Presented by: Mozart Team Spring 2008 MGT 693. Company History & Background CAT’s Strategy SWOT...
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Transcript of Presented by: Mozart Team Spring 2008 MGT 693. Company History & Background CAT’s Strategy SWOT...
Company History & Background CAT’s Strategy SWOT Analysis Competition Industry Analysis – Porter’s 5 forces Recommendations CAT Today
Caterpillar Tractor Co. MGT 693
Headquartered in Peoria, Illinois Started out in farm equipment Late 1920’s moved to EME (earth-
moving equipment) 1941 to 1944 sales tripled due to WWII Bulky equipment left behind after the
war Company has only experienced a loss
one time
Caterpillar Tractor Co. MGT 693
Multinational company Designs, markets and
manufactures EME and engines Cat is world’s largest EME
manufacturer In 1981 it was estimated that
57% of the sales were overseas 68% of these sales were made in
the USA Parts revenue is about 35% to
45%Caterpillar Tractor Co. MGT 693
Management takes a long term approach to business
High quality products Effective service Strong brand value and brand loyalty Company was always on the defense – mostly self-
reliant
Key Success Factors: Cost competitiveness through high volume
production Reliability backed by a stockpile of spare parts Service delivery through a widespread network
of independent distribution agents Localized ability to customize
.
Caterpillar Tractor Co. MGT 693
129 overseas dealerships
87 US dealerships Manufacturing
consistencies Make 90% of
components and parts Profit margins higher
on parts and attachments
Differentiation advantage
Low dependence on debt
High Labor costs High inventory 1970’s continued
to expand plant facilities
Consistent price structure
Caterpillar Tractor Co. MGT 693
Diversification Several countries
still growing- ASEAN
Economic environment
EME was operating at 60% of capacity
Caterpillar Tractor Co. MGT 693
7 manufacturers of the EME account for 90% of the dollar sales worldwide
Smaller companies use the flank attack
CAT loosing its market share
Caterpillar Tractor Co. MGT 693
Market Share of Major EME Producers
Rivalry Increasing rivalry with diverse
competitors Strong Brand Identity High switching costs and Barriers to exit
Threats of New Entrants High barriers to entry Govt policies Economies of scale Extensive dealership network
Caterpillar Tractor Co. MGT 693
Low threat of substitutionBalanced supplier power
Backward integration Substitute inputs
Balanced buyer power Low bargaining power Price sensitivity Brand Loyalty
Caterpillar Tractor Co. MGT 693
Lower capacities on existing factories Continue diversification strategies Go back to basics and offer smaller
products Continue with partnership agreements
especially in growing economies Extend dealerships in Asia & MiddleEast Establish EME rental or lease systems Educate labor unions about Caterpillar’s
current challenges and short-term planCaterpillar Tractor Co. MGT 693
Caterpillar Tractor Co. MGT 693
1983- 1985
CFSC & product
line expansion
1990Plants
modernized & BU
restructured
2001-2005QA & CSR
measures
2008 CAT well on its way to realize its
Vision 2020
1986Caterpillar Inc. was formed.
1997Acquires UK
based Perkiin Engines
2006CLS in ShanghaiUpdated Code of
conduct & Enterprise Strategy
Caterpillar Tractor Co. MGT 693
In 2005, Forbes had listed Caterpillar as the best-managed industrial corporation in America
CAT expects record results in 2008. CAT’s current CEO, Jim Owens attributes this to
“..the way Caterpillar reshaped its DNA, permanently changing the culture and capabilities of the enterprise. Caterpillar focused on its decision rights, organizational structure, motivating factors and metrics and measures - the four essentials of organizational DNA”.