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CATERPILLAR TRACTOR CO.
SAQIB MEHMOOD 01-120101-021FAIZAN MEHBOOB 01-120101-004 MBA-VI-Y
PRESENTED TO: SIR. CAPTAIN MUNAWWAR AHMAD PN
CASE STUDY:
PRESENTED BY:
COMPANY OVERVIEW
Merger of C.L. Best & Holt Caterpillar
World’s largest manufacturer of heavy equipment
Recent acquisition of Bucyrus & Pyroban.
Competitors
ADDITIONAL BRANDS
CAT Logistics• World-class supply chain management• Serves more than 60 global firms
• Aerospace, oil and gas, industrial, and high tech
CAT Financial• Provide customers with a means of financing equipment purchases• Insurance provided as well
VISION
A world in which all people's basic requirements - such as shelter, clean water, sanitation and reliable power - are fulfilled in a way that sustains our environment.
MISSION
Their mission is to enable economic growth through infrastructure and energy development, and to provide solutions that protect people and preserve the planet.
STRATEGY
Our strategy is to provide work environments, products, services and solutions that make efficient use of the world's 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
HISTORY OF EME
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 countriesThis lead to an increase with construction activity
EME INDUSTRY
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 competitionEME Industry focused on improvements for existing products
SOURCES OF “CAT” SUCCESS IN EME INDUSTRY
Differentiation strategy
Extending its markets globally- plants in over 8 foreign countries
Providing high-quality, extensive product line backed by efficient service
100% ownership of its subsidiaries (resists joint ventures)
Recognizing opportunities in external environment (postwar opportunity)
CHANGES IN COMPETITIVE ENVIRONMENT
Worldwide demand has doubled- expanding markets globally
Intensity 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
CHANGES IN COMPETITIVE ENVIRONMENT
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 withFree from constraints such as the FCPA
COMPETITOR OVERVIEW
SAQIB MEHMOOD
CATERPILLAR MANAGE TO STAY ON TOP AFTER 1981
CAT responded effectively to the 1981 hardship, but not without criticism from their former employeesThey 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 unionInstead of using their office workers for research and development, CAT faced them directly in the factoriesThis allowed them to suspend innovation and save money on labor costsThroughout this hardship, 20,000 high-wage union jobs were lost
ANALYSIS TOOLS
SWOT ANALYSIS
PORTER FIVE FORCES MODEL
SWOT ANALYSIS
STRENGTHS
Operational Efficiency Wide Product Base Extensive
Distributorship Research and Design
WEAKNESSES
Legal Proceedings
OPPORTUNITIES
Emerging Markets Inorganic Growth Facility Expansion
THREATS
Environmental Regulations Currency Rates
PORTER’S “FIVE FORCES” STRATEGY
LOW TOMODERATE
LOW TOMODERATE LOW
LOW TO MODERATE
MODERATE
GLOBAL EXPANSION STRATEGY
1950S & 1960S
• CAT started its business operations in UK, Europe, Brazil, Canada, Mexico and Australia
IN EARLY 1960S
• CAT tried to enter Japanese market by joint venture with Mitsubishi.
100% MANAGERIAL CONTROL ON
SUBSIDIARIES
• Appointing the senior officials from headquarters.
PRICED THEIR PRODUCTS ON 10%
TO 20% PREMIUM• over the nearest competitor’s model
GEOGRAPHICAL DIVISION
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.
OPERATIONS
MANUFACTURING
Caterpillar products and components are manufactured in 110 facilities worldwide.
51 plants are located in the United States and 59 overseas plants are located in rest of the world.
DISTRIBUTION
Caterpillar products are distributed to end-users in nearly 200 countries through Caterpillar's worldwide network of 220 dealers.
As of the first quarter of 2006, 66% of Caterpillars sales are made by one of the 63 dealers in the United States, with the remaining 34% sold by one of Caterpillar's 157 overseas dealers.
CORPORATE GOVERNANCECorporate Governance
UNITARY LEADERSHIP STYLE
ANGLO SAXON MODEL
MATRIX STRUCTURE
THE BOARD HAS FOUR COMMITTEES
CSR IN CAT
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
FUTURE STRATEGIES
STRATEGIES IN 1981
• Recover the benefits lost due to strike in 1979.
STRATEGIES IN 2012
• Delivering superior results – earnings per share growth, operating profit after capital charge and cash flow
• Developing the best team of people
• Becoming the global leader everywhere they do business
RECOMMENDATIONS
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
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THANK YOU