Caterpillar Case Study

Case Study of Caterpillar

Caterpillar is one of the Americans fortunes 100 corporations which are engage in designing developing and manufacturing machinery, engines financial products and insurance to customers. It has a worldwide dealer network which enables the business organization to gain a competitive advantage in the global market. In the year 2018 caterpillar was ranked number 65 on fortune 500 lists. It has ranked 238 on global fortune 500 lists. The business organization was founded in the year 1925 April 15th in California US. The founder of the organization is C.L Best. The operating income of the business organizations is US dollar 53.8 billion in the year 2019. In the year 2020 the sales and revenue of caterpillar was dollar 41.7 billion. Today the business organization is a world leading manufacturer of construction and mining equipments, industrial gas, turbines, diesel electric locomotive and natural Gas engines. Since the year of its foundation in 1925, it has been driving sustainable progress and helping customers across the globe to build a better world through its innovative products and services. The products and services of by the business organization are built on cutting edge technology and product expertise. The services and products offered by the company are backed by the global network which provides exceptional value to the customers and ensures business success. It has its presence in every continents principal operating in three primary sectors including energy and transportation resource industries and construction industries. The company also provides financial and other related services through its financial products segment. 

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SWOT Analysis of Caterpillar

SWOT analysis is a strategic tool which can be used by business organizations to determine the internal strength and weakness and externall opportunities and threats. It is a highly interactive process which requires effective coordination and cooperation of every department in the organization including marketing, finance, operations and management information systems. Caterpillar is one of the leading firms in the industry and maintains its dominant position in the market by careful analysis of the strengths weaknesses opportunities and threats.

Strengths

Brand image and reputation - Being a global organization it has a higher visibility and brand image in the global market. It has the highest success track record of developing new products and innovative services.

High level of customer satisfaction -It has a strong customer base with high rate of customer satisfaction. The business organization has dedicated customer relationship management department which enables it to obtain high level of customer satisfaction despite the level of competition.

Reliable suppliers- caterpillar has a strong base of reliable suppliers which provides timely raw materials to the company and enables the business organization to overcome any forms of supply chain bottlenecks. 

Weakness

Ineffective organizational structure - The present organizational structure of caterpillar is only compatible with the present business models which limit business expansion possibilities. In order to facilitate further growth an improvement in the market it needs to focus on effective organization structure and alter the present business model.

Low investment in research and development – The business organizations has low investment in research and development as compared to other prevailing competitors in the market. This aspect of the business organization limits its competitiveness in the markets in terms of innovation.

Limited product range - There are certain gap in product range that is being offered by the business organization. Due to the lack of investment in market research and product development, the company has a small range of product portfolio. The competitors in the market can take advantage of the limited product range of offered by the business organization.

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Opportunities

Technological advancements- The rapid advancement of technology and improvement in machineries provides a better opportunity to invest in research and development and provide new innovative products and services to the customers. However, rapid advancement of technology implies that the current technology and machinery might quickly get outdated. The consumers are highly sensitive to quality products with latest technology to ease their work.

Emergence of online channels- The emergence of e-commerce companies and online channels provide a better opportunity to get access to large customer base and attract new customers through online platforms. This has opened new sales channels for caterpillar. It can directly reach out to the customers and ensure a better relationship with the customers.

Sustainability trends in the market - The customers are increasingly conscious about the sustainability initiatives undertaken by the company. The green drive of the government also provides an opportunity to focus on sustainable product catering to the needs and demands of the customers and key stakeholders. 

Threats

Economic slowdown- The covid-19 pandemic situation has resulted in a global economic slowdown which affects the business operations and profitability. This situation has reduced the purchasing power in the hands of the consumers; this might reduce the profitability and sales generation of the business organization. This is a major threat to the business organization and its profitability.

Increasing level of competition - there is an increasing level of competition in the global market which might threaten the positions and profitability of the business organization.

Complex laws and regulations - there are increasing number of complex laws and regulations in every country including liability laws and new environmental laws which threats the existing product categories of caterpillar

PESTLE Analysis of Caterpillar

PESTLE analysis framework is widely used strategic and management tool that can be used by business organizations for strategic planning considering the external business environmental factors including economic, social, technological, environmental and legal factors. Caterpillar Inc. operates in a highly dynamic and ever changing business environment with regulatory changes, collective social trends, rapid technological improvements, changing legal systems and environmental activism. The framework is imperative for achieving long term growth objectives and developing highly effective strategies.

Political Factors

Political stability is essential for carrying out the business operations in smooth manner with predictable market growth trends. However, increasing tensions among countries and instabilities in global political environment affects the growth of the business and limits its expansion opportunities. Frequent changes in government policies and political tensions create an environmental uncertainty which harms the performance of the business organization. Bureaucracy and corruption levels in some countries make business unpredictable and jeopardize public trust on the business organization. The level of corruptions in some countries influences business operations ranging from licensing, fraudulent deals and contracting.

Economic Factors 

The economic development of the country has direct influence on the operations and organizational performance of the business organization. A well developed infrastructure facilitates a better growth opportunity and suitable business environment. However, the ongoing pandemic situation caused by the pandemic situation has affected the global economy and led to economic slowdown thereby reducing the purchasing power in the hands of the consumers. Other factors such as labour market conditions determine the supply of skilled workforce and wage rate of the people. The business operations and practices of the organization are influenced by the prevailing economic structure.

Social Factors 

The culture of the business organization is influenced from the societal norms, trends and values. There have been significant changes in consumer trends and preferences. The consumers prefer latest technology products and are sensitive to quality and price of the products depending on the country of operation. Caterpillar Inc. needs to consider the changes in demographic patterns such as social economic variables and aging population. These factors have paramount importance to multinational corporations like Caterpillar Inc. It is highly essential to determine the attitudes, equality and power distance within the country.

Technological Factors

Rapid advancements of technology and emerging technologies such as artificial intelligence, robotics and machine learning provide opportunity to Caterpillar Inc. The business organization can leverage the advancements of technology to gain a competitive position in the market and enhance the operational efficiency. It is essential to incorporate latest technology in the organization in order to remain competitive in the global market. The emergence of social media market and other communication technologies also provides a better opportunity to collaborate with the customers in the modern business environment. Caterpillar can implement effective online marketing strategies and post creative social media campaigns to develop online brand communities.

Environmental Factors

There has been growing environmental concerns due to changing climate conditions and global warming. Caterpillar needs to consider various environmental standards, laws and regulations in different countries and market. There has been increasing trends such as recycling, renewable technologies and waste management.

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Legal Factors

Caterpillar needs to comply with employee/labour health and safety laws in different countries in order to provide a secure working environment for the workforce. There are other laws and regulations including anti-discrimination laws, equal opportunity, consumer protection laws and intellectual property laws.