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• Here I attachcase study PDF. I want a Presentation on Porter's five forces analysis , recommendation and conclusion onDeere & Company in 2014...[Agricultural, Construction, and Forestry Equipment Industry].
• It should have minimum 9 slides (Without title page.).

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Final PDF to printer CASE 19 Deere & Company in 2014: Its International Strategy in the Agricultural, Construction, and Forestry Equipment Industry Alen Badal John E. Gamble Author and Researcher Texas A&M University-Corpus Christi D eere & Company had its best-ever year in fiscal 2013 with record net income for the third consecutive year. The company's sales and earnings of $37.8 billion and $3.54 billion, respectively, resulted from the success of its global strategy keyed to product innovation and quality, operating excellence, and best-in-industry customer service. Deere introduced dozens of technologically advanced agricultural and construction products during 2013 that helped boost productivity and lower the costs of its customers in farming and construction. The company's prospects for even stronger financial performance were good as the global demand for agricultural products was expected to double by 2050. International markets such as China, Brazil, and Russia already accounted for more than 35 percent of the company's revenues in 2013, and they would likely make up a much larger percentage of sales in the long term as living standards in emerging markets improved. Deere & Company had recognized the importance of international expansion as early as 1956, when it first established operations outside the United States, but it was accelerating its efforts to prepare for rapid increases in the demand for food in international markets. The company built or acquired new plant capacity in Brazil, Germany, and China in 2013 and had plans for seven new factories in international markets in 2014. Deere & Company achieved its record-setting year despite a slowdown in the construction industry, tho20598_case19_C285-C294.indd 285 where it also competed with a line of tractors, articulating dump trucks, backhoe loaders, motor graders, excavators, and bulldozers. The company also manufactured and marketed forestry equipment, turf equipment, and diesel engines for marine and construction equipment uses. The company's primary challenge in 2014 was how to best defend against the competitive pressures stemming from its chief rivals in the agricultural and construction equipment industries, who were also preparing for rapidly expanding industry growth. COMPANY HISTORY Deere & Company began manufacturing and marketing farming equipment in 1837 when John Deere, a blacksmith and inventor, began forging steel plows for mule-drawn walking plows. The company added corn planters, wheeled sulky ploys, and cultivators during the late 1800s, but its walking plow accounted for the majority of its business until the company acquired motorized tractor producer Waterloo Boy in 1918. Deere's acquisition of Waterloo Boy dramatically changed the company's business model and scope of operations, but it was a necessity since Ford Motor Company was revolutionizing agriculture with the manufacture and sale of Fordson farm Copyright 2014 by Alen Badal and John E. Gamble. All rights reserved. 10/30/14 12:03 PM Final PDF to printer C-286 PART 2 Cases in Crafting and Executing Strategy tractors. Ford sold more than 34,000 farm tractors in 1918 as farmers across the United States easily recognized how machinery could boost productivity in agriculture. Deere's shift in strategy began with disastrous results, with the Waterloo Boy brand selling only 79 tractors in 1921. The first John Deere-branded tractor, the Model D, was launched in 1923 and was so popular that it remained in the company's product line for 30 years. Deere added more models to the product line throughout the 1920s. The appeal of the company's Model D, GP, Model 1, and Model 2 tractors allowed its revenues to soar until the depths of the Great Depression in 1922, when its revenues plunged to $8.7 million. However, even though Deere & Company was losing money, the company's management chose not to repossess farm equipment owned by farmers unable to make payments during the Depressiona decision that would solidify its bond with farmers for generations. The company expanded internationally in 1956 when it opened an assembly plant in Mexico and acquired a German tractor manufacturer and a Spanish harvester manufacturer. Deere & Company expanded further internationally when it constructed a tractor and implement manufacturing plant in Argentina in 1958, built a plant in France in 1961, and acquired a cultivator manufacturer in South Africa in 1962. By 1963, John Deere was the world's largest producer of farm and industrial tractors and equipment. The company also began selling lawn and garden tractors that year. In 2014, with its world headquarters in Moline, Illinois, Deere & Company remained the largest agricultural equipment and machinery manufacturer in the world, with operations in more than 26 countries. The company's income statements for fiscal 2011 through fiscal 2013 are presented in Exhibit 1. Deere & Company's balance sheets for fiscal 2011 through fiscal 2013 are presented in Exhibit 2. OVERVIEW OF THE TRACTOR AND AGRICULTURAL EQUIPMENT INDUSTRY The tractor and agricultural equipment industry was projected to grow at an attractive rate for decades because of increasing urbanization and rising standards of living in many countries around the world. tho20598_case19_C285-C294.indd 286 By 2050 the global population was expected to exceed 9 billion, up from approximately 7 billion in 2014, with Asia and Africa experiencing the greatest increases. It was also expected that a growing middle class would emerge in Latin America, China, and India, among other developing economies. Thus, agricultural output was projected to double by 2050 in order to maintain pace with the increase in global population, which would require the rate of production to grow. Also, an increase in urbanization would stir a need for infrastructure development, with the percentage of the world's population living in urban areas increasing from 50 percent in 2014 to 70 percent by 2050. The increase in urbanization was expected to result in increases in the demand for construction services and equipment. The long-term macro-economic trends were favorable for the $41.6 billion tractor and agricultural industry, which had grown annually by 3.9 percent between 2009 and 2014. The industry consisted of dairy farm equipment and sprayers, dusters, blowers, and attachments, with harvesting machinery representing the largest segmentsee Exhibit 3. The steady growth in the industry since 2009 was brought about by favorable sociocultural forces and economic conditions that included farm interest rates supported by the U.S. federal government and subsidies of various sorts in countries outside the United States. Also, the weakening U.S. dollar and a rising demand for exporting helped rebuild the farming industry. The farming industry was consolidating as large conglomerates took over smaller farms. As a result, total volume increases and economies of scale were taking place in the industry, along with more vertical integration across supply chains. A demand for better optimization of farming also resulted in reliance on technology to reduce operating costs and increase farming output. Precision agriculture was a growing trend in the industry that allowed farmers to spottreat fields using aerial photography and geographic information systems (GIS) technology to precisely water, seed, and harvest in less time. Industry Competition The tractor and agricultural equipment industry comprised more than 1,000 companies, with the top four generating half of all revenues. Industry production was concentrated primarily among Deere & 10/30/14 12:03 PM Final PDF to printer CASE 19 EXHIBIT 1 Deere & Company in 2014 C-287 Deere & Company Income Statements, Fiscal 2011-Fiscal 2013 (in thousands) Period Ending: Total revenue Cost of revenue Gross profit Operating expenses Research and development Selling, general, and administrative Operating income Interest expense Income before tax Income tax expense Minority interest Net income Oct 31, 2013 Oct 31, 2012 Oct 31, 2011 $37,795,400 25,667,300 12,128,100 $36,157,100 25,007,800 11,149,300 $32,012,500 21,919,400 10,093,100 1,477,300 4,426,100 6,224,700 741,300 5,483,400 1,945,900 (300) $ 3,537,300 1,433,600 4,198,500 5,517,200 782,800 4,734,400 1,659,400 (6,900) $ 3,064,700 1,226,200 3,884,700 4,982,200 759,400 4,222,800 1,423,600 (7,900) $ 2,799,900 Source: www.finance.yahoo.com. Company, CNH Industrial N.V., and AGCO Corporation. Mergers affected the industry, with CNH Industrial N.V. having gone through a merger with KamAZ in 2010 and Fiat Industrial in 2013. External factors, such as emission standards, continue to become more stringent in the United States. Quality control, research and development, and adoption of new technological advances were all strategic factors in the industry. Agricultural equipment manufacturers were driving the use of technology with larger, more sophisticated equipment. Equipment manufacturers also recognized the importance of customer service and support and equipment financing as farming consolidated to a smaller group of farming corporations. The average useful age for farming equipment was estimated to be 10 to 20 years. A preference of farmers was to prolong the life of equipment by purchasing replacement parts. The industry was expected to continue production of replacement parts for equipment and reap the profits of the segment. Interest rates on farm equipment loans had a direct impact on sales; lower rates and incentives helped boost sales of higher-end equipment. Profits had increased over the five-year 2009- 2014 period, with revenues increasing despite rising steel costs, which manufacturers had passed on to buyers. The weakened U.S. dollar had increased export sales for U.S. companies. An average industry tho20598_case19_C285-C294.indd 287 profit was projected as 6.2 percent of revenue. Wages in the industry had decreased as a result of the increased automation of the manufacturing process, which lessened dependence on labor. Because of technological advances in manufacturing, depreciation costs as a percentage of industry revenue had increased for manufacturers. Product quality, innovation, customer service, branding, and performance were essential areas rivals competed on. Generally, price competition between the three rivals was low; as a result, competition centered on overall value instead of price. Competitor barriers to entry into the industry ranged from low to medium; however, with such fierce competition among the top three, entrants were surely challenged. Globalization had a significant effect on functions within the industry. Lower wages and overall production costs increased revenues. Between 2009 and 2014, both AGCO and Deere & Company increased their percentage of revenue generated internationally; CNH's tractor sales increased 25 percent in Latin America during 2011, with combined sales growth of 30 percent. International Markets for Agricultural Equipment The declining U.S. dollar made it more affordable to export equipment from the United States. In 2013, total imports to the United States were estimated at 10/30/14 12:03 PM Final PDF to printer PART 2 C-288 EXHIBIT 2 Cases in Crafting and Executing Strategy Deere & Company Balance Sheets, Fiscal 2011-Fiscal 2013 (in thousands) Period Ending: Assets Current assets Cash and cash equivalents Short-term investments Net receivables Inventory Total current assets Long-term investments Property, plant, and equipment Goodwill Intangible assets Other assets Deferred long-term asset charges Total assets Liabilities Current liabilities Accounts payable Short/current long-term debt Total current liabilities Long-term debt Other liabilities Minority interest Total liabilities Stockholders' equity Common stock Retained earnings Treasury stock Other stockholders' equity Total stockholders' equity Total liabilities and stockholders' equity Oct 31, 2013 Oct 31, 2012 Oct 31, 2011 $ 3,504,000 1,624,800 35,039,200 4,934,700 45,102,700 221,400 9,124,100 844,800 77,100 1,825,800 2,325,400 $59,521,300 $ 4,652,200 1,470,400 31,426,400 5,170,000 42,719,000 215,000 7,539,700 921,200 105,000 1,485,500 3,280,400 $56,265,800 $ 3,647,200 787,300 27,501,600 4,370,600 36,306,700 201,700 6,502,300 999,800 127,400 1,210,900 2,858,600 $48,207,400 $ 9,240,800 12,898,000 22,138,800 21,577,700 5,537,100 1,900 49,255,500 $ 9,288,500 9,967,300 19,255,800 22,453,100 7,694,900 19,900 49,423,700 $ 8,090,800 9,629,700 17,720,500 16,959,900 6,712,100 14,600 41,407,100 3,524,200 19,645,600 (10,210,900) (2,693,100) 10,265,800 $59,521,300 3,352,200 16,875,200 (8,813,800) (4,571,500) 6,842,100 $56,265,800 3,251,700 14,519,400 (7,292,800) (3,678,000) 6,800,300 $ 48,207,400 Source: www.finance.yahoo.com. $10.5 billion, while exports were estimated at $11.8 billion. Canada was the largest U.S export market, with a 34 percent share of exports, while Mexico, Australia, and Brazil were the next-largest export markets for U.S. agricultural equipment manufacturers. Germany was the largest exporter of farm equipment to the United States, accounting for 16 percent of U.S. imports. Canada, China, and Japan were also significant exporters of farm equipment to the United Statessee Exhibit 4. tho20598_case19_C285-C294.indd 288 Deere & Company's Strategy in 2014 Deere & Company's farming equipment product lines were aimed at supporting the farming of every owner of Deere equipment and compelling the thought of \"should've got a John Deere\" among those who farmed with rival equipment. Farming was arguably the most time-sensitive industry since harvesting windows could be limited to a matter of a few days. In addition, farming seasons were limited to specific months when weather 10/30/14 12:03 PM Final PDF to printer CASE 19 EXHIBIT 3 Deere & Company in 2014 C-289 Product Segmentation of the Tractor and Agricultural Equipment Industry, 2013 Planting, seeding and fertilizing machinery and attachments, 12.1% Haying machinery and attachments, 12.3% Dairy farm equipment, sprayers, dusters, blowers and attachments, 9.6% Harvesting machinery, 24.2% All other tractors and agricultural machinery and attachments, 19.5% Parts sold separately, 22.3% Total: $41.6 billion Source: Adapted from IBISWorld, February 2014. EXHIBIT 4 Leading U.S. International Trade Partners for Agricultural Products, 2013 Exports from the United States Imports to the United States Brazil, 4% Japan, 12% All others, 46% China, 13% Canada, 14% Canada, 34% Germany, 16% All others, 45% Mexico 8% Australia 7% Total: $11.8 billion Total: $10.5 billion Source: Adapted from IBISWorld, February 2014. was favorable to various types of crops. Deere's strategy of producing the highest-quality, most reliable farm equipment and offering farmers the highest level of customer service resulted in fiscal 2013 being the company's best financial year ever. tho20598_case19_C285-C294.indd 289 Deere & Company's strategic intent was to achieve $50 billion in sales by fiscal 2018 and 12 percent profit margins by fiscal 2014. Deere's strategy was keyed to expanding its business globally and enhancing its complementary businesses while supporting the 10/30/14 12:03 PM Final PDF to printer C-290 PART 2 Cases in Crafting and Executing Strategy overall business. In doing so, the company believed its critical business factors (CBFs) consisted of better understanding consumers at a root level, delivering value, offering a world-class distribution system, and grooming and hiring extraordinary international associates. The CBFs were predicated on building from the foundation already in place, consisting of Deere's exceptional business performance, optimal shareholder value-added growth, and aligned high-performing, team-oriented associates. The company evaluated the \"health and performance\" of its operations on an ongoing basis and, as necessary, made appropriate adjustments to further improve customer value. Ultimately, the overarching goal was to offer consumers farming products that were representative of a company with integrity and commitment to manufacturing innovative products of the highest quality. Deere's purpose was to be fully committed to those \"linked to the land.\" The company's managers believed that many opportunities existed for the company, such as an increase in the global population and income growth, which would require infrastructural needs on a global basis. Additional opportunities included new consumer segmentation and advances in technology. The company identified challenges moving forward. Specifically, Deere foresaw capturing more customers across six identified key regions (United States/ Canada, European Union, Brazil, CIS/Russia, China, and India), with a focus on meeting each country's local farming and agricultural equipment needs while leveraging global economies of scale. The company was strategizing forward progress without encountering any headwind. The company planned to increase its market share in developed markets. At the time, Deere was number two in market share in North America, a ranking it hoped to strengthen and increase. Perhaps a continuous focus on technology and increased customer services, coupled with competitive pricing, would help the company increase its market share. Alternatively, maybe the solution was to focus on additional research and development and enhance its domestic manufacturing plants and products while also focusing on optimally manufacturing equipment to meet the specific country demands of farming abroad. Deere & Company's Business Divisions In 2014, the company had three primary businesses: Agriculture and Turf Equipment, Construction and Forestry Equipment, and the Financial Services/ tho20598_case19_C285-C294.indd 290 Power Systems/Global Parts/Intelligent Solutions Group. Deere's strategy in each of its two heavyequipment divisions was to learn more about its customers' local needs and translate the knowledge into products and services that delivered superior customer value. The Agriculture and Turf division was Deere's largest division and was the focus of its new product development activities. The Construction and Forestry division remained profitable in spite of a slowing demand for construction machines. Deere's Financial Services division also experienced financial success. In 2013, the division achieved net income of $565 billion. The loan and lease portfolio of Deere & Company grew by approximately $5 billion. Dealership Collaboration Deere & Company attributed much of its success to its relationship with its dealers throughout the world. It emphasized the necessity of having an effective distribution and aftermarket support system. In the Commonwealth of Independent States, the number of dealerships increased by 50 percent between 2011 and 2013. The company also added new parts distribution centers in South Africa and Argentina and had additional expansion plans to begin operations in India and Brazil. Deere established cooperative banking relationships in seven African nations where additional sales opportunities were projected. Also, the company had a retailing-financing presence in over 40 countries that accounted for more than 90 percent of its sales. Product Innovation Deere & Company focused on the use of technology to better assist end users with managing and using their equipment. This was achieved via the MyJohnDeere platform. This wireless data transmission system enabled the collection of data that was used for analysis by John Deere, in regard to the mechanical performance of equipment, and by customers, in regard to production metrics. In addition, Deere focused on manufacturing dozens of equipment attachments, such as those utilized for demolition and landscaping. Increases in product lines also helped the company with its goal of continued growth and profitability. In 2013, Deere introduced nine advanced agricultural equipment models, as well as flex-fuel premium lawn tractors, commercial mowers, and Deere's first hybrid-electric construction equipment. The company focused particularly on increasing efficiency and incorporating technology while reducing 10/30/14 12:03 PM Final PDF to printer CASE 19 emissions and meeting consumers' requirements for power, reliability, and fluid and fuel efficiency. In a highly notable achievement, Deere's larger engines were certified as meeting the strict U.S. and European emission standards. Deere had reduced the emissions level of all its engines by over 99 percent since 1996 as a result of redesigning virtually all of its engines. Awards, Achievements, and Corporate Responsibility Deere & Company was named one of the top-100 innovators by a leading business media group on the basis of its patents and technology developments. The company received additional awards and recognition from organizations throughout the world, including special recognition for its new Chinese-made combine, which took top honors at China's largest machinery venue. In 2013 Deere focused on identifying solutions to world hunger, improving educational opportunities, and helping to develop better communities in the locations where it operated. In most cases, Deere & Company employees volunteered to assist in the execution of its social initiatives. For example, to further the company's social mission, more than 3,000 U.S. employees prepared approximately 960,000 packaged meals for those in need in 2013, and 20 employees spent a week in northwest India training small farmers in new farming methods. In 2013, Deere & Company was named for the fifth time to Fortune's \"Most Admired Companies\" list. Domestic Manufacturing Operations Deere's manufacturing plants in the United States were located in seven states (Iowa, Illinois, North Dakota, Georgia, Louisiana, Missouri, and Wisconsin). Deere manufactured tractor cabs and other assemblies in its Waterloo, Iowa, plant. Large combine harvesters and hydraulic cylinders and planting equipment were manufactured in East Moline, Illinois. The plant in Valley City, North Dakota, manufactured tilling and seeding equipment. The Davenport, Iowa, plant manufactured wheel loaders, motor graders, dump trucks, and forestry equipment. In neighboring Dubuque, Iowa, production consisted of backhoes, crawlers, tracked forestry equipment, and skid-steer loaders. The Springfield, Missouri, plant manufactured engines. The Ankeny, Iowa, plant manufactured sprayers, while hay and pull-type mowers were made in Ottumwa, Iowa. Cane harvesting equipment and scrapers were made in Thibodaux, Louisiana. The plant in Horicon, Wisconsin, produced lawn and tho20598_case19_C285-C294.indd 291 Deere & Company in 2014 C-291 garden and turf care products, while the plant in Augusta, Georgia, manufactured the 5E, 5EN, and 5M Series tractors. The Fuquay Varina, North Carolina, plant made golf equipment and turf mowers. International Manufacturing Operations Expansion plans called for new manufacturing locations in key markets that were to be completed in 2013 and ready in 2014 to support increased production. Deere opened three locations in China to support construction equipment, engines, and large farm equipment; two locations in Brazil, one of which was in conjunction with Hitachi, for construction equipment; one location in India for manufacturing farm equipment; and one in Russia for manufacturing seeding and tillage machines. Additional plans included expansion into Germany to manufacture cab production and into Brazil to manufacture large tractors. In the United States, the company's expansion included new factories in Moline and Valley City, North Dakota, and extensive modernization at existing plants. Deere sold its landscape operation and purchased a manufacturer of ultra-wide planters. Deere's international manufacturing operations spanned Mexico, India, Argentina, China, Canada, and Europe. Two plants in Mexico (Saltillo and Torreon) manufactured a variety of agricultural tractors. Power systems were manufactured in Fleuryles-Aubrais, France. Tractors, diesel engines, and header models for grain harvesting were built in Granadero Baigorria, Santa Fe, Argentina. The Pune, India, plant manufactured small agricultural tractors, while additional tractors were manufactured in the Mannheim, Germany, plant. The Zweibrcken, Germany, plant manufactured harvesting equipment, and the Horst, Netherlands, plant manufactured spraying equipment. Forwarders and wheeled harvesters were built in the Joensuu, Finland, plant. The Edmonton, Alberta, Canada, plant produced remanufactured equipment. Consumer and commercial lawn equipment was manufactured in Gummersbach, Germany. DEERE'S RIVALS IN THE TRACTOR AND AGRICULTURAL EQUIPMENT INDUSTRY Deere & Company was the world's leading manufacturer of agricultural and forestry equipment, with a market share of 35.4 percent in 2013. Its 10/30/14 12:03 PM Final PDF to printer PART 2 C-292 EXHIBIT 5 Cases in Crafting and Executing Strategy Financial Summary for CNH Industrial N.V., 2009-2013 (in millions of euros) Net revenues Trading profit Operating profit (loss) Profit (loss) before taxes Profit (loss) Total assets Total equity 2013 2012 2011 2010 2009 25,778 1,985 1,868 1,507 917 40,941 5,556 25,785 2,063 1,846 1,460 900 38,861 5,376 24,289 1,690 1,633 1,162 694 38,572 5,252 21,342 1,096 1,021 567 369 34,873 4,556 17,968 322 (19) (470) (503) 30,872 5,718 Source: CNH Industrial 2013 annual report. primary competitors in the tractors and agricultural equipment industry were CNH Industrial N.V., the maker of Case and New Holland tractors and construction equipment; AGCO Corporation, the maker of Massey Ferguson and other brands; and Caterpillar, Inc. CNH Industrial N.V. CNH Industrial N.V., based in Basildon, United Kingdom, held an 11.7 percent market share and was Deere & Company's primary rival in agricultural equipment. CNH Industrial was formed in 2013 as a result of a merger between CNH Global and Fiat Industrial. The company marketed agricultural equipment under 12 global and regional brands, and it had 62 manufacturing plants, 48 research and development centers, and 6,000 dealers in 190 countries. The company's farming/agricultural and construction equipment was marketed under such brands as Case IH Agriculture, New Holland Agriculture, and Steyr. CNH Industrial also manufactured and marketed trucks, busses, and other commercial vehicles under the Iveco and HeuliezBus brands. The company's total revenues in 2013 were 25.8 billion. Approximately 62 percent of the company's revenues and 94 percent of its operating profits were generated from the sale of agricultural and construction equipment in 2013. Exhibit 5 provides a summary of the company's financial performance for 2009 through 2013. AGCO Corporation AGCO Corporation, based in Duluth, Georgia, held an approximate 4 percent share of the global farm tho20598_case19_C285-C294.indd 292 equipment market in 2013. The company's tractors, combines, planters, grain storage silos, and other agricultural equipment was sold in 140 countries. Sales from North America accounted for approximately 25 percent of the company's revenues in 2013. The company held a strong market presence in emerging markets, such as Brazil and other Latin American markets. Approximately 60 percent of its revenues were generated from tractor sales under brands such as Massey Ferguson, Fendt, and Challenger. The company had approximately 1,300 dealers in North America, 340 dealers in South America, 1,160 dealers in Europe and the Middle East, and 300 dealers in the Asia-Pacific region. A summary of AGCO's financial performance between 2009 and 2013 is presented in Exhibit 6. Caterpillar, Inc. Caterpillar, Inc., manufactured construction and mining equipment, diesel and natural gas engines, gas turbines, and diesel-powered locomotives. The company also built and marketed small to medium-sized track-type tractors for use in the construction and mining industries. In 2013, the company's construction industry division recorded sales and operating profit of $18.5 billion and $1.8 billion, respectively. The company's construction equipment sales in North America for 2013 were approximately $7 billion, with sales in the Asia-Pacific region approximating $4.7 billion; sales in Europe, Africa, and the Middle East slightly exceeding $4 billion; and sales in Latin America approximating $2.7 billion. In 2013, the company's revenues for its energy and power systems were approximately $20.1 billion, its mining machinery 10/30/14 12:03 PM Final PDF to printer CASE 19 EXHIBIT 6 Deere & Company in 2014 C-293 Financial Summary for AGCO Corporation, 2009-2013 (in millions) Net revenues Gross profit Income from operations Net income Total assets Total equity 2013 2012 2011 2010 2009 $10,786.9 2,390.6 900.7 592.3 8,438.8 4,044.8 $9,962.2 2,123.2 693.2 516.4 7,721.8 3,481.5 $8,773.2 1,776.1 610.3 585.3 7,257.2 3,031.2 $6,896.6 1,258.0 324.2 220.2 5,436.9 2,259.2 $6,516.4 1,071.9 218.7 135.4 4,998.9 2,394.4 Source: AGCO Corporation 2013 annual report. EXHIBIT 7 Financial Summary for Caterpillar, Inc., 2009-2013 (in millions) Net revenues Operating profit Net profit Total assets 2013 2012 2011 2010 2009 $55,656 5,628 3,789 84,896 $65,875 8,573 5,681 88,970 $60,138 7,153 4,928 91,218 $42,588 3,963 2,700 63,728 $32,396 577 895 59,842 Source: Caterpillar, Inc., 2013 annual report. revenues were approximately $13.3 billion, and its financial services revenues were nearly $3.2 billion. A summary of Caterpillar's financial performance for 2009 through 2013 is presented in Exhibit 7. Caterpillar's strategy was focused on best-inindustry quality and after-the-sale service. The company maintained 178 global dealers, with an average dealer relationship of more than 88 years. The company's relationship with its dealers and its commitment to unmatched parts availability ensured that the 3 million Caterpillar products around the world were in top-notch operating condition and were able to keep construction projects on schedule. Caterpillar's strategy was also focused on developing new products and improving the company's cost structure to boost profitability. Even though Caterpillar was the industry leader in construction equipment sales, it experienced a dramatic decline in sales and profit in 2013 due to a slowdown in global construction. THE FUTURE FOR DEERE & COMPANY Deere & Company's strategy seemed on track in 2014 as the company focused its efforts on entering tho20598_case19_C285-C294.indd 293 emerging and new markets and utilizing technology to both help production and provide real data to customers that would support increased productivity. Deere management believed that in order to continue to achieve global business success, the company needed to understand its customers at a deeper level and deliver greater customer value. Management also understood that Deere's employee-associates and dealer allies were critical elements in its plan for long-term success. The overall aim was to deliver quality, stemming from a company with stellar integrity that was committed to providing innovative products and services for consumers. Specifically, the company planned to advance operations and increase market share across six key markets: the United States and Canada, Brazil, China, Russia, India, and the European Union. However, the company's chief rivals all recognized the same trends in the macro-environment and the same opportunities for growth in revenues in profits. Deere & Company management would be compelled to develop an international strategy that yielded competitive advantage in domestic and rapidly growing emerging markets to capitalize on the industry's opportunities. 10/30/14 12:03 PM Final PDF to printer tho20598_case19_C285-C294.indd 294 10/30/14 12:03 PM