Caterpillar Case-studyHarshada HemanginiSonali Varsha Kedar Bhooshan

CAT Overview

MNC company which designs, manufactures and markets the product - EME and Engines for earthmoving and construction machines.

Strong 53 percent market share worldwide Nearly 60 percent of sales was from

overseas Parts represented nearly 35 percent of

their total revenue 33 manufacturing plants with 22 in US Strong dealer network and support

Case Study synopsis

EME represented 70% of sales and $8.6 billion sales was achieved by CAT in 1981

EME was represented by 60 percent in Construction and 30 percent in Mining and 10 percent by Forestry

Komatsu, a Japanese company was upcoming competition to CAT

Decision for buying EME was dependent on manufacturer’s reputation , machine performance and dealer capability

Questions for CAT

Negotiation with UWA for triennial contract Effect of low sales due to higher interest rates Growing competitive environment To find answer to the benefits lost after bitter

1979 strike

Strengthening of US currency Global debit crisis and severe liquidity crunch Under – utilization of capacity High labor and overhead costs

Strategic Recommendation – Short term

Buy back offer of CAT machines after 5 years Complete Sales and Service contract to be

offered by the dealers To handle dollar fluctuation, multiple

currency billing to be introduced Renting out of machines directly Contract employee strategy Strong inventory control Reduce manufacturing and R&D costs

Strategic Recommendation – Long term

Target agricultural and allied industry More joint venture in European and

Australian market Target complete utilization of plant – if

needed stop other plants or relocate to emerging markets

Turbine engines manufactured at solar turbines can be sold to aircraft manufacturers as a diversification

Acquisition of non performing competitors

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