How Does Cervus Equipment To Produce An Appropriate Growth Strategy

Cervus Equipment Corporation was founded to manage and consolidate farm equipment dealerships from original equipment manufacturer. Cervus had achieved big accomplishments during the past nine years, growing from $56 million to $734 million by acquiring and operating agriculture, commercial and industrial equipment dealerships and attempting to advance the company toward its goal of $2.5 Billion in revenue by 2020, which is three times the current run rate. As the industry is becoming more competitive and technical, Drake is faced with the decision to select the appropriate growth strategy that would be most suitable for the company in order to attain such a goal.

Cervus Equipment began as a partnership between Peter Lacey, Graham Drake and

other owners of a few John Deere dealerships in the 1990s. During its first 13 years in business it accumulated more than 50 partially and wholly owned equipment dealerships with 36 representing John Deere and rest representing construction equipment brands. In 2009 the company discovered opportunities to expand internationally. Cervus Equipment sealed 10 dealerships with John Deere in New Zealand which made it an international company in the process. Cervus Equipment had seen its organization grow from 176 employees in 2003 to more than 1,200 in 2012. The company wanted to maintain its value-based employee model. Cervus Equipment had two primary competitors who were executing similar growth strategies: Rocky Mountain Equipment (RME) in western Canada and Titan Machinery (Titan) in the United States. Both companies had strong ties with the OEM Case Construction.
Cervus Equipment was performing near, or slightly above, industry levels. Gross margins in the agricultural industry stood at approximately 17 per cent. In the forklift and materials handling industry, gross margins averaged 34.6 per cent, while in the construction industry they came in around 22.5 per cent.