Nortrax is now an authorized dealer for
construction, material handling and forestry equipment. Located in numerous places across the
United States and Canada, Nortrax is the number one place for customers to purchase a John
Deere construction or forestry product. In addition to this, Deere also owns dealers in Australia,
Brazil, Finland, Ireland, New Zealand, Norway, Sweden and the United Kingdom.

17. 17
Competitive Environment for the Construction and Forestry Segment
The construction and forestry segment operates in highly competitive North American and global
markets, and is seeking to grow its competitive position in other parts of the world, specifically
Brazil, China, India and Russia. John Deere’s competitors in the construction and forestry
segment include Caterpillar, Komatsu, Volvo, and Ponsse. The segment provides equipment that
competes for over 90 percent of the estimated total North American markets for construction,
earthmoving and material handling equipment that John Deere manufactures (“United”, 2015).
An overview of each competitor is briefly outlined below with an emphasis on operating margins
and net profit margin.
Caterpillar
Caterpillar is the world’s leading construction and mining equipment manufacturer. In 2014,
Caterpillar reported global sales and revenue streams of more than $50 billion. In addition to
this, the company now has more than 115,000 employees worldwide. Similar to Deere,
Caterpillar manufactures backhoes, excavators, tractors, soil compacters and pipe layers, as well
as other related parts for heavy construction. Being the world leader in this industry, Caterpillar
has $40.4 billion in market capital, towering over Deere’s $24.22 billion. However, Deere does
have higher operating and net profit margins compared to Caterpillar’s (6.5% and 3.41%
respectively). In 2014, Caterpillar’s net sales were $55.184 billion.
Komatsu Ltd.
Komatsu is the world’s second largest manufacturer of construction and mining equipment. It
has manufacturing businesses in 151 countries across the world including the United States,
Japan, China, Africa, and areas in the Middle East as well as Europe. Smaller than Deere,
Komatsu’s market capital stands at $15.58 billion. From an operating and net profit standpoint
the two competitors are, however, very similar (11.03% and 7.44% respectively). In looking at
net sales, Komatsu generated $19.54 billion in 2014.
Volvo Construction Equipment
Volvo Construction Equipment is another one of the world’s largest manufacturers and providers
of construction machines. Like Deere, Volvo takes pride in their core values as well as its strong
dealer network. Slightly smaller than Deere, Volvo holds $20.87 billion in market capital. In
relation to this, its operating and net profit margins are also smaller (6.35% and 4.19%
respectively). In 2014, the company had net sales of $13.3 billion.
Ponsse Plc.
Unlike the competitors above, Ponsse specializes in the manufacturing of forest machines for the
cut-to-length method and in the related information systems. With this method, tree trunks are
cut to the specific length in forests to best fit its intended use. With its world-class information
systems, Ponsse notifies the end users of the types and quantities of timber it will receive from
the forest. Because Ponsse Plc. only specializes in forestry equipment, it would make sense that

18. 18
its market capital of $506.2 million would be much smaller than that of Deere and its other
competitors.
Financial Services Segment
The financial services segment primarily focuses on the finances of sales and leases of the John
Deere equipment. Its financial services also offer wholesale financing to dealers of forgoing
equipment while also providing them with long-term warranties as well. This part of the
company’s business operates at a very high margin, contributing to 8% of its total revenue.
However, it does contribute over 20% of the company’s total operating income.
Perceptual Map
The perceptual map above illustrates how John Deere compares to its competitors in its market
for push mowers. Using the relative price points and consumer ratings, one can easily recognize
where Deere & Company stands amongst its competitors within the residential market segment.

19. 19
On average, the residential lawn mower prices ranged from $300 to $700. From the perceptual
map one can discern that John Deere’s residential lawn mowers were relatively average when
prices and consumer ratings are taken into account. The John Deere JS36 falls near the middle at
$400. According to Popular Mechanics, a service magazine covering a variety of different home
improvement products, automotive needs, etc., the five brands illustrated above are among the
top five companies on the consumer ratings list. The brands were compared using the following
variables: torque, noise, likes, and dislikes. With regards to performance, specifically torque, the
John Deere mower was comparable to that of the Craftsman lawnmower with a torque
measurement of 7lbs per foot. Another positive characteristic the testers/evaluators have is that
the John Deere mower is fairly easy to push when it is turned off. The John Deere lawnmower
uses a pivoting top-handle system for steering, also known as its "MowMentum” system; which
attributes to the lack of resistance observed. This attribute allows the lawnmower to change
speeds quickly; though, only allows for simple cut patterns. Furthermore, the Honda lawnmower
poses a significant threat to John Deere sales due to its lower price and similar consumer ratings.
However, John Deere may be able to mitigate this threat by fixing the only problem the Popular
Mechanics testers at Popular Mechanics came across: the inability for tight turns and unique
cutting patterns.
There is no direct correlation between the displayed firm’s mower prices and consumer ratings.
For example, Honda’s pricey mower prices seem to have little to no effect on the corresponding
consumer ratings. On the contrary, as one takes a look at the lower priced residential mowers
(Quadrant 3), Husqvama and Poulan Pro, the correlation between price and customer ratings
becomes evident; the lower the price, the lower the customer rating. The lower price model could
represent a lower quality product, in turn causing the lower customer ratings.

20. 20
BCG Matrix
MarketGrowth
LowHigh
Stars
Financial Services
Question Marks
Construction
Forestry
Cash Cows
Agriculture
Golf and sports
Residential
Dogs
Military
High Low
Market Share
Stars
John Deere has distinguished themselves from competitors through the use of financial services.
It holds 5.9% of the market share for the credit market segment, competing with companies like
Caterpillar, CIT Group Inc., and General Electric. The financial division provides credit,
equipment leases, and crop insurance for customers. With more farmers and construction
companies opting to lease instead of purchase equipment this is a great market to be in. From
2013 to 2014 John Deere increased profits from its financial services sector $15.1 million
(“Company Overview”, 2015). If John Deere is able to continue this growth and take advantage
of this evolution in the market place for credit sales, then its financial service sector will continue
to be a source of profit.
Question Marks
John Deere falls short of its competitors in the market for construction equipment, commanding
4% market share compared to Caterpillar’s staggering 18% market share (“New Coverage”,
2014). However, because of the huge opportunities arising from an increase in demand for
construction equipment, John Deere has increased spending in this sector. In 2013 and 2014, it
opened two factories in Brazil and one in India. Focus in this area over agriculture and turf
comes from the background of the CEO, Samuel Allen. He has worked for the construction
sector of John Deere since 1975, thus when he was appointed CEO, he made it a goal to increase
the success of that sector (Raczon, 2014). As the market for construction equipment grows
worldwide, he will try to beat competitors to new markets and increase share overall.
John Deere stands in the same position for its forestry sector. The company is one of many
competitors in the forestry equipment market, but has not gained enough market share to make a

21. 21
significant impact. The forestry market is expected to be worth $19 billion by 2019, climbing
4.3% annually. Western Europe accounts for 22% of the forestry market (Tiwari, 2015). Given
this information, John Deere could possibly take advantage of this by expanding its global reach
to Western Europe and increase it’s market share. It would take a huge amount of capital to do
so, but with the predicted decline in agriculture, Deere needs to find a way to diversify itself.
Cash Cows
John Deere has continuously excelled in agricultural equipment. It holds 18% of the market
share for all agricultural equipment worldwide (“New Coverage”, 2015). Although it holds
enormous market share, the expected decline in the market makes this division a cow. The
company’s large market share will slightly compensate for the expected decline in purchases, but
the next few years look grim for John Deere. Revenues are expected to fall because of the large
contribution of time and money to the agricultural department. Even though this department is a
cash cow, John Deere will never sell. Over the next 10 years population growth is expected to
help the agricultural market because of a demand for food. Also, agriculture is the foundation
that John Deere was built upon.
Also in the cash cow section of the BCG, John Deere’s golf division has captured a significant
market share of the golf industry. Since 1987, John Deere Golf has made exceptional progress in
building a great business in a very tough competitive market. And along the way, earned the trust
of many top courses around the world. Therefore, John Deere Golf now has a premium position
in the industry by excelling in multiple aspects. The rapid growth has allowed John Deere to be
trusted by the best courses on Earth. Unfortunately, the golf industry is diminishing. According
to the Economist, there are three main reasons in which the golf game is declining. They include:
too long to play a round of golf, too much money to invest, and the game is becoming too
difficult. It is hard to predict where the golf industry will end up, but as of currently, the game is
going downhill (“Why”, 2015).
The third cash cow John Deere has is in its residential sector. The company currently has a large
amount of market share. In order to combat the low market growth, John Deere has released five
new riding lawn mowers. Deere has specifically stated that the latest models offer something for
every customer, regardless of the size of the customer’s lawn, or budget. Since the beginning,
Deere has always been known for its riding mowers, giving its customers a more efficient way to
cut their lawns.
Dogs
John Deere has a small presence in the military vehicle sector. The company creates a tractor that
is called the M-Gator A1 Military Specification Utility Vehicle. John Deere has sold thousands
of these tractors to militaries worldwide. The vehicles are intended for cargo transportation and
casualty evacuation in critical combat scenarios. However, John Deere does not have a large
presence in this sector, and the market growth is relatively low, unless multiple countries start
World War III (“M Gator A1”).

22. 22
Macro Environmental Factors
Deere & Company manufactures agricultural equipment, forestry equipment, construction
equipment, diesel engines, drivetrains (for heavy equipment), and lawn care equipment (see
illustration below). Proving to have a wide marketing mix, John Deere has to meet the needs of
many different target markets. However, with these different markets comes the issue of macro
environmental factors. Macro environmental factors are the major external, uncontrollable
factors that greatly influence a company’s business or decision-making process. In addition,
these factors could potentially affect the company’s short-term or long-term performance and
strategies. These external influences include: political, economic, social, technological,
environmental, and legal factors.
Social:
According to the United States Department of Agricultural (USDA), predictions show that by
year 2050 the world’s population will consist of more than 9.5 billion people. Furthermore,
nearly 70 percent of the population will be living in urban areas. The illustration below depicts
this increase in population and percent living in urban areas (“Global Drivers”, 2014).
Specialists believe that as a response to the expansion of world’s population and increasing urban
population there will be a higher demand for more grain-intensive foods, such as meat. As a
result, “Deere will be called on to offer products and services that help meet the demand for
more food, fuel, shelter, and infrastructure in the years ahead” (“Deere & Company Annual
Report”, 2014). Due to the increase in population and the expected demand for more grain-
intensive foods, John Deere will have to strategically position themselves in their target markets
to provide the necessary products and services for the relative demand in each market.

23. 23
As we take a look at the current demand of grain one can see that it has gradually increased by
40% from 2000-2014. Below is an illustration of the Global Grain Demand from 1999-2014.
John Deere’s sales are not directly correlated to the increase in global grain demand (“Deere
Company Annual Report”, 2014).
Economic:
In fact, according to Deere & Company’s annual report 2014 net sales and revenues declined five
percent to $36.1 billion from the previous year. In addition, 2014 operating profit of the
equipment operations totals $4.3 billion. This is a decline of 15% from the 2013 operating profit.
This decline is due to lower Agriculture and Turf equipment sales. The drop in global sales of
Agricultural and Turf equipment is a result of the current, weak economic state of the farm
economy. Experts predict these economic conditions are to worsen. Value Line states:
According to the U.S. Department of Agriculture, 2015 domestic farm incomes will drop
close to 40% over the year-ago period, to nearly $60 billion. Its outlook is based on tepid
fundamentals for major crops corn and soybeans. Corn prices have slumped, well below
$4.00 per bushel, as buoyant yields have led to projections of the third-biggest harvest on
record. (“Value Line Deere & Co.”, 2015)
Although the overall demand of grain is predicted to increase, the price of grain crops like wheat,
soybeans, and corn are expected to continue to drop. Below are graphical illustrations, depicting
the continual price drop of corn, wheat, and soybeans (“Nasdaq Corn”, 2015).

24. 24
This continual drop in price of these commodities has had a tremendous effect on the farmer’s
ability to afford the farm equipment necessary to manage the crops. In response to the weak farm
economy, farmers are becoming increasingly meticulous in their monetary spending; which
includes the purchase and return on farm equipment. As a result, John Deere farm equipment
sales have declined and are predicted to continue to drop in the coming months. According to
Value Line, “Deere & Company expects equipment sales to decrease about 20% for fiscal 2015
(ended October 31st), with results in the fourth quarter likely to be especially weak” (“Value Line
Deere & Co.”, 2015).
Furthermore, Deere & Company announced it would be laying off more than 600 of its workers
at a few of its manufacturing plants to reduce production. In order to keep up with the declining
demand and reduce its finished goods inventory John Deere deemed it a necessary action
(“Deere Could Turnaround”, 2014).
Political:
John Deere sales are also impacted by political factors that exist in the larger market. In years
past, South America has been a key market for John Deere. However, South America’s
consumer appetite for heavy equipment has slowly declined in recent months. An increase in
interest rates on government-sponsored funding has only made the current situation worse.
Technology:
John Deere is using its innovation and advances in technology to differentiate itself from the
competition. As technology continues to become more complex on a global scale Deere &
Company and its competitors are constantly pressured to develop cutting-edge machines to
enhance the productivity and efficiency of its customers. Director of product technology and
innovation, John Reid, believes: “Innovation is at the core of what John Deere has stood for in its
entire 176-year history…Our work with strategic university partners, such as the University of
Illinois, helps us deliver these integrated solutions for John Deere customers” (“John Deere
Technology”, 2014). John Deere Technology Innovation Center (JDTIC) at the University of
Illinois provides Deere & Company the means to meet the need for constant innovation and
technological improvement.

25. 25
Along with the continual effort to develop innovative and productive machines, John Deere
strives to manufacture machines that lessen the impact on the environment. This is known as
“product sustainability”. A few examples of its machines that minimize environmental impact
include: self-driven tractors, advances in combines, CVT benefits, and lastly the Fixed Chamber
Baler. For over 15 years John Deere has provided farmers with the option of self-driven tractors.
Using Global Positioning Systems (GPS), these self-driven tractors can assist farmers in steering,
reduce missed rows, and drastically cuts the time spent in the field; which reduces fuel use. In
addition, John Deere’s combines “use machine intelligence that deliver automatic feed rate
control, assisted steering for higher efficiency, and less fuel consumption” (“John Deere
Products”, 2015, p. 1). Furthermore, John Deere has developed the Continuously Variable
Transmission (CVT), which allows the engine to run at constant speeds, minimizing fuel
consumption and maximizing efficiency. Lastly, the Fixed Chamber Baler is another example of
“product sustainability”.
John Deere’s new Fixed Chamber Baler delivers up to 24% better fuel efficiency and is
significantly faster than previous designs due to new rotor feeder design. The Baler
reduces soil compaction – up to 40% lower than previous generation round balers. And
uses Bio-Multiluber, a biodegradable grease that is accurately and automatically applied
to chains and bearings to avoid unnecessary resource consumption. (“John Deere
Products”, 2015)
As illustrated, Deere & Company’s continual advances in technology have allowed them to
tremendously minimize the impact on the environment.
John Deere’s competitors lack an extensive plan to allow its customers to be as efficient and
profitable as possible. Komatsu has developed a Global Positioning System (GPS) that can solely
locate the machines a company has. John Deere’s other competitors such as Parker Hannifin,
Kubota, and TREX lack any such software or GPS capable machines. (“Products”, 2015;
“Group”, 2015; “Software”, 2015). Lastly, Caterpillar has developed technologies called
MineStar and Product Link. MineStar is specifically for the mining sector. However, John Deere
is not currently in the mining market. Caterpillar’s Product Link technology, allows the
customers to monitor fleets in a multitude of different ways (“CAT”, 2015; “Product”, 2015).

26. 26
Marketing Mix
Product:
As stated in the immediate environment, Deere uses two separate business segments in which to
sell its products: agriculture and turf and construction and forestry. The images below illustrate
the prices across the different products from each segment as well as its specifications.
Agriculture and Turf:
Deere D105 Riding Mower
List Price: $1,499.00 * USD
Engine Power
17.5 hp, 500 cc
(13.0 kW)*
Chassis Frame
Full-length welded
steel
Seat Back
Height
11 in.
Mower
Cutting Width
42 in.
Deere Run 41 Push Mower
List Price: $317.00 * USD
Mower Cutting
Width
41 cm (16 in)
Engine Power 2,1 kW at 2.900 RPM
Forward Speed
Single-Speed 3,6 km/h
(1,7 mph)
Deere 5045E Utility Tractor
List Price $29,000 * USD
Std. Transmission: 9F/3R Sync Shuttle
3-Point Hitch:
Category 2 (convertible
to Cat-1)
Wheel Base:
80.7 in (2,050
mm)

27. 27
Gator TX Turf
Construction and Forestry Segment:
Deere 470G LC
Deere 450J LT
List Price: $8,699.00* USD
Brakes Type All-wheel hydraulic disk
Tires Front Two 22x9.50-10, 4PR
Dimensions Seat
Type
Professional High back,
bucket
List Price $357,000 * USD
Operating Weight 49 420 kg (108,952 lb.)
Max. Digging
Depth
8.28 m (27 ft. 2 in.)
Arm Digging
Force
196–201 kN (44,063–
45,187 lb.)
List Price $79,000 * USD
Base Weight
8908–9354 kg (19,640–
20,622 lb.)
Track on Ground 2349 mm (92 in.)
Blade Width
Range
2667–2921 mm (105–
115 in.)

28. 28
Deere 460E Articulated Dump Truck
Deere 437D Knuckleboom Loader
Place:
Deere prides itself on its extensive dealer and retailer network. Spread throughout the globe,
Deere distributors employ knowledgeable men and women who are there to help consumers find
the right piece of equipment to meet their needs. Within these dealerships, Deere employees help
with buying decisions by laying out the requirements of the consumer. Once this is completed, a
costumer may purchase the product on site or if they want more time to find what they are
looking for, the customer can have it ordered. In the final steps, employees help with financing
the purchased product as well as aiding with service dates. In addition to on site dealerships,
Deere also gives consumers the ability to order John Deere products directly from the “buy
online website.” On this site, the company has listings of all available products providing
consumers with extensive specification information. Deere considers its on site dealerships and
the “buy online website” as a prominent competitive advantage. The company claims that it will
not hire someone if he or she is not 100% committed to John Deere, which is why these
dealerships have become so special. Unlike some of its competitors, “it is almost impossible to
find an employee who doesn’t love the company,” said Alec Alessandra, Director of Supply
Chain and Strategic Planning, Deere and Company employee for over 25 years.
List Price $667,340 * USD
Operating Weight
(empty)
32 218 kg (71,028 lb.)
Rated Payload 41 819kg (92,195 lb.)
Heaped Capacity 25.5 m³ (33.4 cu. yd.)
List Price $239,000 * USD
Reach 9754 mm (32 ft. 0 in.)
Operating Weight 14 959 kg (32,980 lb.)
Lift Capacity @ 10
ft.
12 129 kg (26,740 lb.)

29. 29
Price:
Price is the most flexible element in the marketing mix. As stated in the place section above,
Deere puts a strong emphasis on the quality and the workmanship of its employees. Because of
this, it is reflected in the quality and design of its products. As a result, Deere uses a non-price
competition strategy. A non-price competition strategy is defined as a marketing situation in
which a company would not lower its prices for fear of a price war. For example, if a significant
competitor, such as Kubota, decided to price one of its riding mowers at half the price of Deere’s
D105 riding mower, Deere would not think about lowering its price to compete. This strategy
goes back to how Deere prides itself on its 179-year history and the quality of its products. To
Deere, this is what separates it from its competitors; therefore, Deere does not feel like its
products should be offered at a lower price.
Promotion:
As stated above, Deere is hesitant to lower its prices. Instead, it focuses on extensive promotions
to highlight the competitive benefits of its products. Discussed in the immediate environment
section, the company is constantly seeking new ways in which to incorporate new technologies
into its products. These efforts do not go unnoticed. Deere makes sure that current equipment
owners are always up to date with these advances, which often leads to further interest in its
products. Like Deere, its customers are always looking for new ways in which to improve
efficiency in the workplace. In addition to this, the company also provides a “special offers” tab
on its website. Here, John Deere offers unique financing options to catch the attention of its
customers. An example of a current special offer on a Deere Excavator is shown below:
As shown, this offer lasts until February 2016. When it expires, Deere will typically provide a
new offer shortly after. In addition to its pricing strategy and emphasis on promoting the quality
of its products, Deere has another unique approach. The company understands that its base of
loyal customers is essential to its success. One way Deere has tried to keep this loyal customer
base alive is by providing younger children with models or toys of its “real” tractors and
machines. Loyal customers of John Deere have purchased these toys for their children in an
effort to share their love of the company with them. Very popular around the holidays, these
toys are often called a child’s “First Deere.” The company has given a license to a company
called “Green Farm Toys” where it sells authentic John Deere merchandise.

30. 30
Sales Forecasting
The figure above is a graphical depiction of the correlation between John Deere sales revenue,
from construction and forestry, and the number of new residential constructions per year in the
United States. A R2=0.60594 shows there is a strong, positive correlation between these two
variables. Although new residential constructions does not cause the increase in construction and
forestry sales for John Deere, this figure shows evidence that the two variables have moved
together in the past. Historical data indicates this relationship will continue in the future. This
variable was chosen because of the need for construction equipment in the development of
residential areas. John Deere forestry equipment can be used to clear trees to be able to develop
land. Then, once land is cleared, John Deere excavators, backhoes, and tractor loaders will be
used to actually build houses. This relationship between the two variables makes sense; as
construction rates rise, a need for construction equipment will increase as well. Construction
rates are expected to grow exponentially in the next few years (Frank, 2015). This predicts good
results for the construction sector of John Deere. As demand for its agriculture equipment
decreases, the company can take advantage of the forecasted increase in construction rates.

31. 31
In 2013, the year of the latest USDA census, 4.7% of the United State’s $16.8 trillion gross
domestic product (GDP) was from by agriculture (Glaser, 2015). This large portion of the GDP
results in a correlation between GDP and John Deere’s sales revenue. With agriculture making
up $789 billion of the GDP, and John Deere equipment being widely used in farming, it is
understandable why these two variables have a strong, positive correlation. The U.S. GDP has
been continuously on the rise. However, the service industry continues to make up a bigger
portion of it. As GDP, an overall measure of economic stability, continues to grow one can
expect to see John Deere sales or agriculture and turf grow.
This detailed analysis of John Deere’s marketing processes highlights how competitive the
environment within the industry really is. The outline of each segment allows for deeper
examination into the company’s diverse product portfolio that provides a great transition in its
pricing, promotion and place strategies. The sales forecasting models illustrate how sales from
each business segment have fluctuated over the years.

32. 32
V. STRATEGIC OPERATIONS
The following section provides a detailed breakdown of the company’s key order winners and
qualifiers, processes, facilities, and locations. In addition, it discusses the company’s supply
chain integration, technology and systems, and their corporate social responsibility.
Key Order Winners and Qualifiers, and Distinctive Competencies:
Key order winners are the features and technological advances John Deere has made over the
past couple of decades. One major feature is the innovation of self-driving tractors for the
commercial farm vehicles. Unbeknownst to the public, John Deere has had this technology for
over 15 years now. Unfortunately, the tractors must still be operated with a human behind the
control at all times the tractor is running. There are no federal rules specifically addressing self-
driving technologies for tractors. This is because farm equipment is designed for use in fields
where it doesn’t pose the same level of risk to other vehicles or people as a self-driving vehicle
on a public road (“Farmers”, 2015). This technology has been available for many years, and
farmers all over the world, since it is used in now over 100 countries, have seen productivity
increase dramatically (Barger, 2015; Peterson, 2015). As for John Deere’s competitors, there are
three main companies that have similar products, which include: Autonomous Tractor
Corporation, Fendt, and Case IH. The main difference is that John Deere has proven that it has
been successful with the technology for the self-driving tractors. The Autonomous Tractor
Corporation started its operations in 2012. In 2013, it produced 25 self-driving tractors to test
with different farmers. This shows how Autonomous Tractor Corporation is brand new and still
working the initial problems to make the tractor the best it could be (“Revolutionary”, 2015).
Next is the Fendt Corporation. Their major product is having the first tractor be driven by a
person, while having another tractor behind the driver to mimic the moves of that tractor. This
allows the farmer to have two tractors working at the same time, while only requiring one
person. (“Fendt”, 2012). Finally, for Case IH, the company has a similar system to John Deere.
However, this program is not as developed as the John Deere system due to the lack of
positioning satellites used to control the tractor (Hest, 2012). Overall, John Deere’s self-driving
tractors have the advantage due to the many years of experience already using the guidance
system, along with the preprogrammed routes, so that the driver does not have to constantly
correct the tractor.
One of the key order qualifiers is the overall value of their products. For many products, John
Deere has shown that the quality has constantly been good. This is especially shown in the John
Deere push lawn mowers. The push lawn mowers show how John Deere compares to its
competitors on the variables of price and consumer ratings. John Deere maintains a strong
competitive advantage on its residential lawn mowers. Based on the breakdowns of each
company’s product, it seems that John Deere (vs. its competitors) remains in the complete all
around average. When it comes to engine HP, weight, and hydraulic flow, it consistently meets
standards in the middle of its competition. This consistency allows Deere to perform more
efficiently than its competitors, even if the competitors have perks; ranging from a slightly
stronger engine (22.4 vs. Kubota’s 25.5), or on the other side, slightly lighter (1345 vs. Cub
Cadet’s 1280). However, it also shows how that John Deere is just a qualifier. The prices of John
Deere and its competitor’s range from $300 to $700 for the standard push lawn mowers. John

33. 33
Deere falls right in the middle at $450. The company was ranked in the top five brands based on
the consumer ratings produced by Popular Mechanics. The lawn mowers were compared on
torque, drive control, noise, likes, and dislikes. John Deere ranked second with “easy going
operation” and “little rolling resistance with the engine off.” However, the magazine did say that
the mower “seemed better suited for simple cut patterns” (Berendson, 2015). In this sector of the
company, John Deere is not a key order winner. The company hasn’t been able to put themselves
at a distinctive advantage over other companies, and this has led to John Deere just being a
qualifier in the push lawn mower sector. Therefore, John Deere has proven that the company has
a product that is comparable on many levels.
Another key order qualifier is the performance and reliability of the machinery. For example,
John Deere has been expanding into the construction equipment industry. The construction
industry is constantly growing and is always changing. New construction projects around the
world are being set up and executed. John Deere has been in the business of building
construction equipment starting in the 1980s (“Timeline”). However, John Deere hasn’t been
able to pull them away from the competition. One reason for this problem is because John Deere
has always been known for the agricultural equipment it make, since the company currently has
78.32% of the current agricultural market. John Deere is struggling to get a significant piece of
the market share. As shown in 2014 for construction sales, John Deere had $6.5 billion
worldwide, while the industry leader, Caterpillar, had over $28 billion (“Leading”). In order for
John Deere to gain market share, the company must think of new strategies to exploit this sector.
John Deere’s distinctive competency is the new, innovative services and products. Through these
services, John Deere’s technology group has created multiple technology solutions to help
farmers be more productive, efficient, and resourceful. In 2010, John Deere increased the John
Deere Intelligent Solutions Group, which is the company’s premier development facility
specializing in creating technology used in maximizing crop yields and creating a better food
production infrastructure. The company hired a variety of employees ranging from software
developers, systems engineers, product testers, marketers and customer support personnel. John
Deere has invested significantly in this group because the company has hired over 800 workers.
The group has invested in technology and ingenuity to create a range of advanced products such
as crop management tools, logistics systems and special hardware used in ultra-accurate GPS-
driven tractors. Since deploying the model in 2010, John Deere has seen great improvements in
production efficiency and field resolution times as well as a significant decrease in warranty
expenses, making John Deere a prime example of the innovation and competitive resilience
displayed by advanced manufacturing companies. This team also works with the farmers to
specifically help and troubleshoot the self-driving commercial tractors, if they ever get into a
problem (“John Deere Intelligent”). Competitors do not have an extensive plan to allow their
customers be the most efficient and profitable as possible. With regards to Komatsu, it has a GPS
that can just locate the machines a company has. Furthermore, it does not have any software that
can help keep track of information and other important statistics (“Intelligent”, 2015). As for
Parker Hannifin, Kubota, and TREX, the companies do not have any software or GPS capable
machines that they currently build, nor do the three have any software abilities with the machines
produced (“Products”; “Group”; “Software”). Finally, Caterpillar has developed called Minestar
and Product Link. Minestar is specifically for the mining sector. However, John Deere is not
currently in that market segment. For Product Link, the product allows the customers to monitor

34. 34
the fleet in a multitude of different ways (“CAT”; “Product”). John Deere has proven that it is
leading in this sector of the market by creating a team and different software to meet the
customer needs in many ways.
Processes, Facilities, and Location:
In North America, John Deere has a total of 16 manufacturing locations. Around the world, the
firm has 13 manufacturing locations, with four of those locations located in India alone. In total,
John Deere employs approximately 59,600 employees worldwide. John Deere has shares owned
in over 21 different countries (John Deere 10-K, 2014).
The predominant process type is an assembly line. John Deere has many different assembly lines
for each product. These factories mostly produce a finished good ready to be sold to a customer.
However, the firm does have a couple of other lines that make products that go into the final
product. For example, in Torrance, California, John Deere manufactures the navigation
equipment that goes into the tractors at an assembly line, usually in Iowa or Illinois. This shows
how not every finished good John Deere makes is necessarily ready to be sold to the consumer,
creating extra time needed to get the finished customized product to the customer (“Factories”).
John Deere has many distribution hubs across the United States. The main centers are in: Denver
(Colorado), Portland (Oregon), Visala (California), Denton (Texas), Rock Valley (Iowa),
Williamsport (Pennsylvania), Charlotte (North Carolina), and Jacksonville (Florida).
Out of the 158 suppliers, many of them are located in the North Midwest region of the country,
showing that the suppliers have located or changed their location due to all of the John Deere
plants. John Deere has a very wide footprint of resources within the United States, it continues
throughout the globe. This is shown by new expansions throughout the world, especially in
recent factory openings in South America (“Factories”).

35. 35
The picture shown above shows all of the United States based locations for the company. Within
the United States, there are many parts distribution facilities in different areas of the country to
help minimize the time from when a customer’s machine breaks to when it can be fixed. John
Deere has allocated resources all over the country to help out its suppliers. John Deere’s
locations vary depending on where they are best suited in the United States. For example, as
stated earlier, John Deere has a location in Southern California where it designs GPS units for
their tractors. This is an ideal location because Southern California has the resources that are
needed to create quality GPS units for John Deere.
The chart on the next page represents the property, plant and equipment that John Deere owns
around the world. As shown by the bars, John Deere’s assets have been increasing steadily every
year, besides fiscal years 2010 and 2011. The company is seeking expansion and is increasing
factories in both the United States and around the world.

36. 36
Supply Chain Integration and Outsourcing:
Today, Deere offers three product lines: agricultural, commercial and consumer, and
construction and forestry. Out of these three product lines, commercial and consumer lines
provide the most business for John Deere. According to Bloomberg, John Deere has 158
suppliers and 16 customers. However, it is much more complicated than this. Obviously, John
Deere is the assembler in the supply chain. Deere creates products ranging from large
agricultural equipment to cans of grease. One of the main suppliers for John Deere is Titan
International Inc. Titan receives about 12% of its revenue from John Deere. The reason it is so
high is because Titan makes the tires for all of the machinery. As for John Deere, the COGS is
about 1% of its total expense, which means tires take about 1% of the entire cost to manufacture
the machinery. On the other hand, the main two consumers for the Deere products are The Home
Depot and Lowe’s. John Deere accounts for 1% of the total revenue those stores generate. John
Deere has third party vendors that include: Ag-Pro, Meade Equipment, and Derrick Equipment
(Bloomberg). In addition, the actual company serves as a retailer and customers can orderly
directly from the website. Finally, John Deere has limited the amount of machines the vendors
get because it wants the customer to get a more customized feel, and therefore, the customer can
order it from the website.
Deere and Co. has exerted a high degree of power throughout the supply chain. Deere believes in
strong links with the market. Raw manufacturing prowess alone does not create business success.
The business has to start with the customer. Whatever a company manufactures, the product has
to be something that customers really want to buy. Companies have to constantly put time and

37. 37
money into research and development to design it right. Throughout the whole website, John
Deere really focuses on being connected to the customer. To that end, Deere’s factories maintain
a robust feedback loop with the design, engineering, and research and development functions.
Nurturing market sensitivity can be a problem for manufacturers that shift production offshore in
pursuit of cost savings.
John Deere has clearly described that its relationships with suppliers are very important. As the
company has directly stated, “To compete successfully in the global market, our suppliers must
share our vision and commitment to continuous improvement in all areas” (“Achieving”). Deere
has a specific supply chain management tactic called “Achieving Excellence” in which the
company follows to make the best quality it possibly can. In order to accomplish these goals,
John Deere has put together a four-step plan where John Deere works closely with its suppliers
to attain perfection. First, the plans begin with communicating and setting goals that are related
to performance. Once production has begun, the second step is to review the statistics and have
John Deere give feedback to the suppliers. The third step is to implement a strategy to get the
desired performance level, as both ends agreed to in the first step. The final step is to recognize
and reward the suppliers for meeting, and hopefully exceeding, the goals set (“Achieving”).
Supply chain management is a vital part of the John Deere process to get the best possible
machinery the company can make.
John Deere has been using these relationships with suppliers since the early 2000s to decrease
large amounts of inventory. In 2003, John Deere insourced the company SmartOps to design
software that will help with managing inventory. Thanks to this new technology, John Deere was
able to decrease its finished goods inventories by $890 million in just two years (“SmartOps”,
2005). This inventory reduction system gives John Deere a competitive advantage in an industry
where a lot of inventory creates a lot of costs.
Deere & Co. has far expanded outside of the U.S., creating a global footprint, as their factories
and sales offices are present in over thirty countries. Multiple “home markets” plus export
strategies allows John Deere to be successful. Some companies may locate manufacturing in a
particular country to satisfy demand there. However, Deere embraces a dual approach,
considering the demand in major markets, which it calls “home markets,” and also factoring in
possible exports from those markets. Deere builds diesel engines, transmissions, and tractors in
India. Deere aims to be able to serve the Indian market and at the same time exports from there
to 52 countries, including the United States. But John Deere probably would not be doing that
that if it did not have a strong demand in the Indian market.
Another tactic that John Deere is pursuing is a balanced investment approach. Many American
manufacturers have closed U.S. factories and shifted production offshore or simply decided to
source from other offshore companies. A balanced investment approach means a substantial
reinvestment in the United States, while still moving some manufacturing facilities offshore. For
example, Deere used to build diesel engines in Dubuque, Iowa, but has shifted that production to
Waterloo, Iowa and Mexico. John Deere uses globalization to build machines at lower costs
while still operating United States manufacturing facilities.

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Technology and Systems:
From an innovation standpoint, John Deere puts resources into developing innovative
technologies that fulfill the needs and wants of its customers while providing a reliable solution
to customers. According to Eichberg Consulting, a marketing strategy consultant for the farming
industry, John Deere is listed as the most innovative agricultural equipment manufacturer in
Europe. Eichberg Consulting determined these ranking based on a few different valuations
(survey of medals and innovation, and have been given recognitions since 2010). Chris Wigger,
Vice President of Sales and Marketing responds to this recognition by saying, “This list
recognizes our ongoing commitment to research and development (R&D) which reached a
record investment level of more than $1.2 billion in 2011, worldwide (“Innovative”, 2012).
To facilitate such innovations, John Deere built a European Technology Innovation Center
(ETIC) in Kaiserslautern, Germany. John Deere has also recently become a shareholder in the
German Research Centre for Artificial Intelligence (DFKI), which will be of great value to future
developments (today’s large John Deere tractors have more lines of software code than early
space shuttles [and Deere’s] GPS technology can guide a tractor and implement in the field with
near-perfect precision. This means less overlap in tillage and chemical application, saving time
and money and minimizing environmental impacts). The new center has a better environmental
footprint on the world as well, giving decreased CO2 emissions by using the geothermal and
photovoltaic systems, rather than traditional oil-based heating and electrical supply systems.
As stated in previous sections, John Deere’s business is heavily dependent upon technology. The
John Deere Intelligent Solutions Group, created in 2010, is the company’s premier development
facility specializing in creating technology used in maximizing crop yields and creating a better
food production infrastructure. By employing a mix of over 800 software developers, systems
engineers, product testers, marketers and customer support personnel, the group has invested in
technology and ingenuity to create a range of advanced products such as crop management tools,
logistics systems and special hardware used in ultra-accurate GPS-driven tractors. Since
deploying the model in 2010, John Deere has seen improvements in production efficiency and
field resolution times as well as a significant decrease in warranty expenses, making John Deere
exemplary of the innovation and competitive resilience displayed by advanced manufacturing
companies. John Deere’s group helps optimize machines, uptime, and jobsites – ultimately
leading to improved profits for the customers. In the past decade, technology has become a major
part in the success of large machine manufacturers. The more recent push has been to promote
productivity. The products have been developed to be some of the most technologically
advanced machines in the world. However, the company doesn't want to let technology scare the
consumers. John Deere has put a lot of research and development into making the technology
very user friendly, so anyone can use it. The John Deere dealer's technology specialist can ensure
that the customer experience is exactly how the customer wants it (“John Deere Intelligent”).
In 2011, to meet the needs of farmers not only today, but also as the company looks to the future,
John Deere unveiled Farmsight, an array of services that will provide technology solutions in
three areas. The first area is machine optimization. It allows farmers to get the most out of
machinery on the farm using precision technology and wireless data for higher levels of
productivity and increased uptime. The second latest innovation is logistics optimization. It

39. 39
better manages machinery from remote locations through a variety of fleet management solutions
and increased machine-to-machine communication. The last service is called Ag Decision
Support. Farmsight includes user-friendly monitors, sensors, and wireless networks that provide
easy access to machinery and agronomic data so farmers can make proactive management
decisions. Farmsight is a total solution that begins with understanding the customer needs, and
provides a world-class experience by combining equipment, technology, and local John Deere
dealers (“Farmsight”).
Even more recently, John Deere has introduced Forestsight, Worksight, or Powersight with as
much or as little involvement as the customer desires. John Deere Worksight lets you see
machines that are idling excessively, inactive, running at very high loads for long periods of
time, or moving when it should not be. John Deere Worksight can also serve as a helpful
maintenance assistant when consumers are responsible for a large fleet spread across many
locations or a single machine within sight. In addition, Worksight makes sure that the right
machines on the right job. The consumer can reduce grading passes while improving the finished
product. Worksight also gives you visibility to data from completed jobs. More importantly, it
helps one make operations more efficient. As for Forestsight, it is a combination of Farmsight
and Worksight, but it is specifically geared towards the forest industry. Lastly, the newest feature
for John Deere machinery is Powersight. This solution integrates with Worksight and Farmsight.
The new key difference in this new option is that it works with the John Deere engines. This is
better because it can detect improper machine operation before it causes expensive downtime.
And when a machine does break, the machine automatically sends to a technician what is wrong,
so it cuts down on the interruption (“Construction”; “Forestry”; “Powersight”).
All of this technology is vital for the world. John Deere customers are faced with the challenge
of feeding an increasing world population. For example, this new technology has allowed
farmers to go from harvesting 32 acres a day to 32 acres in one hour. The new machines are
becoming much more efficient and smarter to help the farmer produce the best product they can.
In order to keep moving forward one major advantage John Deere has, is it built a new
technology center in India. The new world-class facility offers the opportunity for careers in
technical areas, including Information Technology, Product Engineering, Manufacturing
Engineering, Embedded Systems and Technical Authoring. The facility includes multiple
functional organizations, with a focus on delivering the highest quality global shared services to
John Deere business units worldwide. This allows John Deere is keeping researching and
developing new products to show the consumer world that it stays ahead of the game
(“Factories”).
Infrastructure
Deere’s infrastructure is comprised of their facilities, and their operations capabilities are based
upon how efficient they can be. Past history as shown that to be able to cut costs after paying for
the expensive factories and equipment, Deere has sought tax breaks. It is quite possible that
Deere and Caterpillar depreciation tax breaks could be resurrected. This bill would allow them
to lower the cost of capital and increase their cash flows. An influx of cash flow would allow
Deere to pay off its debt, and branch out into new/emerging markets. Deere’s target areas should

40. 40
be locations with a multitude of farms, new highways in need of construction, ones that are just
being built, or affordable locations to set up new factories.
John Deere is in constant search for the perfect employee. To attract intelligent hard workers,
Deere has carefully constructed its letterhead on the company’s website to attract curious minds.
In the beginning of the website, it states: “Why John Deere? John Deere is, simply, a great place
to work. Here, your ideas, experiences, and values matter.” This message supposedly attracts
creative minds because it gives them the inference that at Deere, they can actually make a
difference. Deere continues the letterhead by stating that the employees will be in the center of
the action, guaranteeing that the employees will work alongside some of the most innovative
minds in the industry. This strives to not only be the best, but to also work with the best attracts
employees that are also good team players. Deere instills in the message that it is of the utmost
importance to have their workers love what they do. This supports the mentality of if you love
your job; you never work a day in your life. Deere finishes by continuing to explain the
characteristics of what kind of worker it wants. The description involves someone who wants to
be challenged, a go-getter, and an avid achiever.
A great deal of Deere’s operations are successful because they have modern computer programs
to make sure their factory floors run efficiently, their R&D department can constantly innovate,
and their customer service remains at a high level of individual care. To be able to meet the
needs of the company, Deere also targets IT professionals by stating, “You'll work your magic in
normal IT functions. But you'll also find yourself involved in IT areas within our worldwide
product development centers, production, and services businesses.” Giving a broad overview of
everything the IT professional can do gives the introverted job seeker a sense of self-worth and
determination to join the company. Deere continues by saying that at Deere, the IT professionals
will be members of an aligned, high-performing, cross-functional team. Deere instills the job’s
significance by going on to say that the employee’s influence will positively affect the
improvement of the processes and the quality of the products.
With a focus on loving work, rather than focusing on financial benefits, shows what type of
employee John Deere is in pursuit of. The quality over quantity standard really holds true in this
regard. With the ability to work at manfuacturing facilities in hundreds of areas across the globe,
the world traveler also apeals to the job description.

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This map above shows the amount of John Deere locations around the United States and the
world. The different locations vary from marketing to full manufacturing, which represents every
part of the company. Recently, in the past five years, John Deere has constructed and opened two
new factories in Brazil. John Deere did extensive research into the South American market, and
Deere realized that the market is going to be growing because the forestry division will be
picking up, since the world is using more wood products everyday. Recent information shows
that the factories in South America are performing as well as expected and will continue to grow
for years to come.
John Deere is a company that has built itself off of quality and durability. However, especially in
recent years, many John Deere customers are unsatisfied with their product and service. There
are many attributions that trigger this frustration by the consumer. One of the major issues at
John Deere that has been occurring is the value and quality of its product. From reading
customer reviews on customerservicescoreboard.com, over 75% of the reported negative reviews
were because of the riding lawn mowers. The problems in the tractors were all over the board.
These include: transmission being blown out, the fuel injector pump not working, and ball
bearings being subpar. The riding lawn mowers are a significant problem machine because they
are one of the cheaper products John Deere makes, and it is implied that quality is not as good as
the other tractors competitors are producing. One customer’s comment said, “John Deere used to
manufacture quality machines and provided quality service at a reasonable cost. Judging from
consumer comments, and my own experience, that is no longer the case. I recommend you
purchase equipment, parts and service from another dealer, preferably not John Deere.” This
customer reviewed John Deere on August 10, 2015. Obviously, the customer is not pleased with
their interaction with John Deere.
Another frequent consumer complaint that John Deere has had in the past couple years is
customer service and support services. One review stated, “Now JD is so out of touch with the
American farmer now. There’s no service and your equipment is so cheap and unreliable.”
Again, this buyer is not happy with the service and interaction they had with John Deere. More

42. 42
specifically, this review said they had emailed twice to John Deere about a technical problem
about a certain tractor, and Deere never replied. Therefore, many of the reviews have stated that
Deere must rely on local tractor supply stores in order to get the service and attention the
customer needs.
CSR and Sustainability
John Deere has a strong sense of obligation towards the communities and future generations that
it impacts. Every company aims to maximize its triple bottom line: economic, environmental,
and social factors. John Deere does a great job maximizing its environmental and social factors,
but tends to neglect the economic well being of its stockholders. The company has plans to make
an impact for future generations to create a sustainable world for the next century.
Due to the nature of the manufacturing industry, it is hard for a company to be completely
environmentally friendly. However, through product design and waste reduction, John Deere sets
and reaches goals towards being environmentally conscious. This past year, John Deere spent
approximately 4% of its revenue on research and development. This money goes toward
developing more environmentally conscious machines. In 2011 its 8320R was named the second
most fuel-efficient tractor of the decade (“The Second”, 2011). John Deere proudly reduces fuel
consumption in all of its equipment through the development of engines that shut down when
idle and are able to use biodiesel. Deere has been reaching goals to obtain a Tier 4 emissions
reduction. To meet these Tier 4 emission standards, engine manufacturers will produce new
engines with advanced emission control technologies similar to those already expected for
highway trucks and buses. Exhaust emissions from these engines will decrease by more than 90
percent (“John Deere Tier”).
In addition to specific products being helpful towards the environment, John Deere uses a
process that reduces waste. John Deere also uses a remanufacturing system in which it takes old
machines and uses the materials to remake newer machines. This process is not only
environmentally friendly, but also financially beneficial. John Deere Mexico is able to use
wastewater, instead of municipal or well water supplies, in its manufacturing plants. Also, John
Deere has changed its packaging system for parts from using foam to using recycled paper,
which also resulted in a savings of $450,000. John Deere set goals in 2013 towards Eco-
Efficiency for 2018. These goals included reduction of waste, water and energy in the
manufacturing of products. Shown below is the progression towards achieving these goals. John
Deere is on track in lowering its water consumption and recycling more waste; however, it has
not found a way to lower consumption of energy (“A Power”, 2015).

43. 43
In addition to these environmental acts, John Deere strives to develop the future generations of
the global community. Through science and technology programs, John Deere encourages young
students to become involved in the process of innovation. Deere also has worked with non-
profits to develop poverty stricken countries. By helping countries gain sustainable food sources,
John Deere is setting them up for furthering its market. As demand for agriculture in America
drops, John Deere needs to think about larger markets. Encouraging and financially supporting
growth in other areas will help John Deere become sustainable by the very definition of “meeting
the needs of present and future generations.”

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Customers:
Due to the high-risk nature of operating heavy machinery, John Deere has put many measures in
to place in order to protect the customer. By providing training tutorials through dealers, John
Deere ensures that every customer knows how to properly handle the equipment prior to
purchase. Deere and Company has developed simulators that customers can buy to train
employees to practice real-world situations and hazards that one may face on the job. With every
purchase tutorials, brochures and DVDs on safety are delivered with the new equipment. In
2015, John Deere collaborated with the program Progressive Ag Foundation’s Agriculture Safety
Days and planned 400 events devoted to customer understanding of equipment safety (Allen,
2015). John Deere has excelled in customer safety since 1996, when it was the first to instill a
rollover protective structure in commercial farm tractors (“Product”, 2015).
When John Deere opened two new factories in Brazil in 2013 to meet demand, it needed to find
a way to change their customer perspective. John Deere found that employees were selling
machinery the same way they would in the United States, which was not acceptable for the
global market. They had slow delivery times and the products were not consistent. Therefore,
John Deere spent time training their employees to match customer satisfaction. This program
earned them the 2015 Customer Experience Innovation Award from CXPA (Vanderkay, 2014).
Management:
John Deere requires that its management uphold the ideals of the company with the decisions
that are made. There are a total of 18 corporate managers that work together with other managers
for each sector of the company. Samuel R. Allen is the current CEO of John Deere. He was
appointed in 2009 after working his way up through the company since 1975 (Board). In 2014,
amid the decline that John Deere and the agricultural industry is facing, Mr. Allen requested that
Customers
20%
Management
15%
Community
25%
Suppliers
10%
Employees
20%
Stockholders
10%
Corporate Social Responsibility
Customers
Management
Community
Suppliers
Employees
Stockholders