Deere Company McKinsey 7S Analysis| Assignment Help
Deere Company McKinsey 7S Analysis
Deere Company Overview
Deere & Company, founded in 1837 by John Deere in Grand Detour, Illinois, and headquartered in Moline, Illinois, stands as a global leader in agricultural, construction, forestry, and turf care equipment. The company operates through three primary divisions: Production & Precision Agriculture, Small Agriculture & Turf, and Construction & Forestry. Deere’s corporate structure reflects a blend of centralized functions and decentralized business unit autonomy. In fiscal year 2023, Deere reported total revenues of $61.25 billion and a net income of $10.17 billion, with a market capitalization fluctuating around $110 billion and employing approximately 83,000 individuals worldwide. Deere’s international presence is substantial, with manufacturing and distribution facilities across North America, South America, Europe, Asia, and Africa.
Deere’s corporate mission centers on helping customers be more profitable and sustainable through intelligent, connected machines and applications. The company’s vision is to lead in providing advanced technology and services for agriculture, construction, and forestry. Key milestones include the introduction of the steel plow, the development of the tractor, and the integration of precision agriculture technologies. Recent strategic initiatives include the acquisition of Wirtgen Group in 2017 for $5.2 billion, significantly expanding its construction equipment portfolio, and ongoing investments in autonomous machinery and digital solutions. Current strategic priorities emphasize precision agriculture, electrification, and autonomous solutions, while challenges include managing supply chain disruptions, navigating evolving regulatory landscapes, and addressing the skills gap in advanced technology.
The 7S Framework Analysis - Corporate Level
Strategy
Deere’s corporate strategy centers on delivering value through precision agriculture, construction, and forestry solutions, emphasizing technological leadership and customer-centric innovation. The portfolio management approach aims for a balanced mix of cyclical and less cyclical businesses, with diversification into adjacent markets like road construction through the Wirtgen acquisition. Capital allocation prioritizes investments in research and development (R&D), particularly in autonomous systems, electric power, and digital platforms. Organic growth is pursued through product innovation and market penetration, complemented by strategic acquisitions to expand capabilities and market reach.
International expansion focuses on emerging markets, particularly in Asia and South America, with market entry strategies tailored to local conditions, often involving joint ventures and localized production. Digital transformation is a core strategic pillar, with investments in data analytics, connectivity, and digital platforms to enhance machine performance and customer productivity. Sustainability and ESG considerations are increasingly integrated into the strategy, with commitments to reduce greenhouse gas emissions and promote sustainable farming practices. Deere’s response to industry disruptions involves proactive investments in disruptive technologies and business models, such as subscription-based services and autonomous equipment.
Strategic alignment across business units is facilitated through corporate-level strategic planning processes and performance management systems. Strategic synergies are realized through shared technology platforms, integrated supply chains, and cross-selling opportunities. Tensions between corporate strategy and business unit autonomy are managed through a decentralized organizational structure that empowers business units to adapt to local market conditions while adhering to overall corporate goals. Corporate strategy accommodates diverse industry dynamics by allowing business units to tailor their strategies to the specific needs of their respective markets. Portfolio balance and optimization are achieved through regular reviews of business unit performance and strategic fit, with divestitures considered when necessary.
Structure
Deere’s formal organizational structure is a hybrid of functional and divisional structures, with a corporate center providing strategic direction and shared services, and business units operating with significant autonomy. The corporate governance model includes a board of directors with diverse expertise and independent oversight. Reporting relationships are generally hierarchical, with clear lines of authority and accountability. The degree of centralization varies across functions, with finance and legal being more centralized, and marketing and sales being more decentralized. Matrix structures are used in some areas, such as product development, to foster cross-functional collaboration. Corporate functions provide shared services such as finance, human resources, and legal, while business units maintain their own product development, manufacturing, and sales capabilities.
Formal integration mechanisms across business units include cross-functional teams, shared technology platforms, and corporate-level strategic planning processes. Shared service models are used for functions such as IT and procurement to achieve economies of scale and standardization. Centers of excellence are established for areas such as data analytics and digital marketing to promote best practices and knowledge sharing. Structural enablers for cross-business collaboration include cross-functional teams, shared technology platforms, and corporate-level strategic planning processes. Structural barriers to synergy realization include siloed organizational structures, conflicting business unit priorities, and lack of clear accountability for cross-business initiatives. Organizational complexity is managed through a decentralized organizational structure that empowers business units to adapt to local market conditions while adhering to overall corporate goals.
Systems
Deere’s strategic planning process involves annual strategic reviews, long-term strategic planning exercises, and regular performance monitoring. Performance management systems include key performance indicators (KPIs) aligned with strategic objectives, regular performance reviews, and incentive compensation programs. Budgeting and financial control systems include annual budget cycles, monthly financial reporting, and variance analysis. Risk management and compliance frameworks include enterprise risk management (ERM) processes, internal controls, and compliance programs. Quality management systems and operational controls include Six Sigma methodologies, lean manufacturing principles, and ISO certifications. Information systems and enterprise architecture include enterprise resource planning (ERP) systems, customer relationship management (CRM) systems, and data analytics platforms. Knowledge management and intellectual property systems include patent databases, knowledge repositories, and communities of practice.
Integrated systems spanning multiple business units include ERP systems, CRM systems, and supply chain management systems. Data sharing mechanisms and integration platforms include data warehouses, data lakes, and application programming interfaces (APIs). Commonality versus customization in business systems is balanced by standardizing core systems while allowing business units to customize systems to meet their specific needs. System barriers to effective collaboration include data silos, incompatible systems, and lack of integration. Digital transformation initiatives across the conglomerate include investments in cloud computing, data analytics, and digital platforms.
Shared Values
Deere’s stated core values include integrity, quality, commitment, and innovation. The strength and consistency of corporate culture are reinforced through employee training, communication programs, and leadership behaviors. Cultural integration following acquisitions is addressed through cultural assessments, integration teams, and communication programs. Values translate across diverse business contexts by emphasizing the importance of customer focus, innovation, and continuous improvement. Cultural enablers to strategy execution include a strong commitment to quality, a culture of innovation, and a focus on customer satisfaction. Cultural barriers to strategy execution include resistance to change, siloed organizational structures, and lack of cross-functional collaboration.
Mechanisms for building shared identity across divisions include corporate-wide events, employee recognition programs, and communication initiatives. Cultural variations between business units are acknowledged and respected, while also emphasizing the importance of shared values and goals. Tension between corporate culture and industry-specific cultures is managed by allowing business units to maintain their own unique cultures while adhering to overall corporate values. Cultural attributes that drive competitive advantage include a strong commitment to quality, a culture of innovation, and a focus on customer satisfaction. Cultural evolution and transformation initiatives include leadership development programs, diversity and inclusion initiatives, and employee engagement surveys.
Style
Deere’s leadership philosophy emphasizes customer focus, innovation, and continuous improvement. Decision-making styles are generally collaborative, with input from multiple stakeholders. Communication approaches are transparent and open, with regular communication from senior executives to employees. Leadership style varies across business units, with some leaders being more directive and others being more empowering. Symbolic actions that impact organizational behavior include executive visits to manufacturing facilities, employee recognition ceremonies, and community involvement activities.
Dominant management practices across the conglomerate include performance management, talent development, and continuous improvement. Meeting cadence is regular and structured, with clear agendas and action items. Collaboration approaches include cross-functional teams, virtual meetings, and shared workspaces. Conflict resolution mechanisms include mediation, arbitration, and escalation to senior management. Innovation and risk tolerance in management practice are encouraged through innovation challenges, venture capital investments, and pilot programs. Balance between performance pressure and employee development is achieved through performance management systems that emphasize both results and development.
Staff
Deere’s talent acquisition strategy focuses on attracting top talent from universities, technical schools, and industry competitors. Talent development strategies include leadership development programs, technical training programs, and mentoring programs. Succession planning and leadership pipeline are managed through talent reviews, development assignments, and leadership development programs. Performance evaluation and compensation approaches include performance appraisals, merit-based pay increases, and bonus programs. Diversity, equity, and inclusion initiatives include employee resource groups, diversity training programs, and recruitment efforts targeting underrepresented groups. Remote/hybrid work policies and practices are evolving, with a focus on flexibility and productivity.
Patterns in talent allocation across business units are driven by strategic priorities and business needs. Talent mobility and career path opportunities are facilitated through internal job postings, cross-functional assignments, and international assignments. Workforce planning and strategic workforce development are managed through workforce planning models, skills gap analyses, and training programs. Competency models and skill requirements are defined for key roles and used for recruitment, training, and performance management. Talent retention strategies and outcomes include competitive compensation and benefits, career development opportunities, and a positive work environment.
Skills
Deere’s distinctive organizational capabilities at the corporate level include strategic planning, financial management, and risk management. Digital and technological capabilities include data analytics, software development, and cloud computing. Innovation and R&D capabilities include product development, technology scouting, and venture capital investments. Operational excellence and efficiency capabilities include lean manufacturing, Six Sigma, and supply chain management. Customer relationship and market intelligence capabilities include customer relationship management, market research, and competitive analysis.
Mechanisms for building new capabilities include training programs, knowledge sharing platforms, and communities of practice. Learning and knowledge sharing approaches include online learning platforms, internal conferences, and mentoring programs. Capability gaps relative to strategic priorities are identified through skills gap analyses, competency assessments, and strategic planning exercises. Capability transfer across business units is facilitated through cross-functional teams, shared technology platforms, and knowledge sharing platforms. Make versus buy decisions for critical capabilities are based on cost, expertise, and strategic importance.
Part 3: Business Unit Level Analysis
1. Production & Precision Agriculture:
- Strategy: Focused on providing advanced machinery and technology solutions to large-scale farmers.
- Structure: More centralized structure compared to other units due to the need for standardized technology platforms.
- Systems: Heavily reliant on data analytics and precision agriculture software.
- Shared Values: Emphasis on innovation and customer productivity.
- Style: Data-driven decision-making and a focus on technological advancement.
- Staff: Highly skilled engineers and data scientists.
- Skills: Expertise in precision agriculture technologies and data analytics.
2. Construction & Forestry:
- Strategy: Focused on providing durable and reliable equipment for construction and forestry applications.
- Structure: More decentralized structure to cater to diverse regional markets.
- Systems: Focus on equipment maintenance and service.
- Shared Values: Emphasis on reliability and durability.
- Style: Relationship-oriented sales and customer service.
- Staff: Skilled technicians and sales representatives.
- Skills: Expertise in heavy equipment maintenance and sales.
3. Small Agriculture & Turf:
- Strategy: Focused on providing affordable and easy-to-use equipment for small farms and residential customers.
- Structure: Streamlined structure to reduce costs and improve efficiency.
- Systems: Focus on online sales and customer support.
- Shared Values: Emphasis on affordability and ease of use.
- Style: Customer-centric and responsive to customer feedback.
- Staff: Skilled customer service representatives and online marketing specialists.
- Skills: Expertise in online sales and customer support.
Part 4: 7S Alignment Analysis
Internal Alignment Assessment:
- Strategy & Structure: The decentralized structure supports the diversified strategy, but can lead to silos.
- Strategy & Systems: Investment in digital systems aligns with the focus on precision agriculture.
- Shared Values & Style: The emphasis on innovation is reflected in the leadership style.
- Staff & Skills: Talent management focuses on developing skills aligned with strategic priorities.
External Fit Assessment:
- The 7S configuration is generally well-suited to the external market conditions, but Deere needs to adapt to changing customer expectations and regulatory environments.
- The company’s competitive positioning is strong, but it needs to continue to invest in innovation to maintain its lead.
Part 5: Synthesis and Recommendations
Key Insights:
- Deere has a strong 7S alignment, but there are some areas for improvement.
- The company needs to continue to invest in innovation and digital transformation.
- Deere needs to improve cross-functional collaboration and knowledge sharing.
Strategic Recommendations:
- Strategy: Focus on portfolio optimization and strategic focus areas.
- Structure: Enhance organizational design to improve cross-functional collaboration.
- Systems: Improve process and technology to improve efficiency and effectiveness.
- Shared Values: Develop cultural development initiatives to promote innovation and collaboration.
- Style: Adjust leadership approach to be more collaborative and empowering.
- Staff: Enhance talent management to attract, develop, and retain top talent.
- Skills: Prioritize capability development to support strategic priorities.
Implementation Roadmap:
- Prioritize recommendations based on impact and feasibility.
- Outline implementation sequencing and dependencies.
- Identify quick wins versus long-term structural changes.
- Define key performance indicators to measure progress.
- Outline governance approach for implementation.
Conclusion and Executive Summary
Deere has a strong 7S alignment, but there are some areas for improvement. The most critical alignment issues are the need to improve cross-functional collaboration and knowledge sharing. The top priority recommendations are to enhance organizational design to improve cross-functional collaboration and to develop cultural development initiatives to promote innovation and collaboration. By implementing these recommendations, Deere can improve its organizational effectiveness and achieve its strategic goals.
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