International business and expanding somewhere that makes a business foreign can be difficult and hard to break the barriers of entry. The problems that John Deere had with making acquisitions and starting businesses internationally was a big move for the company but at the same time it put the company in a though financial position. Deere lost a lot of money in the irrigation and farming segment during the early 2000’s because of the lack of research and missing technology information from different parts of the world. One of the suggestions that are used in this paper is the Strategic Importance and criticality matrix and the other suggestion is how Deere and company could have used a better form of outsourcing when doing business internationally. This paper will also describe how John Deere could of entered the market knowing specific details of the foreign country it was entering.
Joint ventures and outsourcing are a very if not the most important part of doing international business. Joint ventures are agreements between two companies to begin on a project or start a type of business where both parties are equally interested in the project. In the case with John Deere they used joint ventures and went for more of a vertical integration not only to help split the cost but to protect the companies’ Intellectual property, IP. Outsourcing is a way of business going outside of the company or in this case out of the country to help with the production of a product or services to a consumer. In my personal experience with John Deere both joint ventures and outsourcing cost Deere and company millions of dollars in international business. John Deere is the leading company in the agriculture business, has many other customers, products, businesses and competitors that one may not think of. John Deere is a company that started from a small shop in 1837 to now being a big corporation that employs more than 50,000 people around the world in 2013. The headquarters of John Deere are located in a Moline, Illinois. The Deere Company is a very interesting because of the success in every segment it enters and the reason for this success is because of the division of the company. Deere and Company is divided into three major components. One is agriculture and turf, being the largest manufacture of farm equipment, in this part of the company they offer everything that you need for farm or to simply landscape. The second concentration of John Deere is construction and forestry, in this branch they are also the leaders in the industry. The third branch is also very important because it helps bring money to the company, which is John Deere credit. John Deere Credit having over 2.4 million accounts with a value of 23 billion dollars in 25 different countries. PROBLEM DESCRIPTION:
This paper considers the problem of outsourcing for the products that John Deere makes and backward vertical integration that made Deere and company lose money to protect their IP. There are many reasons why the outsourcing used by John Deere for their top performing products failed in other countries. When doing business outside of the US extensive research needs to be done by the company not only to see what the barriers of entry are but who is going to run the show when there is no one watching.
In the early 2000’s John Deere started outsourcing and expanding internationally to gain market share around the world. This project included countries like Brazil, Argentina, Chile, and 19 other countries, the project came about because Deere and Company was getting tax for every product they brought into the country for the farmers. While conducting business in a foreign country Deere’s started to lose money because of the tax they were paying, the company was not able to keep up with local suppliers. This gave Deere an idea on why they do not start manufacturing outside of the country and save money on the products...
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