CASE ANALYSIS: COME BACK OF CATERPILLAR

Case summary

—  In 1904 – Emergence of Caterpillar

—  Product line – earth moving equipment, off highway trucks, construction cranes, mixers, pavers & related equipments, parts & attachments

—  Crisis in early 1980s

—  Turnaround (1985-1999) : George Schafaer and Donald Fites – implementation of various strategies

—  By 2000 – Glen Barton – declination of sales

Strategies implemented

Schaefer’s period as CEO

•      Congenial leader.

•      Social skills were on focus in his management strategy.

•      Strategies that focused on purchasing, manufacturing, marketing, personnel and labor relations.

Following were the strategies followed:-

•      Introduction of cost cutting measures

•      Global outsourcing

•      Broader product line

•      Labor relations

•      Employee involvement

•      Plant with a future

Donald Fite’s period as CEO

—  Structural reorganization of Caterpillar

—  Diversification was the key in his strategic management.

The key points in his strategy planning were:-

—  Leadership

—  Reorganization

—  Marketing and dealership

—  Information technology

—  Diversification & liberalization

Glen Barton as a CEO

—  New markets

—  Diversification

—  New distribution channel

—  Joint ventures

Challenges for Barton:-

—  To sustain the market trends and changes.

—  To maintain the position of being market leaders in construction & mining equipments.

—  To overpower the competitors.

—  To adapt with new trends.

SWOT

Strength

•      Innovative ideas

•      Broad product line

•      Global market leader

•      Strong portfolio of brands

•      Wide logistic network

Weakness

•      Slow down in the market with increasing inflation

•      Weak labor relations

•      Premium pricing

•      Lack of foresight

Opportunity

•      Global infrastructure development

•      Strategic alliances & joint ventures

•      Intrusion into developing countries

Threat

•      Intense competitive pressures

•      Foreign exchange & interest rate fluctuations

•      Rise in raw material prices

•      Possibility of a partner or supplier pulling out of a joint venture or SCM deal

Suggestions

—  ERP implementation

—  Penetration into new market

—  Enlargement of distribution channel

—  Differentiation of product lines-automation-quality

—  HR required to solve the disputes among trade unions

—  Identifying the wastages and eliminating them-ERP

—  Statistical process control

—  Online process control

—  Go for a blend of strategies that were time tested by the former CEO’s