Caterpillar Inc. is a large multinational company that manufactures earthmoving equipment and engines. It has a 53% global market share and generates nearly 60% of its sales from overseas. Parts also represent about 35% of Caterpillar's total revenue. In 1981, earthmoving equipment represented 70% of Caterpillar's $8.6 billion in sales. However, Caterpillar was facing challenges such as a growing competitive environment, high costs, and overcapacity. To address these issues, Caterpillar planned strategies like targeting new industries, joint ventures, cost reductions, and potential acquisitions.

1. Bhooshan Kanani

2.  MNC company which designs, manufactures and
markets the product - EME and Engines for
earthmoving and construction machines.
 Strong 53 percent market share worldwide
 Nearly 60 percent of sales was from overseas
 Parts represented nearly 35 percent of their total
revenue
 33 manufacturing plants with 22 in US
 Strong dealer network and support

3.  EME represented 70% of sales and $8.6 billion sales
was achieved by CAT in 1981
 EME was represented by 60 percent in Construction
and 30 percent in Mining and 10 percent by Forestry
 Komatsu, a Japanese company was upcoming
competition to CAT
 Decision for buying EME was dependent on
manufacturer’s reputation , machine performance and
dealer capability

4.  Negotiation with UWA for triennial contract
 Effect of low sales due to higher interest rates
 Growing competitive environment
 To find answer to the benefits lost after bitter 1979
strike
 Strengthening of US currency
 Global debit crisis and severe liquidity crunch
 Under – utilization of capacity
 High labor and overhead costs

5.  Buy back offer of CAT machines after 5 years
 Complete Sales and Service contract to be offered by
the dealers
 To handle dollar fluctuation, multiple currency billing to
be introduced
 Renting out of machines directly
 Contract employee strategy
 Strong inventory control
 Reduce manufacturing and R&D costs

6.  Target agricultural and allied industry
 More joint venture in European and Australian market
 Target complete utilization of plant – if needed stop
other plants or relocate to emerging markets
 Turbine engines manufactured at solar turbines can be
sold to aircraft manufacturers as a diversification
 Acquisition of non performing competitors