Sunday, March 31, 2019

Strategic Development Study of Caterpillar Inc

Strategic growth break d bear of qat IncINTRODUCTIONThis report presents the Strategic Development Study of hombre Inc. cat-o-nine-tails Inc. founded on 15th April, 1925 in California, United Stated. kat is compound in designing, manufacturing, tradeing and selling hefty equipments, machinery and engines and it is similarly problematic in selling pecuniary services to the clients only over the globe. qat is the worlds thumpingst producer of manufacturer of formulation and mining equipment, diesel and natural bollix up engines and industrial gas turbines. The administration is military service oecumenical and is providing employment to on the dot near 104,490 employees. Its products includes Bulldozer, Excavator, Wheel Loader, Haul Truck, Diesel Engine etc. and its services includes Financing, Insurance, livelihood and Training.The learningal strategies rehearse in the past, present strategies and the strategical mean for the approaching maturement of the computerized tomography, be discussed merely in this report. Strategic Planning is about the finding the best solution for incoming hassles to be position about by the fundamental laws that not only solves the problems but should in like manner proves to be beneficial to the arrangement. kat value statement is We have the volume, processes, diaphysiss and investments to deliver the t nonpareil, reliability and durability customers remain from true cat in each bracing product introduction. This strategic planning report focuses on three major tasksDescribe the strategies deployed by the arranging in the past and their resulting out causes i.e. the strategic instruction history of the ph geniusr.Undertake the valuation and appraisal of the comp some(prenominal)s current strategic situation with reference to the play alongs strategic lifesize industry and competitory environs and connections endowment of its resources and capabilities.Explore, evaluate a nd access the strategic choices available and recommend the best strategic plan available for the brass section.strategic DEVELOPMENT HISTORY OF hombreERPILLARIt has been more than 85 yrs that khat is serving its customers and hence be worlds number one in its own industry. The comp either has been developing e genuinely stratum and has deemed its position into the market. In 1980s, bozo came actually c discharge to bankruptcy but still it manages to come back as a mellowed tech globally competitive growth company. The company has now proved itself as the worlds largest manufacturer of anatomical structure and mining equipment, diesel and natural gas engines and industrial gas turbines.Companys faceIn April 1925, the financially strong C. L. Best merged with the market leader Holt Caterpillar to form Caterpillar Tractor Co. Caterpillar is involved in manufacturing of cogent equipments used in reflexion and mining that atomic number 18 recognizable with CAT logo. Bec ause of the intensive competition over the market share, in 1963, Caterpillar forms the marijuana cigarette venture with Mitsubishi Heavy Industries Ltd. which is ranked 2nd in Japan for manufacturing facial expression and mining equipments. Caterpillar agreement with Shanghai Diesel in china was helpful in change the market share of Caterpillar as it was a technology sharing alliance.Come back of Caterpillar from quoinIn the year 1981, Caterpillar faced huge economy downtown and was very close to bankruptcy. For 3 consecutive years, the recession be round $1 million a day to the company which further forces the company to reduce the employment. There were three reasons for this crisis i.e. global recession, strikes and unfavorable currency swap rates. Company faced umpteen competitors that period including Komatsu Ltd. as the prime competitor. To inhibit this recession, the company CEOs introduced various strategic measures equivalent cutting costs, employee reduction, out sourcing of machinery, move and their components, introduction of modernization, variegation of product line and re arrangement of companys structure. These measures were very eventful that time to save the organization to become bankrupt. Later on the organization worked really well and managed to generate the higher(prenominal)est revenues. George Schaefers encouraged the executives to respond to recession.Caterpillar outsources 80% of its part and components and further they used their brand names for selling the outsourced products retentiveness the quality control of the products. They doubled their product line in safe 4 years from 150 to three hundred equipments with an introduction of small and light source weighted products along with the customer diversification as well. Caterpillar also focused on repairing its relationship with the push back as they experienced many strikes because of the cost cutting the company success well(p)y achieved the target of an healthy employee and employer relationship. also employee involvement program was launched by Schaefer in 1986 that involves employee satisfaction, quality improvement and change magnitude force take. This program was termed as Employee satisfaction Progress i.e. EPS. EPS helps in minify the rate of absenteeism, decline in labour grievances, saving in costs of upto $10 million and increases employees loyalty. Plant with the future (PWTF) is launched as a modernization program. Shift from batch production to flexible work cells proved to be reasoned for the organization. The technological improvements and PWTF program resulted in high quality of products, increase efficiency level and high productivity. As a result of all these efforts put by the organization, the Caterpillars 30 worldwide plants managed to cut the inventory level by 50% and manufacturing space by 21% in just 3 years. Also Caterpillars world market share goes up to 50% and its revenues increased by 66% from the year 1985 to 1990. Caterpillar beat the Komatsu by having total sales of over $11 billion in the year 1989, which were about twice the sales of Komatsu. The company takes the advantage of the growth in global demand for heavy construction industry at a steady rate of 4.5% in the 1990s and was successful in devising its way towards the top some position.Schaefer proves to be the best manager of any manufacturing company of heavy construction equipments. After phoebe bird year raise of Schaefer as CEO, Donald Fites becomes the next CEO of Caterpillar Inc. Donald brought leadership style to the organization. He further focuses on reorganization plan that involves the customer postulate on priority basis.Research and DevelopmentIn 1904, Benjamin Holt solved the problem of driving tractors smoothly in moist soil faced by farmers in California by manufacturing a tractor with gasoline engine sort of of steam engines that are much lighter in weight and that tractor was nicknamed as Caterpillar. By 1915, the Holt tractors were sold in almost 20 countries. just they make a company named Caterpillar by merging with best company in tractors. Caterpillar was the first company that introduces diesel engines on a moving vehicle. In 1931, the company created separate engine sales collection for the marketing of diesel engines to other equipment manufacturers and they further replaced it with sales and marketing piece for serving better range of customers. The company was highly involved in manufacturing replacement parts as well because it generates over a depict of the total revenue because of two main reasons i.e. sale of replacement parts is more profitable than the whole machines and the replacement parts market was little cyclical than that of original equipment.After World War 2, the demand for Caterpillar products increased to reconstruct the disaster happened in europium because of the 2nd world war. Finally in 1960s, Caterpillar becomes the leader of the heavy construction equipment industry. Further in 1965, Caterpillar expanded its operations to Britain, Canada, France, Brazil, Australia, India and Japan.In 1983, the company starts providing financial services as well. There has been huge diversification in the product line to overcome the recession in the year 1985 to more than 300 products. As the company was developing and diversifying in its operations, it changes its name to Caterpillar Inc. In 2001, Caterpillar was the first company that launches 6 Sigma that helps the organization in improving its quality to the best level. Caterpillar starts sustainable development in the year 2005 as it responded to the Asian tsunami disaster and earthquakes in South Asia.CURRENT STRATEGIES OF quatCaterpillar Inc. is the worlds number one manufacturer of construction and mining equipments, diesel and gas engines and natural gas turbines. The organization is developing day by day and continuously expanding their clientele. Its marke t is not only limited to Europe but Caterpillar is selling its products all over the world like China, India, America, Russia etc. Caterpillar serves its customers with the highest quality product at a very reasonable price and also involved in good customer relations. Caterpillar is manufacturing its products at 110 plants worldwide and is selling its products in close to 200 countries. Caterpillar made its sales through independent dealers that tot up around 66% of the total sales.Caterpillar uses many credit line strategies for its development and to compete effectively with its competitors. For the evaluation and appraisal of companys current strategies, various strategic tools are used like PESTEL synopsis for analyzing the macro environment, hit the books Analysis for analyzing the capabilities efficiency of resources as well and Porters Five Force Analysis is used to analyze the market, customers, competitors, suppliers etc.PESTEL AnalysisFor evaluating and analyzing the macro environment of the organization, the PESTEL Analysis tool is used. There are various macro environmental factors that fall the industrial plant of an organization like Political factors, Economical factors, Social factors, Technological factors, environmental factors and Legal factors. Let us now discuss in expand that how these factors affect the working of Caterpillar Inc.Political Factors Political factors are one of the main factors that affect the operations of the organization. Every country has its own governments with antithetical laws and legislations, rules and regulations, import and exportation policies etc. As Caterpillar is operating and serving the customers worldwide, it should be aware of the political factors.Economical Factors The economic factors includes the recession, inflation, growth in GDP, growth in population etc. In 1980s, the recession hits Caterpillar badly as it was very close to bankruptcy but in some manner it manages to overcome that e conomic downtown. The turn off in the prices of blunt material, diesel, petrol, import and export costs etc. is big problems for the organizations. A rise in raw material prices increases the manufacturing costs in Caterpillar and to maintain a balance, the organization has to increase its prices.Social Factors Caterpillar is operating in many alter countries. Hence it becomes essential to consider the social factors while framing the business strategies. Each and every country has different societies with different values, culture, religions, attitudes etc. the company has to maintain a balance to avoid any kind of secretion into the organization.Technological Factors A manufacturing organization like Caterpillar needs current technological advancements. It should be updated with all the latest technologies to compete in a better way and maintain its position into the market. Caterpillar is always apply the best technologies for manufacturing its construction equipments. Mo reover it has invented many new products with the best quality and price range among the whole market.Environmental factors The Caterpillar has moved towards the sustainable development i.e. they are focusing on new technologies and innovations to increase the efficiency and productivity of the organization by not impacting the environment and also providing guidelines to the customers for doing the same. Their missionary post is to enable economic growth through infrastructure and energy development, and to depict solutions that protect people and preserve the planet.Legal Factors The various laws and legislations of the country in which the company is operating supportnot be ignored. The laws related to import and export, employment laws, labour laws, should be taken care of. A lawful and legal organization mint effectively survives in long run.SWOT AnalysisThe SWOT Analysis shows the Strengths, Weaknesses, Opportunities and Threats available with the organization and provid es an opportunity to the organization to use its Strengths and Opportunities for the onward motion of the organization and keep the organization safe from its weaknesses and outside brats. Let us discuss the SWOT Analysis of Caterpillar.Strengths The main strength of Caterpillar is that it is a global leader in its own industry as it is worlds largest manufacturer the construction and mining equipment, diesel and gas engines and natural gas turbines. It is ranked as number 44 among all the organization in 2009 by Fortune 500. It has the highest revenue generation and highest share value in the market as well. It has a strong financial correct as it can grab the worldwide opportunities available. Caterpillar has 110 plants worldwide and is serving around 200 countries which show its huge customer diversification. It has a strong dealers worldwide network which contains over 200 full line dealers that helps the organization in capturing about 60% of the market.Weaknesses In recen t years the company has faced many downtowns. The sales volume of the company is decreasing since 2003 which results in slight(prenominal) revenue. Also the long term debts of the company have been increasing. The company does most of its sales through its independent dealers. Dealers show a very less confidence towards the Caterpillars new forecasting system.Opportunities Caterpillar has good opportunities of growth in developing countries like India and China. These countries demand lot of construction equipments and engines as well. over again the growth in the population demands more construction. Entering into joint ventures and acquisitions provides good opportunities for the companys development. In 2004, the company formed Caterpillar part Generation Systems in association with Solar Turbines Incorporates to market the products of both the companies which further reduces the manufacturing costs of the business firm and makes the organization more competitive.Threats Th e outside threats cannot be ignored as they affect the organization adversely. The recent threats faced by Caterpillar include the rise in the prices of raw material especially metal prices. This increases the manufacturing cost and further decrease the organizations profits. The demand of the mining equipments depends on the population growth and gain Domestic Product growth which is very uncertain. The deal between Caterpillar and United Auto Workers finishes in 2004 which enable strikes and disruptions in work. Hence such contract expuration are great threat to the organizations.Porters Five ForcesPorters Five Forces is a business strategy that is formed by Michael E. Porter. He points out the fin forces available in the macro environment that affects the abilities and capabilities of an organization. These five forces are threat of new entrants, intensity of competitive rivalry, threat of substitutes, bargaining power of customers and at last bargaining power of suppliers. T his helps an organization to be aware of the outside environment and make their business strategies accordingly. The further discussion on Caterpillars Porters Five Forces is as fol haplesssThreat of New Entrants The threat of the new entrants in very low for Caterpillar. Caterpillar is into manufacturing the construction equipments which requires a huge capital and resources. It is difficult for any new entrant to invest that much into this industry when it knows that there are already highly competitive firms available. Caterpillar should compete continuously with its competitors to maintain its position into the market.Intensity of Competitive Rivalry Caterpillar faces a high competition into the market and the other competitors can overcome Caterpillar anytime if they lose focus or using bad business strategy. Caterpillar has around 50 competitors worldwide that controls around 80% of the market.Threat of Substitutes There is nearly no threat of substitutes for Caterpillar as it is involved into the manufacturing of such singular construction and mining equipments.Bargaining Power of Customers The customers have a concord bargaining power as most of the sales are through through independent dealers and pricing is done according to the markets.Bargaining Power of Suppliers Again the suppliers also have a moderate bargaining power. For manufacturing construction equipments, there is a need of steel or other heavy raw materials which are difficult to transport and also costs very high. Hence an increase in the prices of raw material is a big issue for the organization.FUTURE STRATEGIC PLANNING OF CATERPILLARCaterpillar has sit various targets for future and is seriously involved into the achievement of those targets. The organization has set its strategy as Vision 2020. This strategy sets the stage for the next strain of the companys leadership and growth in the global industries it serves. The visions and missions set by Caterpillar are very practic al and will provide further development to the organization. In the past 80 years, Caterpillar has proved itself to be a well established business with effective management and business strategies that helps the organization to maintain its profits and position into the market even at the time of recession. The organization knows the ways of beating the recession and wins back its position into the market.Caterpillars future strategic visions are like becoming a recognized leader in its own industry everywhere, the products, services and solutions provided will helps the customers to succeed, making use of the organizations dispersals system as their competitive advantage, maintaining good labour relations and acquiring highly talented people. The organization has set various targets for its next five years i.e. providing the best return to its shareholders, hiring and maintaining the best talented people into the organization and becoming a global leader everywhere they do busines s. These targets are already achieved by Caterpillar to great extent. The 100% achievement of these targets needs more efforts. Caterpillar is now focusing towards more sustainable development i.e. making the efficient and effective use of the resources available without impacting the environment and also works for the society as a whole.Caterpillar has named as one of the top 10 industrial supply chains in 2010 on Gartners Inc. top 10 list. Also the Caterpillars Chairman and CEO, Doug Oberhelman named into the top 50 people in business according to Fortunes 2010. Hence Caterpillar is actively involved in the development of its business and competing at its best into the environment.Future RecommendationsCaterpillar should be opening new markets all over the world as an expansion of its business mostly into the developing countries as around 80% of the population lives there and they demand for such construction equipments on high basis. Also the diversification into the product lin e and customers is essential for further growth. drop of diversification reduces the sale which has already suffered by the organization. The diversification of the products done by the organization in the past proved to be very profitable. market has become an essential part of any organization. Successful marketing plays an important role in gaining competitive advantage. A wide spread distribution service network is important is essential in competing with heavy construction equipment industry. Joint ventures are important to expand the new markets and diversify into new products. This is important for the growth and development of the organization and to cover a large number of customers.Recently the global economy downturn decreases 25% of the Caterpillar sales. The ability to rebound the economy plays a significant role in the profitability maintenance of the organization. The other critical issues for the organization like changes in the prices of raw material, changes in the government monetary and fiscal policies, the credit chance involves into the financial services provided by Caterpillar etc. should be granted special attention as their affect on the organization can proven to be the worst.Continuous growth and development initiatives are important for the maintenance of the topmost position into the market. Like entering into the new markets, diversification of products and services, customer diversification, sustainable development, new distribution channels etc. The full usage of its Strengths like companys strong reputation, dominating among the industry, good financial condition for upto date technology and beating any competition and diversified business competencies, will provide a competitive advantage to the organization.

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