Marketing Management Strategic Direction -Myassignmenthelp.Com

Question: Discuss About The Marketing Management Strategic Direction? Answer: Introduction In the competitive world, the managers of the company evaluate the external factors that might impact the working of the company and after considering the external analysis the company form the business strategy. The aim of the report is to analyze the strategy and external environment of the case study of Deere and company. Moreover, the report includes the details related to the competitive rivalry of the company discussed in the textbook. Overview of company The brand name of Deere company is John Deere, an American corporation that manufactures farming equipment. The company came into existence in the year 1837, since then the company is delivering the products and services to support those linked to the land. Now, the company is well-known leading company who has operations across the borders (John Deere, 2018). John Deere expanded internationally in the year 1956, at that time the company opened an assembly plant in Mexico and acquired a German tractor manufacturer and a Spanish harvester manufacturer (John Deere, 2018). Recently, in the year 2015, Forbes reported that John Deere Company is on 70th rank of worlds most valuable brands (Badal, Gamble Turnipseed, 2015). Evaluation of Strategy Business strategy plays a significant role in producing good financial results. Most of the companies make use of the financial performance measures to analysis the financial results of their company (Delen, Kuzey Uyar, 2013). Financial performance is a subjective measure which shows how well Deere company can make use of its assets for generating revenue. Using financial ratios is an effective way to measure the financial performance of the company. Ratios can reflect the true picture of the company; the 3 ratios that are selected for the analysis are Current assets ratio, Net margin ratio and Debt-Equity ratio. These ratios reflect the liquidity, profitability, and solvency of the company respectively. Please refer Appendix 1.1 for the calculation of the ratios of Deere and company. The companys business strategy is reflecting an alarming financial result which is clear from the profitability ratio of the company. In the year 2014, the net margin ratio of the company was 8.77% which is less than 9.36%, net margin ratio of 2013 (John Deere, 2013). This data shows that the change in the strategy is not beneficial for the company. Deere company are able to maintain its current ratio almost equal in 2013 and 2014 year which is a positive sign. Along with this, the company has improved its solvency ratio by 0.97 as in the year 2013, the debt-equity ratio was 4.80 and in 2014 it was 5.77 (John Deere, 2014). Overall performance measure shows that company should make changes in the strategy on immediate basis due to a decrease in profitability ratio. The company should make use new innovation and technology in their products which helps in improving the sales. Analysis of External Environment The analysis of external environment includes the outside factors that influence or create an impact on the business operations. Macro environment (PESTLE analysis) and microenvironment (Porter's five forces) analysis is done by the company to identify the factors that affect the working of company (Hayes, 2014). Deere and company analysis of external environment is discussed below: - PESTLE Analysis Political factors: - Deere company decisions and growth might get affected due to the updated changes in the legislation and taxation of the country. Though, the growth of the industry has been projected in many countries including Asia, Africa, Latin America, China, and India. Along with this, increase in urbanization is also favouring the rise in the agricultural equipment industry. Economic factor: - The economic include interest rates, inflations rates, population and purchasing power of customers. The steady progress in the industry since 2009 until 2013 was brought about by favorable economic conditions. The U.S. government supports the farm interest rates and the subsidies of different sorts in the countries outside the U.S. Apart from this, the weakening U.S. dollar and increasing demand for exporting the products are rebuilding the industry (Badal, Gamble Turnipseed, 2015). Socio-cultural factors: - The tractor and agricultural equipment is expected to grow with the change in the socio-cultural factors. Increasing urbanization and rise in the living standard of peoples across the world are contributing to the growth of the industry. By the year 2050, the global population was predicted to show a rise of 9.5 billion up from approximately 7 billion in the year 2014. The greatest rise is expected in the countries of Asia and Africa. Technological factors: - The adoption of new innovation and technology is becoming a trend globally because each and every company is making use of technology in their processes and products (Kotler, 2015). John Deere Company also decided to bring innovation in the products with the use of innovative technology. Environmental factors: - John Deere knows its commitment towards the environment and this is the reason the company tries to reduce the environmental impact of operations and products. The manufacturing locations incorporate environmental impact and risks. The company also joined the U.S. environmental protection agency's climate leaders program in the year 2007 (John Deere, 2018). Legal factors: - Legal factors consist of laws and regulations that create an impact on the working of the company. Changes in the legal regulation might work as a huddle for the company while expanding the business and entering into the potential market of Asia and Africa. Porters Five Forces Bargaining power of buyers: - The buyer of the heavy equipment's generally belongs to the construction market and deals in large-scale businesses. Buyers belong to the large-scale corporation likely to have high bargaining power but on the other hand, the small-scale corporation doesn't have much power so they generally shift to the other customers (Wilson Gilligan, 2012). Government is one of the best buyers for John Deere as they are the one who purchases the equipment in bulk from the manufacturers. Bargaining power of suppliers: - Deere and company attributed much of the success because of its strong relationship with the dealers across the world. The number of the dealership of the company increased by 50% between the year 2011 and 2013. The suppliers of the Deere company have strong bargaining power because they supply the raw materials (metal, plastics, and many others) to the company in bulk. The company has tie-ups with Rio Tinto or Alcan for steel and aluminum and with Michelin or Bridgestone for rubber. Intense rivalry: - John Deere has intense competition with the companies like CNH industrial N.V., and AFCO Corporation as these companies deal in the same industry of heavy equipment. The price competition among the three companies is low but the competitive rivalry centered on factors like value rather than price. Threats of substitutes: - Company has low threats of substitutes as there is very less number of industries who are involved in the manufacturing of heavy equipment. Thus, the John Deere doesn't have to worry about the sales and revenue of the company. The threat of new entrants: - There is the low threat of new entrants in the industry of heavy equipment's because to enter into the industry due to the high investment and risk (Lee Carter, 2011). Along with this, the new companies will find the strong competition in the market with the existing companies. Hence, the possibility of the new entrants in the industry is very less. Competitive Rivalry The company has two main competitors CNH Industrial N.V. and AGCO Corporation. The globalization has an impact on the effective working of the industry. Between the year 2009 and 2014, AGCO and Deere Company raised their percentage of profit generated internationally due to globalization as both the company tool the advantage of same. Another strong competitor CNHs tractor sales increased by 25% in Latin America during the year 2011 with the accumulated sales growth of 30%. Four years later, CNH projected tractor sales in Latin America declined by 5% to 10% (Badal, Gamble Turnipseed, 2015). Deere Company has a global market share of 35.4% in the year 2013, on the other hand, AGCO Corporation held approximately 4% of global farm share in 2013. CNH Industrial is a strong competitor of Deere company as this company has a strong market presence in the emerging markets of Brazil and other Latin American markets (Rivers, 2014). Conclusion It can be concluded, Deere company has scope to expand the business in the emerging market as there is less number of competitors in the industry. The company can form the appropriate strategies to bring innovative and quality products in the market with the help of which the company can improve its financial results. The analysis of external environment reflects the growing demand for farm equipment, mainly for the large model in the United States and Canada where Deere company dominates the market. Moreover, the company should also form proper strategies to face the strong competitors and to create competitive advantage in the market. References Badal, A., Gamble, J.E. Turnipseed, D.L. (2015). Deere Company in 2015: Striving for Growth in a Weakening Global Agriculture Sector. Gamble. Delen, D., Kuzey, C., Uyar, A. (2013). Measuring firm performance using financial ratios: A decision tree approach.Expert Systems with Applications,40(10), 3970-3983. Hayes, J. (2014).The theory and practice of change management. Palgrave Macmillan. John Deere. (2013). Deere Company Annual Report 2013. Viewed on 5th February 2018, https://www.annualreports.com/HostedData/AnnualReportArchive/d/NYSE_DE_2013.pdf John Deere. (2014). Deere Company Annual Report 2014. Viewed on 5th February 2018, https://www.annualreports.com/HostedData/AnnualReportArchive/d/NYSE_DE_2014.pdf John Deere. (2018). About Us. Viewed on 5th February 2018, https://www.deere.co.in/en/our-company/about-john-deere/ John Deere. (2018). Operations. Viewed on 5th February 2018, https://www.deere.com/en_US/corporate/our_company/citizenship/environmental_stewardship/operations/operations.page John Deere. (2018). Our History. Viewed on 5th February 2018, https://www.deere.com/en/our-company/history/ Kotler, P. (2015).Framework for marketing management. Pearson Education India. Lee, K., Carter, S. (2011). Global marketing management.Strategic Direction,27(1). Rivers, M. (2014). John Deere Versus The Competition. Viewed on 5th February 2018, https://seekingalpha.com/article/2523975-john-deere-versus-the-competition Wilson, R. M., Gilligan, C. (2012).Strategic marketing management. Routledge