Cervus Equipment Corporation: Diversified Growth in Trucking
(8 pages of text)
Cervus Equipment Corporation, the major Canadian dealer group for John Deere and Peterbilt Motors Company equipment, had grown from CA$56 million in 2004 to close to $1 billion in 2014. It had achieved these results through an aggressive acquisition and growth-oriented strategy, by purchasing heavy-equipment dealerships representing John Deere, Bobcat, and other high-end original equipment manufacturers (OEMs). The company’s move into the long-haul trucking industry, beginning with the acquisition of 16 Peterbilt truck dealerships in 2013, was timely, as the agricultural and construction sectors entered what many believed would be a prolonged downturn in its base in western Canada. However, these acquisitions and this move into the trucking industry presented significant challenges related to integration, leadership and management skills at the dealer level, OEM partner control, and the presence of established competitors that served the major vocational and fleet markets. The bottom line: Cervus Equipment required its transport division to drive profitable growth in 2016 and beyond.
This case provides an opportunity to utilize strategic analysis tools and external market assessment skills to assess the integration challenges associated with acquisition-related growth. It is suitable for use in strategic management classes and case competitions at undergraduate and MBA levels. It highlights the significant challenges associated with moving into a new industry vertical, the unique challenges within the transport industry, and key factors driving change. After completing the case, students will be able to do the following:
- Identify how a company focused on a single product set (heavy equipment sales and service) across multiple industries, geographies, and partners can deal with a diverse set of industry business models and unique industry-related challenges.
- Identify the challenges associated with maintaining a decentralized decision structure while driving overall efficiencies through centralized services.
- Determine how to drive short-term profitability from a newly established division in the wake of a serious economic downturn in a company’s core business units.
- Convert the sales and service culture and infrastructure to focus on a growing market in order to take advantage of a short-term boom in the Ontario trucking industry.
Transportation and Warehousing
Canada, Large, 2015
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