Deere & Company A Deere & Company,a Fortune 500 company headquartered in Moline,
ID: 2500822 • Letter: D
Question
Deere & Company A
Deere & Company,a Fortune 500 company headquartered in Moline, Illinois, manufactures equipment for farming, construction, forestry, and lawn care.
Answer the following questions using information in Deere’s 2013 Annual Report
1. Examine the information provided on page 14 for Deere Equipment Operations.
• What is “equipment operations”?
• What do the following three lines mean? How are they related to what we’ve discussed in class?
o Asset Turns (Std Cost)
o Operating Margin %
o OROA% @ Standard Cost
• The table reports: Asset Turns (Std Cost) x Operating Margin % = ORAO% at Standard Cost. Explain how this is related to what we have discussed in class.
2. Construction and Forestry showed a greater than 25% decrease in ROI from 2012 to 2013.
• According to the information provided on page 14, what was the primary cause of this change?
• Read management’s discussion in the 2013 annual report (page 16) about Construction and Forestry’s operating profit.
o What does it point to as the causes of the decrease in profit? What sorts of things could Deere do to counteract this effect?
o What does “partially offset by price realization” mean?
o Explain the impact of each of the following causes on operating profit margin?
1.lower shipment volume ?
2.unfavorable product mix ?
3.increases in production costs ?
4.higher selling, administrative, and general expenses ?
5.improved price realizations
• Describe two internal business process measures that Deere might use to assess its performance on being a good corporate citizen. Would these measures likely lead to higher profit?
• Describe two learning and growth measures that Deere could use to assess its performance on being a good employer. Would these measures likely lead to higher profit?
Explanation / Answer
Deere & Company A Deere & Company,a Fortune 500 company headquartered in Moline,
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