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Caterpillar.Inc case study analysis


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Caterpillar.Inc case study analysis

  1. 1. Merger of C.L. Best & Holt Caterpillar World’s largest manufacturer of heavy equipment Markets include construction, mining, agriculture, forestry, and many others Recent acquisition of Bucyrus & Pyroban. Competitors Deere & Co., Komatsu Ltd., Joy Mining, CNH Global, International Harvester.
  2. 2. CAT Logistics•World-class supply chain management•Serves more than 60 global firms CAT Financial •Aerospace, oil and gas, •Provide customers with a means of industrial, and high tech financing equipment purchases •Insurance provided as well
  3. 3. A world in which all peoples basic requirements - such as shelter, clean water, sanitation and reliable power - are fulfilled in a way that sustains our environment.
  4. 4. Their mission is to enable economic growththrough infrastructure and energy development,and to provide solutions that protect people and preserve the planet.
  5. 5. Our strategy is to provide work environments, products, services and solutions that make efficient use of the worlds natural resources and reduce unnecessary impacts on people, the environment and the economy.• Promote and protect individual safety and well-being• Provide employment, education and training• Minimize the use of energy, materials, water and land• Maximize recycling• Minimize emissions• Optimize the use of renewable resources
  6. 6. World’s largest manufacture of earth moving equipment (EME)The EME industry began in the late 1800’s with the development of steam powered equipment The demand for EME depended on the increase at which machines were substituting manual labor. Demand was higher in developed countries (US) Demand structure changed due to the changing oil demands within the Middle Eastern countries This lead to an increase with construction activity
  7. 7. 1981, the construction industry along with EME usage represented nearly 70% of total dollar sales Excavators, bulldozers, graders, loaders off highway tractors and haulers EME demand was doubling throughout 1973-1980’s Mining / Construction industry -60% of the EME market Low cost labor method created competition EME Industry focused on improvements for existing products
  8. 8. Differentiation strategyExtending its markets globally- plants in over 8 foreign countriesProviding high-quality, extensive product line backed by efficient service 100% ownership of its subsidiaries (resists joint ventures) Recognizing opportunities in external environment (postwar opportunity)
  9. 9. Worldwide demand has doubled- expanding markets globallyIntensity of competition increases Understand these markets needs and wants better. (Competitive analysis)Less developed countries are increasing their rates of construction activity New opportunities to target new customers Financing problems with LDC
  10. 10. Construction in the U.S is decreasing-less U.S dominated and less concentrated in the U.S Advanced developing countries are entering the industry and increasing competitive competition World contractors are becoming better placed than U.S contractors to perform contract Foreign companies are more flexible and easier to form joint ventures with Free from constraints such as the FCPA
  12. 12. CAT responded effectively to the 1981 hardship, but not without criticism from their former employees They laid off a large percentage of workers, bringing about enormous labor union strikesCAT delegated the tasks of warehouse and production to outside firms, rather than trying to battle the union Instead of using their office workers for research and development, CAT faced them directly in the factories This allowed them to suspend innovation and save money on labor costsThroughout this hardship, 20,000 high-wage union jobs were lost
  14. 14.  Operational Efficiency  Legal Proceedings Wide Product Base Extensive Distributorship Research and Design  Emerging Markets  Environmental Regulations  Inorganic Growth  Currency Rates  Facility Expansion
  15. 15. • CAT started its business operations in UK, Europe, Brazil, Canada, Mexico and Australia • CAT tried to enter Japanese market by joint venture with Mitsubishi.• Appointing the senior officials from headquarters. • over the nearest competitor’s model
  16. 16. North and South America served by U.S, Brazil, Mexico and Canada. Europe, the Middle East and Africa served by European facilities. Far East receive its products from Japan, Australia and India.
  17. 17. Caterpillar products and components are manufactured in 110facilities worldwide.51 plants are located in the United States and 59 overseasplants are located in rest of the world.Caterpillar products are distributed to end-users in nearly 200countries through Caterpillars worldwide network of 220dealers.As of the first quarter of 2006, 66% of Caterpillars sales aremade by one of the 63 dealers in the United States, with theremaining 34% sold by one of Caterpillars 157 overseas dealers.
  18. 18. CorporateGovernance
  19. 19. CAT management had developed a “caterpiller village” in geneva.In 1981 CAT’S management constructed a training center in down town peoria.Caterpillar china was awarded the 2011 china sustainability award in beijing CAT financial brazil demonstrates social responsibility throughout the year Caterpillar environment, health & safety (ehs) policy
  20. 20. STRATEGIES IN 1981 STRATEGIES IN 2012 • Recover the benefits • Delivering superior lost due to strike in results – earnings per 1979. share growth, operating profit after Affective response to capital charge and the changing and cash flow emerging competitive • Developing the best environment team of people • Becoming the global To support the leader everywhere employees of they do business caterpillar.
  21. 21. Increased emphasis on mining side of the business because of the fact that emerging markets will require coal and other resources. Expand their dealership facilities into the Asia and Middle Eastern market Enhance product reliability Support customer relations through repair & maintenance scheduling Develop relations with outside manufactures and designers Launch rental and lease arrangements Increase their production systems to reach the level of their competitors