Over the recent eleven years, Cervus Equipment has increased its profits almost 17.5 times. Started as a partnership between owners of dealerships, in 1999, the company decided to use consolidation-based growth approach. Additionally, cooperation with original equipment manufacturer (OEM) John Deere and its positive reputation and popularity of brand contributed to the Cervus Equipment’s expansion. The company focused on the consolidation through acquisitions in several stages. First of all, consumer- and employee-based approach was applied at the very beginning with a value over policy method. The next step related to the caution in the choice of dealerships in addition to the significant amount of investments. Since recently, the company had concentrated on the diversification strategy in the construction and manufacturing equipment segment. The company bought many dealerships, namely Doosan, Bobcat, Nissan Forklift, JCB, Sellick and Clark. In transportation segment, Cervus Equipment set the relationship with the Canadian biggest truck production company, Paccar, via the purchase of its branded dealerships.
Despite available opportunities of the population, farming industry and technology growths, the company faces problems of reduction of commodity prices, record castoff tractor inventories, forecast of John Deere’s sales decrease and high rates of non-real estate agriculture credits. It is expected that interest rates will increase over the next five years. Also, the company experienced challenges over global expansion into New Zealand due to great differences in the conditions of operating on the farming market. Absence of innovative farming technologies and high level of conservatism in realizing new goods and services are among Cervus Equipment’s constraints. There is the necessity to reconsider investment policy in direction of its aggressive application. Therefore, the company can have difficulties to reach $2.5 billion by 2020.
References
Doiron, D. J. and Schryer, D. (2015). Cervus Equipment Corporation: Harvesting a New Future, Richard Ivey School of Business Foundation.
