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Reasons for Caterpillar’s dominance
Caterpillar’s growth from a small tractor company into a global leader in earth moving machinery was fueled by several measures that the company took. First, it developed a brand that popularized its products both in the United States and abroad. The company did this by using its trademark farm treads on Army tanks during the two world wars. The popularity gained increased demand for its product in the ensuing reconstruction period after the destruction made during the wars. Secondly, the company embraced change and adopted a business model and organizational structure that facilitated its recovery and growth (Weinzimmer and McConoughey par. 5). It divided its business into decentralized business units that functioned independently thus improving efficiency. Each unit handled its profits and losses. Another change strategy that boosted its growth involved modernization of its factory. CAT invested $1.8 billion in the automation of its business operations. For instance, the manufacturing operations were automated and led to increased efficiency and newly-gained competitive advantage that allowed it to compete effectively in the market (Wolpert 18).
Even though the program worked effectively, the company was compelled to reduce its workforce. Third, the company made research and development one of its core organizational success strategies (Haycraft 122). It began developing new products, technologies, and machines that served eight different industries (Whylly par. 4). Through research, CAT was able to develop new ways of manufacturing high-tech and environmentally friendly machinery. The company’s annual budget of $2 billion is evidence of its commitment to providing high quality products that are innovative and of high quality. Research and development has also enabled the company to invest in innovation.
Innovation is one of the most effective strategies that give organizations competitive advantage. Innovation allows the company to launch new products every year that are improvements of those existing in the market (Colvin par. 5). Moreover, innovation has led to the development of a wide range of products that serve all market segments (Colvin par. 6). For instance, the company has products for low end and high end market segments. Market segmentation has been adopted in new markets such as China and India where potential for growth is very high. Four, the company’s business model facilitates its growth and expansion into different markets. CAT offers a wide range of products and services that are offered through its immense Global Dealer Network (Orlemann par. 7). The network customizes its products and services based on the region and the needs of the people.
The future of Caterpillar
The future of Caterpillar lies in emerging markets such as India, China, and Japan. In contemporary society, environmental conservation is a critical issue that businesses and organizations are urged to prioritize. CAT should continue to innovate in order to provide products that help to conserve the environment (Haycraft 123). For instance, they can develop tractors that are fully electrical. The main goal should be to eradicate or lower greenhouse emissions that originate from their machinery (Whylly par. 6). On the other hand, the company needs to expand into emerging markets that have great potential for growth.
For instance, developing countries are undergoing periods of great economic development that is involving construction of infrastructure and other facilities. Their products and services are in high demand in these countries. In order to squash competition, the company needs to make innovation its greatest priority. The future growth of Caterpillar is in innovation, technological advancement, and investment in emerging markets (Weinzimmer and McConoughey par. 8). Its strong brand is an advantage in its efforts to enter new markets and introduce new products because it has a reputation for quality and efficiency.
Works Cited
Colvin, Geoff. Caterpillar is Absolutely Crushing It. 2011. Web.
Haycraft, William. Yellow Steel: The Story of the Earthmoving Industry. Chicago: University of Illinois Press, 2002. Print.
Orlemann, Eric. Caterpillar Chronicle: History of the Greatest Earthmovers. New York: MotorBooks International, 2000. Print.
Weinzimmer, Larry, and Jim McConoughey. Good Fail, Bad Fail: What Made Caterpillar and Unmade Enron. 2012. Web.
Whylly, Lynn. Caterpillar: What Continuous Innovation Looks Like. 2014. Web.
Wolpert, Catherine. “The Success of Caterpillar’s Global Approach to Change Management.” Global Business and Organizational Success. 29.6 (2010):17-24. Wiley Online Library. Web.
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