Caterpillar Case Study Essay

1. What were some of the key steps that led to Caterpillar’s becoming the industry leader in earth-moving machinery? Caterpillar produced over 300 different kind of machinery for sales around the world. Its products give solution to eight industries such as residential, nonresidential, industrial, infrastructure, mining and quarrying, energy, waste and also forestry. Besides that, the use of Caterpillar’s trademark farm treads on the Army tank in World War 1 and World War 2.

The huge postwar construction and also strong overseas demand made the sales of Caterpillar’s products increased. Due to the recession of the early 1980s, Caterpillar lost about $6. 5 billion and the company was forced to laid off thousands employees, closed several factories and suffered a long United Auto Workers strike. Therefore, Caterpillar recognized that a change in the company would overcome the crisis. The company undergoes the new leadership and it was successful pull off one of the biggest turnarounds in corporate history.

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Caterpillar boldly fought the United Auto Workers and outlasted two strikes and seven years of disagreements. Due to that, it decentralized and restructured into several business unit and each of the business unit will responsible for its own P&L. Caterpillar invested a significant amount of money about $1. 8 billion in a factory-modernizing program that automated and streamlined its manufacturing process with a combination of just in time inventory and flexible manufacturing.

By automating its manufacturing system, the company became more efficient and competitive, although it also was forced to lay off more its workforce. Furthermore, the company realized that the research & development will made the company even better than its competitors. Caterpillar invested hundreds of millions of dollars in new technologies, products, and also the machines. As results, CAT construction trucks became higher tech, competitive and environmentally friendly. Besides that, the focusing on the innovation also made the company ranks in number one or two in every industry it serves.

Other than that, the company also divided its product strategy into three segments: World Class, Mid-Tier and also Low End. The company is also focused on innovating high-tech machinery for the growing World Class segment and leaving the Low-End segment to local competitors that will eventually be consolidated. The business model practiced by Caterpillar also made contribution to its dominance in the market. Caterpillar provides machines support and support for a wide range of industries.

The Global Dealer Network which is a specially trained independent CAT dealers who can provide services on a local basis, giving the global company a personal feel. 2. Discuss Caterpillar’s future. What should it do next with its products line? Where is the future growth of this company? Due to the demand of its products in U. S still in sluggish, thus the Caterpillar has switching it focus more on the emerging economies such as China, Brazil, Russia, India and those region which will be a strong point for the company.

The developing countries would demand more construction equipment in their economy growth. The company must able to continue provide the high performance equipment with highest reliability and durability. This two quality features is the key purchase consideration in purchasing of heavy industrial equipment. While Caterpillar is well known for its large premium machines sporting with many features, customers in China may be looking for something simpler with fewer bells and whistles.

For instance, Japan’s Komatsu Ltd, competes against Caterpillar with smaller, simpler machines. Thus, Caterpillar should take concern of these problems and continue supply the idea products for the consumers. Besides that, Caterpillar should continue in doing the R&D for its product line. For example, the company should understand the segment of market they currently and future served. Benchmarking their product with the competitor such as Japan-based Komatsu, Netherland-based CNH would make them growth faster and bigger.

The company move forward by focused on reducing the greenhouse gas emissions in its machinery, innovating the green technologies. Due to its position as a leader of the heavy-equipment industry leader, its competitors will also following the change in order to compete with Caterpillar. According to the Wall Street Journal, Caterpillar is doing a good job of supplying customers on a timely basis. The superior sales and service functions will continue act as the heart of the Caterpillar’s successful product strategy.


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