Small tractors at John Deere and potential global growth

A Bllombergbusinessweek article (Sept 26, 2011) describes plans by John Deere to build small tractors that are more suitable to the 3 acre farms that are typical in India. Given the anticipated large growth in agricultural land that will demand tractors in Indian and China, and Deere’s planned doubling of sales to $ 50 billion by 2018, adjusting product mix to suit demand and price points became a necessity, particularly given Indian domestic competition from Mahindra and Mahindra.  But getting to domestic price points for Deere also means designing the tractor in India, soliciting feedback from Indian customers, and manufacturing it in the plant in Madhya Pradesh, India.  Similar plans are reported for China. Will competing in global markets that already have intense local competition require such local sourcing ? How will the larger margins that Deere normally expects mesh with the lower margins anticipated in India ? What will be Deere’s competitive advantage in India – better management, leveraging of its global design capability, its global supply chain for sourcing or leveraging its brand ?

About aviyer2010

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