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
nice one man...
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