Describe and Assess the Product Market Strategy Massey Pursued Through 1976
Describe and assess the product market strategy Massey pursued through 1976. Where possible, compare MasseyĂs strategy with those of its leading competitors. In your view, did MasseyĂs strategy make sense (at the time)?
Massey specialized in manufacturing farm and industrial machinery as well as diesel engines through its subsidiary, Perkins. The farm machinery line included tractors, combine harvesters, balers and other equipment for agricultural use. The industrial machinery included various types of tractors, forklifts, loaders and log skidders. The diesel engine business produced a variety of 60 basic models of multi-cylinder ranging from 30 to 300 braking horse power.
Massey’s strength had been in developing countries markets outside North America and Western Europe. Massey was able to deal directly with those countries’ governments and public institutions. These countries’ agricultural needs were growing faster than the North American market. Between 1960 to 1975 Massey pursued a massive expansion plan financed mostly by debt, most of it short term. The debt-to-equity ratio soured from 97% at 1971 to 214% at 1978. At the same time sales grew from $1,029M to $2,631M, a 255% increase. This strategy made sense as the company grew sales at a faster rate than its debt-to-equity increase.
Massey’s sales were divided roughly equal between North America, Western Europe and the rest of the world. The years of negligence put Massey in an inferior position in the North American market compared to its competitors which included both large, multi-national and medium to small local companies. In 1975 Massey’s management decided to switch gears and tried to increase presence in the North American market by introducing a new range of tractors. However, this was a poor timing as the American market was depressed at the time leading to a very unsuccessful re-entry. Massey’s competitors in the North America market were mainly Deere