Deere & Company recently announced that the company would double its sales by 2018. Last year, the company’s sales and revenue totaled $26 billion with earnings of $1.87 billion. To reach the 2018 goal, Deere plans include global expansion, especially in Russia, China, and India.
Deere’s Russian expansion will focus on agricultural products. Russia has 9% of the world’s arable land and plans to double their wheat production to react to worldwide demand. It can be a struggle for foreign companies to operate in Russia, due to the volatile political climate. In the past, the Russian government has enforced policies that have stopped foreign equipment manufacturers from distributing their products. Current Russian policies are favorable for Deere’s expansion, but there is a considerable risk of a flip-flop of these policies. Deere has mitigated this risk by opening a manufacturing plant in Russia and high-level government negotiations.
Deere’s expansion into China and India is focused on construction products. The rapid expansion of infrastructure and urbanization in China and India has fueled the demand for excavators and bulldozers.
As domestic demand for Deere’s products is flat, the company has moved their focus to the global market. This is an excellent example of the global nature of business today. I applaud Deere’s approach to the changing global environment, which shows great promise for its stockholders, employees and vendors. As an employee of one of Deere’s vendors, I am happy to hear of Deere’s planned expansion. I have witnessed firsthand the growth in our Deere business. Deere’s growth provides me with the peace of mind that my employer’s business will be stable for the near future.
Wow! That is quite the goal to double their sales within the next 8 years! I do think if they put the time in and stick with their goal, they will find success. To find components that meet their demands will be a struggle initially and they will probably import or ask their suppliers to set up shop along side of them in Russia. One thing I found in past experience is the moving of tooling has many strings attached along with penalties - hopefully they have negotiated with Russia's government and they stick with their agreements. With the increase demand for this product, they will benefit from the internal sales within Russia. I wish them the best.
ReplyDelete