Introduction
Caterpillar (CAT) is one of the world’s leading manufacturers of specialized equipment for mining, construction, transportation, and other industries. The corporation includes more than 480 divisions located in 50 different countries on all continents except Antarctica; the headquarters of the company is located in the USA. Despite its competitors like Toyota or Mitsubishi, the manufacturer remains top in the industry. Caterpillar’s vision is to ensure that its products are used to facilitate different processes, including construction or ground works (“About Caterpillar,” n. d.). This statement also demonstrated that the company has a legacy; hence, it can be trusted since it has served for over 90 years.
Caterpillar’s Mission
Caterpillar’s mission statement primarily addresses people – customers and the company’s employees. It can be claimed that Caterpillar’s current activity correlates with its mission as the company strives to provide individuals with a unique experience of either purchasing or working. The manufacturer offers the best value to its clients as it remains at the top position within the industry. In addition, the profitability of the business is defined by Caterpillar’s increase in shareholder values due to its constant leverage in expertise and manufacturing (“About Caterpillar,” n. d.). Moreover, the producer stimulates diversity and inclusivity at the workplace, attracting more workers who could contribute to the company’s development.
Finally, social responsibility is observed through Caterpillar’s involvement in gas emission reduction investment projects.
Caterpillar’s Values
Last but not least, the company’s values highly align with its vision and mission and are seen in the current activity. When it comes to integrity, the manufacturer aims to be honest, especially in terms of competition (“Caterpillar’s strategy,” n. d.). Caterpillar does not exaggerate the quality of its products remaining in the top position among competitors. In addition, excellence is ensured by setting clear goals and establishing a stimulating environment for the employees whose productivity grows annually. Teamwork is vital for Caterpillar; thus, the company provides inclusivity and diversity. Moreover, commitment is the fourth value that stands for responsibilities. Hence, the company is accountable for protecting the health and guaranteeing the safety of clients and employees (“Caterpillar’s strategy,” n. d.). Ultimately, Caterpillar supports environmental sustainability by investing in global warming reduction projects.
Recommended Changes
Having analyzed the alignment of Caterpillar’s vision, mission, and values to its present activity, it is evident that the company is striving to remain the top manufacturer in the industry. Caterpillar does not need to alter their current program, yet it could add more value. For instance, if CAT adds inclusivity and diversity as distinct values, its performance may grow as it could attract more field professionals who could stimulate a technological boost. What is more, the manufacturer should specify “Learning” as a value since it may ensure its constant desire to produce top-quality innovations. These steps could contribute to the achievement of organizational goals. In general, CAT has already established its own standards to align its goals with the results; thus, it does not demand significant alterations.
Caterpillar Inc.’s Competitive Advantages
The primary Caterpillar’s main competitive advantage is its broad portfolio, including all products and services since the year of its launch. CAT is prominent for its mining-related and construction equipment and is the largest manufacturer in the field. Throughout the year of operating, CAT has gained more than 300 products in its list. What is more, the company provides financial services to the stakeholders (customers or partners) whose assistance in gaining capital for work is valuable. The other CAT’s strength is its steady brand image – it has recommended itself as a company selling top-quality equipment, having gained customer loyalty. It has been on the list of 100 best global brands for 17 years in a row. Finally, its heritage proves the products’ reliability and adds value to a customer’s eye.
What is more, CAT has a well-elaborated system of global operations, which ensures significant profitability. In 2020, the company collected a network of 161 independent dealers globally, 46 of which are located in the U.S. In addition to the dealers, the company owns 125 plants worldwide, and its products are sold in over 500 locations. Such a vast geography makes Caterpillar one of the most profitable and recognizable brands in the world. Furthermore, the manufacturer constantly focuses on innovations so as to provide its customers with the most advanced solutions (“Caterpillar’s strategy,” n. d.). CAT spends millions of dollars annually on the research and development of new equipment (“Caterpillar’s strategy,” n. d.). Considering the competitive advantages, it can be stated that CAT remains a strong competitor within the industry and makes timely changes to achieve organizational goals.
Caterpillar Inc.’s Competitive Disadvantages
One of the primary company’s disadvantages is its dependence on the U.S. market since most of the revenue comes from North America, and the most significant plants are based there. Approximately 43% of sales revenue came from Canada and the U.S. in 2021 (Thompson, 2018). It signifies that despite the global operations, CAT’s products are majorly acquired in America. What is more, the company utilized weak marketing strategies to promote itself in the market. Regardless of being number one in the industry, Caterpillar’s management team does not fully use resources to increase the manufacturer’s influence. Aggressive marketing is applied to boost sales; however, the positioning techniques lack vitality. It implies that the products are advertised properly in terms of price establishment but lack visual appeal or at least graphical ads.
The other major drawback of Caterpillar is the tremendous turnover rate. On average, the employees working for the company leave after 5 or 6 years. At least 67 out of 100 workers resign annually, putting a strain on CAT’s investments (Thompson, 2018). It presumes that the company has to hire new personnel and provide training to the newcomers, which slows the production and development process. Finally, the company suffers from high inventory, meaning there are more investments in the process of buying. By 2022 the inventory increased by 136 days which is a long period affecting the company’s revenue (Thompson, 2018). In general, the manufacturer attempts to prevent these issues by suggesting new reward programs, attracting new investors and partners, facilitating the inventory processes, and trying to provide employees with annual training to boost their knowledge.
Operational Changes
In order to comply with the standards and achieve set goals, Caterpillar has to introduce operational changes. Primarily, the company needs to penetrate European and Pacific markets. This step would help them increase their influence and receive more income that could be directed toward the research of new technologies. In addition, Caterpillar has to develop new reward or loyalty programs for employees to reduce the turnover rate. For example, a company could introduce new social packages with insurance to ensure the workers are safe and motivated to work. Otherwise, it is recommended to present rewards to those who achieve a specific goal. To reduce the inventory period, CAT should find more suppliers or extend the number of warehouses.
Once the operational changes are introduced, it is vital to present the measure and monitoring activities of plan realization. The first measure would be evaluating the employee retention level at the end of each year. This will help identify if new reward programs affect the attrition rate. The next step would be counting the profit each region has brought. It is indispensable to trace the company’s development in the foreign market to observe the expansion level. Additionally, Caterpillar has to monitor the inventory and the changes in its longitude after the emergence of new suppliers and warehouses. In general, the performance is supposed to boost after introduced alterations. The investment in technological development and research is expected to be more significant.
Caterpillar’s Global Strategy
To fulfill the global strategy, the company utilizes the Operating & Execution model. Caterpillar aims not to grow business but to create value in every investment area. This strategy helps CAT trace what areas create or consume value (“Caterpillar’s strategy,” n. d.). By implementing this method, the manufacturer aims to track what techniques work efficiently for realizing organizational goals. In addition, Caterpillar targets foreign markets as a part of its strategy; however, for now, they barely reached European or Pacific regions, which means the manufacturer is highly dedicated to its domestic operations. In addition to the market expansion, CAT is realizing sustainable projects and making investments to ensure a safe future. These actions are a part of the global Caterpillar’s strategy, and they are efficient yet require some alterations.
Conclusion
In order to succeed globally, Caterpillar should pay more attention to the foreign markets’ development and find ways to expand its influence. In addition, the company can collaborate with manufacturers like Ford or similar ones to make their products more elaborate. It is vital to measure the outcomes of these alterations since the company aims for global success. Within a year, CAT is recommended to evaluate the market penetration level and compare it with the previous years. What is more, it is suggestible to assess revenue before and after collaboration with successful brands. In sum, the brand strictly follows its organizational goals and abides by the set vision, mission, and values. Such an alignment makes the brand number one in the industry and creates value.
References
Caterpillar’s strategy. (n. d.). Caterpillar. Web.
Thompson, A. (2018). Caterpillar Inc. vision, mission, intensive strategy, five forces, SWOT. Panmore Institute. Web.
About Caterpillar. (n. d.). Caterpillar. Web.
