John Deere Business Organization

The organizational structure of a business has a great effect on how the business is run.  The organization needs to look at all of these structures and decide which one fits their business best. They should first decide if they want to have a centralized or decentralized strategy and which one would be more beneficial to them.

Divisional Organizational Structure

John Deere has chosen to be centralized and very orderly.  They are organized by eight total divisions.  These divisions include agricultural, construction, turf, forestry, financial services, power systems, parts services, and intelligent solutions.  Organizing their businesses in this manner gives each division the advantage of concentrating on the needs of their particular industry.  For example the agricultural team has recently developed a line of row tractors that enable the operator to widen or shrink the space between the wheels at the push of a button from inside the cab.  This allows for the tractors to drive down the rows of fields much easier and be adaptable to each individual farmers rows. The turf division does not need to worry about driving down rows but instead should look for ways to take pressure off the ground so that they don't leave indentations in the earth because they are usually working on soft ground.

The disadvantage of this type of business structure would have to be that it is expensive to hire duplicated personal for each division.  It can also lead to divisions not sharing ideas if they are competing against each other.  John Deere doesn't seem to have to much of a problem with this because they are organized by industries.  Forestry generally doesn't have to much to do with agriculture and vice versa.  This prevents the divisions from competing for the same customers.

Some of these divisions are there for the sole purpose of supporting the other businesses.  Financial services, power systems, parts and service, and intelligent solutions are used to create new and innovative ways to help enhance the John Deere experience and to ad value to the product.

If a business wants to compete in an increasingly competitive world they must think hard about how their business is structured to be as efficient as possible and deliver the most value possible to the customer.

Corporate Governance

1 John Deere Pl  Moline, IL 61265

Corporate governance is defined as the relationship among various participants in determining the direction and performance of corporations.  These relationships have great effect because the attitudes and actions of top management trickle down into the other levels of employees.  John Deere has many things in place to insure that the companies core values of integrity, quality, commitment, and innovation are met.

They have written a few codes in order to ensure company wide compliance. One of the codes that John Deere has put into place is a Code of Ethics.  Their current code of ethics was adopted on December 3, 2003 in order to satisfy the requirements of the Sarbanes-Oxley Act of 2002.  Before this code was created, the company had a Business Conduct Guidelines document which guided the actions of employees.  In their code of ethics, John Deere addresses the issues of fair dealing, conflicts of interest, protection of company assets, confidential information, integrity and disclosures, and waivers.  They also provide a way for employees to anonymously report complaints through a hotline number, over the internet, or through the mail. After setting rules for conduct, the company gives the consequenses for violations of the code.  It is important to identify and enforce these issues throughout the entire company.  A code of ethics should be enforced and a part of the culture of an organization.  This document should not exist simply to satisfy governmental rules and regulation, but should be an expectation of those who work in the company.

Another corporate governance document that John Deere has written is the policies of their board.  The Board of Directors his held accountable and ruled by some policies that the company has put in place.  These polices are there to try and limit the power of the board and ensure that they are ethical and keep the companies interest in mind.  These policies govern five key topics of the Board.  First the policies include rules of board composition and functions.  These describe the role of the board of directors and who the board should include. Most of the policies fall under this topic.  The second topic is that of the board meetings.  This section describes when, where, and who should attend such meetings.  It also talks about how the meetings should be conducted.  The policies document then describes the committees that the board can form.   The fourth section is about how the board should be compensated for being a Board member and carrying out such duties. The fifth and final section talks about how top management should be evaluated and how they should plan for succession.

Supplier Code of Conduct

The Supplier Code of Conduct makes an attempt to ensure ethical and responsible behavior from all of the participants in the John Deere supply chain.  This is increasingly important as the world comes into a new age of a world economy.  We do not have the luxury of understanding everyone's culture.  Where something like bribery may be accepted in some countries as a good business practice, it may not be acceptable in others.  These types of things are addressed in the supplier code of conduct.

The last two documents on the John Deere website are complementary documents to the ones above.  They farther identify the companies core concepts and beliefs.  They try to spell out practices and polices in more detail so that employees and investors can better understand their culture and way of business. The Guiding Principles focuses on defining the company values, business conduct, constituencies, social responsibility, diversity, environment, and brand identity.  These are all vital to the company culture.  The last document found on the John Deere website is the code of business conduct.  This document is the largest of their corporate culture documents and includes a lot of different things. From how to treat others in the workplace and the community, to how to maintain integrity and loyalty to the company, John Deere covers all of their expectations of employees in this thirty four page document.

These documents all provide a written documentation of what these relationships should look like within John Deere's corporation.  They try to provide an ethical sound relationship between all of the employees of the company while still holding them accountable for their actions and decisions.

Diversification

Tractors

John Deere is a very diverse multinational business.  They sell everything from tractors, trucks, atv's, engines, and even gun safes and toys.  John Deere realizes that they need to try and get into emerging markets as well as keep inovating in their cash cow markets.

In2010,  John Deere divested their wind energy department "John Deere Renewables" to Exlon Enterprises.  They realized that this business was not their strong point and by divesting it they gained much more then they would have had they continued to try and make the business profitable.

John Deere focuses on internal growth.  They are constantly innovating and control or own most of

Engines

their suppliers.  They make their own parts and tools so that they rely on very few people to keep their company profitable.  

They are very concerned with global growth.  By the year 2018, John Deere has goals to reach 50 billion in their mid-cycle sales.  They also want 50% of their growth to be outside the US and Canada.  In order to reach 50billion, they realize they need to improve their profitability.  By 2014, John Deere wants to have a 12% mid-cycle margin and a 30% operating return on operating assets rate.

These are all very large goals.  John Deere focuses on internal supporting businesses to help them reach these levels of excellence.  They use their financial services, power systems, worldwide parts,

ATV's

and intelligent solutions group, to add value to their equipment and give the customer a better experience.  Having these businesses all internal also helps to promote their brand and improve in the quality they can provide because these support businesses are tailored to fit their products.  The people who work in these businesses also are very knowledgeable about the products that John Deere's customers are using and can access a lot of essential information that the customer may not know at the time.

By focusing on internal development, John Deere can capture the value created by their own innovative activities without having to "share the wealth" with their competitors.  They are large enough to use their financial and global leverage to finance their research and to continue to provide supporting businesses to add value to their main product lines.