Caterpillar Inc.
Background and Introduction
- Caterpillar Inc. was established in 1925.
- It is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, diesel-electric locomotives, and industrial gas turbines.
- The company invests in cutting-edge technology so to make its products highly effective in the industry.
- Its sales revenue for 2019 was $53.8 billion (Caterpillar, 2020).
- It is necessary to assess the strategy of the company to establish the level of opportunities it has.
Strategy Tools of Analysis
- The analysis of the organization will entail using SWOT and Porter’s Five Forces methods.
- The SWOT analysis highlights the strengths, weaknesses, opportunities, and threats of the organization.
- It will aim to establish the internal and external elements which impact the company and influence the level of productivity which it stands to have in the market (Thompson, 2020).
- Porter’s Five Forces analysis considers the industry rivalry, supplier power, buyer power, threat of new entrants, and the threat of substitution.
- Porter’s Five Forces mainly details the external elements which bear an outcome on the operations of the company and the position which it stands to have in the industry.
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Strategy Findings
- SWOT Analysis
- One strength of the company is that it has an extensive network of distributors globally
- Another strength is that it has a strong brand image
- One weakness of the firm is that it has a low rate of innovation.
- Another weakness is that it has a low level of connections in the market (Katsioloudes & Abouhanian, 2016).
- Potential for the company is that there is a significant room for automation and digitization.
- Another opportunity is that rising urbanization means more demand for its products.
- A threat to Caterpillar is that there are escalating costs due to US/China trade tensions.
- Another threat is that difficult economic conditions negatively impact on its operations.
- Porters Five Forces
- There is a threat of new entrants as new companies bring in innovation.
- There is a low bargaining power of suppliers in the industry.
- There is high bargaining power of buyers (Team, 2019).
- There is a low level of substitute products or services.
- There is an intense rivalry among existing competitors.
Recommendation
- Caterpillar Inc. needs to adopt significant levels of innovations so to increase upon the scale of operations.
- The organization needs to create secure networks in the industry, which will help to boost its scale of operations as deemed appropriate.
- The company also needs to continue investing more in R&D (Gattorna, 2017).
- The process will be useful in improving the level of innovation, which is realized within the operations of the company.
- It will be outstanding in terms of the engagements which it is involved with.
- The company also needs to create a deep connection between it and the suppliers.
- The company needs to train its employees concerning innovation to enable them to be outstanding in their specific operations.
Conclusion
- Various aspects regarding Caterpillar Inc. have an impact on its operations.
- The company has notable strengths and weaknesses which have an impact on its operations.
- It has opportunities and threats which impact the level of success it is likely to have.
- Porter’s Five Forces also have an impact on the overall success which the company is likely to have.
- The company needs to invest more in R&D so to improve its levels of success.
References
Caterpillar. (2020). About the Company https://www.caterpillar.com/en/company.html
Gattorna, J. (2017). Strategic supply chain management Creating shareholder value by aligning supply chain strategy with business strategy. In Strategic Supply Chain Alignment (pp. 32-52). Routledge.
Katsioloudes, M., & Abouhanian, A. K. (2016). The Strategic Planning Process: Understanding Strategy in Global Markets. Routledge.
Team, T. (2019). Can Caterpillar Continue Its Strong Revenue Run Rate In 2019? Forbes https://www.forbes.com/sites/greatspeculations/2019/10/14/can-caterpillar-continue-its-strong-revenue-run-rate-in-2019/#6ca67db37384
Thompson, A. (2020). Caterpillar Inc. Vision, Mission, Intensive Strategy, Five Forces, SWOT, Panmore Institute. http://panmore.com/caterpillar-inc-strategic-analysis-vision-mission-swot