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

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

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 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. Consequently, CNH became 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 preoccupied in negotiating with antitrust
officials about what it would take to get regulatory approval. Once the
approval was 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 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 off workers 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.

 Case Study Discussion Questions

1. Why is rapid integration important? Illustrate with
examples from the case study.

2. What could CNH have done differently to slow or reverse
its loss of market share?

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