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