Deere (John) DE Business Risk Report • My Stock X-Ray

Deere (John)

Risk Report Outline:

1. Competition Risk

Deere & Company (John Deere) faces intense competition from major players in the agricultural and construction equipment sectors, such as Caterpillar, Kubota, and CNH Industrial. This competition puts pressure on pricing, product development, and market share.

Mitigation: Deere counters these challenges by focusing on continuous innovation in their product offerings, engaging in strategic partnerships to enhance technological capabilities, and diversifying its markets to reduce reliance on any single market segment.

2. Supply Chain Risk

John Deere relies on a complex network of global suppliers for the procurement of essential raw materials and components, making it vulnerable to supply chain disruptions that can result from political unrest, trade disputes, or pandemics.

Mitigation: The company promotes supplier diversification and actively monitors global supply chain conditions. It also has developed robust contingency plans to manage and mitigate potential disruptions effectively.

3. Regulatory and Compliance Risk

Deere operates in a heavily regulated industry where changes in environmental regulations and safety standards across different countries can impact operations and product specifications.

Mitigation: John Deere invests in regular monitoring of legislative and regulatory developments worldwide. The company is committed to sustainable manufacturing practices and maintains rigorous compliance programs to adhere to international standards.

4. Market Fluctuation Risk

John Deere’s operations and profitability are susceptible to fluctuations in commodity prices, such as steel and rubber, and to changes in foreign exchange rates, which can affect the cost of production and international revenue.

Mitigation: The company employs hedging strategies to manage commodity price risks and engages in long-term contractual agreements where feasible. Additionally, Deere’s financial risk management team works to mitigate effects from adverse currency movements.

5. Technological Risk

The pace of technological innovation in the agricultural and construction equipment sectors, including automation and data analytics, is rapidly changing. This poses a risk to John Deere as products could quickly become outdated.

Mitigation: Deere invests significantly in research and development (R&D) to stay ahead of industry trends and integrates advanced technologies into its products and services. Additionally, the company fosters a work culture that values innovation and agility.

6. Natural Disaster Risk

John Deere’s manufacturing facilities and supply chains are potentially vulnerable to natural disasters such as earthquakes, floods, or hurricanes, which can disrupt operations and lead to significant financial losses.

Mitigation: To manage these risks, the company has established comprehensive business continuity plans and maintains appropriate insurance coverage. Deere also continuously assesses and strengthens its disaster response protocols and infrastructure resilience.

7. Cybersecurity Risk

With increasing digitalization, Deere faces growing threats of cyber-attacks that could compromise sensitive company data and the personal information of customers, potentially leading to financial and reputational damage.

Mitigation: John Deere implements robust cybersecurity measures, conducts regular security audits, and provides ongoing training for employees on cybersecurity threats. The company also has a structured incident response plan to address and mitigate the impacts of potential cyber incidents.