Porter’s Five Forces Analysis of the AGCO Corporation
Economic Strategy Paper
AGCO Corporation is a German based company established in 1990 with the purchase of Deutz Allis Corporation. Prior to the official purchase in 1990, ACGO had purchased parts of the agriculture equipment business five years ago from Deutz Allis Corporation. Since the purchase, AGCO have become one of the innovative corporations in manufacturing, farming, and machinery equipment through market growth, strategic acquisition and the cutting edge agriculture solutions. Some of the acquisition included the purchase of Hesston Corporation, a leader in manufacturing hay tools in 1991, the purchase of White-New idea business of Planters and purchase North American distribution Rights to Massey Ferguson products and fifty percents of a joint venture established for AgriCredit Acceptance Corporation. This acquisition expanded the AGCO North American Network by over 1,000 dealers in 1993. In 1994 Massey Ferguson world holdings were purchased along with McConnell tractors which uttered the tractor manufacturing business to enhance the development of the AGCOSTAR tractor line. In addition, AGCO continue to purchase other company assets, Tye Company, the makers of agricultural implements and tillage equipments was acquired in 1995. The following year 1966, it acquired the lochpe - Maxion agricultural equipment company in Brazil, one of the market leaders in tractors with the Massey Ferguson brand. Deutz Argentina S.A, Western Combine Corporation, and Portage Manufacturing Inc. in Canada were also acquired the same year to expand the Massey Ferguson combine business. Although during the 1990’s AGCO Corporation advance well ahead into the future but the 90’s ended with a down turn because of the economic problems in Asia and Russia which decreased the amount of production of grain. This drastically affected companies such as AGCO because the reduced crop prices force the farmers to stop buying farming equipments. AGCO suffered the 20 year lows and its end results were to start reducing its workforce by 1400 jobs. During this crucial time the company consolidated some of its assets selling the manufacturing plant in Argentina, consolidating production in Brazil and the closing of plants in Ohio; and Lockney, Texas. The Corporation ended the 90’s by losing 11.5 million dollars in sales. Early 2000 and beyond, there was an additional 5 percent cut in the workforce. At the same time AGCO entered the acquisition arena and merged with New Holland N.V as well as the Case Corporation. There were many other acquisitions that took p1ace during the late 2000 which also included the largest deal for AGCO Corporation. The acquisition of Valtra tractor and diesel engine in January 2004 launched the Finnish Firm Kone Corporation for about $756 million. The merger enabled AGCO to become an in-house engine maker and the largest market leader in the Nordic region with a significant presence in Latin America. A week before the Caterpillar deal was completed, hit the company when a corporate jet was carrying Shumejd Edward Swingle, the senior vice –president of sales and marketing worldwide for the AGCO Corporation, crashed while taking off from Birmingham killing everyone aboard. The crashed was investigated and it was believed that the crash was caused by the flight crew failure to de-ice the plane. Within hours of the crash Ratliff Chairman of the Board reassumed the position of President and CEO of the company for that year. Its search for an executive came to fulfillment in 2004, Martin Richenhagen became President and CEO while Ratliff continue to served as Chairman of the board. Richenhagen was no stranger, he was already serving in the capacity of group vice – president of Fort International S.A., based in Zurich, Switzerland. He had served the company in other senior level positions. AGCO manufactures and distributes a full range of agriculture...
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