caterpillartractor 1985 spring2008 padres
TRANSCRIPT
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Caterpillar Tractor Co.Spring 2008
The Padres
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Table of ContentsI. History of EME
II. Industry
III. Central Question
IV. Recommendations
V. The Future for
Caterpillar
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History of EME Worlds largest manufacture of earth
moving equipment (EME)
The EME industry began in the late1800s with the development of
steam powered equipment The demand for EME depended on
the increase at which machines weresubstituting manual labor.
Demand was higher in developedcountries (US)
Demand structure changed due to thechanging oil demands within theMiddle Eastern countries
This lead to an increase withconstruction activity
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EME Industry
1981, the construction industryalong with EME usagerepresented nearly 70% of totaldollar sales
Excavators, bulldozers, graders,
loaders off highway tractors andhaulers EME demand was doubling
throughout 1973-1980s Mining / Construction industry -
60% of the EME market Low cost labor method created
competition EME Industry focused on
improvements for existingproducts
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Central Question
How does Caterpillarmaintain such an
extreme competitiveadvantage,
representing nearly 70percent of the dollar
sales of theconstruction equipmentindustry?
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Differentiation strategy Extending its markets globally-
plants in over 8 foreigncountries
Providing high-quality,extensive product line backedby efficient service
100% ownership of its
subsidiaries (resists jointventures)
Recognizing opportunities inexternal environment (postwaropportunity)
Key Elements in Caterpillars Strategy / Sources of its
Outstanding Success in the EME Industry
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Key Elements in Caterpillars Strategy / Sources of
its Outstanding Success in the EME Industry
Self-sustaining dealers Intangible assets-
training, excellenthuman skills
Flexible and consistentmanufacturing-avoided obsolescencethrough constantlyupdating technologyand equipment
Commitment toconstantly developingnew products
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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 constructionactivity
New opportunities to target new
customers Financing problems with LDC
Changes in the Industry and Competitive
Environment/ Implications for Companies in the
Industry
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Changes in the Industry and Competitive
Environment/ Implications for Companies in the
Industry
Construction in the U.S isdecreasing-less U.S dominatedand less concentrated in the U.S
Advanced developing countries are
entering the industry andincreasing competitive competition
World contractors are becomingbetter placed than U.S contractorsto perform contracts
Foreign companies are moreflexible and easier to form jointventures with
Free from constraints such as theFCPA
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CAT responded effectively tothe 1981 hardship, but notwithout criticism from theirformer employees
They laid off a largepercentage of workers,bringing about enormous laborunion strikes
CAT delegated the tasks ofwarehouse and production tooutside firms, rather thantrying to battle the union
How did Caterpillar manage tostay on top after 1981?
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How did Caterpillar manage to
stay on top after 1981?
Instead of using their officeworkers for research anddevelopment, CAT facedthem directly in thefactories
This allowed them tosuspend innovation andsave money on labor costs
Throughout this hardship,20,000 high-wage union
jobs were lost
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Recommendations (1981)1. Expand their dealership facilities
into the Asia and Middle Easternmarket
2. Enhance product reliability
3. Support customer relations
through repair & maintenancescheduling
4. Develop relations with outsidemanufactures and designers
5. Launch rental and leasearrangements
6. sIncrease their productionsystems to reach the level of
their competitors
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Where is Caterpillar Now?
Despite hardships faced in late 1981,CAT has maintained their competitiveadvantage of the constructionequipment industry in most of theworld
They still rely on the sales of countriesoverseas
In 2006, 44% of CATs sales were thedirect result of customers overseas
CAT products are currently sold in
almost 200 countries through 220dealers
Much of the warehousing and partsproduction is now being outsourced,however, there are still four major
plants in the Peoria, Illinois area
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Where is Caterpillar Now?
The Caterpillar Defense ProductsSubsidiary has been developed,which provides diesel engines andautomatic transmissions to manyother countries engineer tanks andmilitary vehicles
CAT is still the worlds largestmanufacturer of construction, but inJapan, China, and the Middle East,they have fallen in second place. Inthose regions, Komatsu owns a
larger share than CAT
CAT has been listed on the DowJones sustainability index every yearsince 2001. They have become aFortune 100 Company, with more
than $40 billion in assets
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The End