Case Corporation Loses Sight of Customer Needs

question 18

Essay

Case Corporation Loses Sight of Customer Needs
in Integrating New Holland Corporation

Farm implement manufacturer Case Corporation acquired New Holland Corporation in a $4.6 billion transaction in 1999. Overnight, its CEO, Jean-Pierre Rosso, had engineered a deal that put the combined firms, with $11 billion in annual revenue, in second place in the agricultural equipment industry just behind industry leader John Deere. The new firm was named CNH Global (CNH). Although Rosso proved adept at negotiating and closing a substantial deal for his firm, he was less agile in meeting customer needs during the protracted integration period. CNH has become a poster child of what can happen when managers become so preoccupied with the details of combining two big operations that they neglect external issues such as the economy and competition. Since the merger in November 1999, CNH began losing market share to John Deere and other rivals across virtually all of its product lines.

Rosso remained focused on negotiating with antitrust officials about what it would take to get regulatory approval. Once achieved, CNH was slow to complete the last of its asset sales as required under the consent decree with the FTC. The last divestiture was not completed until late January 2001, more than 20 months after the deal had been announced. This delay forced Rosso to postpone cost cutting and to slow their new product entries. This spooked farmers and dealers who could not get the firm to commit to telling them which products would be discontinued and which the firm would continue to support with parts and service. Fearful that CNH would discontinue duplicate Case and New Holland products, farmers and equipment dealers switched brands. The result was that John Deere became more dominant than ever. CNH was slow to reassure customers with tangible actions and to introduce new products competitive with Deere. This gave Deere the opportunity to fill the vacuum in the marketplace.

The integration was deemed to have been completed a full four years after closing. As a sign of how painful the integration had been, CNH was laying workers off as Deere was hiring to keep up with the strong demand for its products. Deere also appeared to be ahead in moving toward common global platforms and parts to take fuller advantage of economies of scale.
-What could CNH have done differently to slow or reverse its loss of market share?

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Definitions:

Transferee

is an individual or entity that receives the transfer of property, rights, or interest from another.

Secondarily Liable

Liable for paying the amount designated on an instrument should the primarily liable party default.

Primarily Liable

The state of being the first or main party responsible for fulfilling a liability or obligation.

Dishonor

In financial contexts, it refers to the refusal or inability to pay a bill of exchange, promissory note, or other negotiable instrument when due.