Cervus Equipment Corporation: Harvesting a New Future Harvard Case Solution & Analysis

KEY ISSUES:

When no central organization was managing the farm equipment dealerships from original equipment manufacturer such as Jone Deer, Cervus Equipment was founded. Cervus has a number of achievements under itsbelt as it has accomplished a number of milestones during the past ten years as a wholesale trade company through wise and efficient acquisitions and operations in agriculture, commercial and industrial equipment dealerships in Canada. Since the company made a successful achievement, it began to enter the international market in 2009. After the occurrence of a blockage in New Zealand, the company realized that it is difficultfor itto operate worldwide dealerships. Apart from that, the company is heavily affected by two of its competitors Rocky Mountain Equipment and Titan Machinery who are following the same strategy as Cervus. All these factors are of great concern for the company as they pose a strong threat to the operations and the growth of the company. The board demands thrice of their current run rate which is to generate $2.5 billion in revenues by 2010. There is a need of developing a new long-term development strategy by the leader of the company, which can help them in achieving the company’s mission and meeting the expectation of the diverse customer base of the company that exists all around the globe.

ANALYSIS:

PESTEL ANALYSIS

Political: Regulations implemented by Canada Wheat Board and the Bio-fuel gas olines are to be abided by the company in order to maintain their reputable name in the industry.
Economical:The level of interest rate is low and not only this, but an aggressive and rapid growth exists in the oil and gas industry followed by the growth in the industry of agricultural machinery and an increase in the levels of investment in the constructions sector.

Social:Lower levels of interest rate inclined the audience towards taking loans and giving an opportunity to the new farmers who are facing financial barriers for starting their own businesses. Food is a mandatory requirement for humans. Moreover, a constant increase in the global population results in higher levels of demand for food.

Technological:Cutting-edge technologies are being exploited and advanced scale in farming technology provides the farmers with farming equipments, which have high levels of efficiency.

Ecological:Bio-fuel gasoline is being used for the processing.

Legal:Regulations are to be followed that are stated by Canada Wheat Board.
The overall observation of the external factor states that these are good conditions for the company to operate in. A good operating environment exists for the wholesale trade industry that can benefit the operations of the organization. Cervus should efficiently capitalize the massive opportunity in the agricultural machinery growth around the globe while following the stated regulations by Canada Wheat Board to enhance its domestic and global development.

FIVE FORCES ANALYSIS

Rivalry amongst the Industry (MEDIUM)
A number of competitors exist in the industry; these competitors effectively affect the operations of the company. The market is heavily penetrated with competitors leading to higher levels of competitor concentration. Another factor that adds up to the competitive industry is the low levels of differentiation of products being offered by a number of companies in the same industry.

Bargaining Power of Suppliers (LOW)

The bargaining power of the suppliers is low in the industry with respect to the product prices as the dealers demand for large frequency orders. The switching cost for the dealers is not of significance as they can always find another manufacturer with convenience. Equipment manufacturers can also create their own sales network and reject the dealers, however creating new sales network will be costly and these costs can heavily affect the growth of their business operations negatively...............................

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