Caterpillar Inc.’s Short-Term and Long-Term Goals

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Introduction

As any successful company, Caterpillar Inc. sets short-term and long-term goals that guide its progress. Caterpillar’s long-term goal is profitable growth that will allow the company to invest in its products and services and strengthen its position as a global leader (Caterpillar, 2018). In addition, the firm aims at providing its customers with solutions that they use to build a better world (Caterpillar, 2018). As for short-term goals, the company has divided them into goals for operations and product stewardship.

The goals for operations include the reduction of workplace injury rates, energy intensity, greenhouse gas emission intensity, water consumption, and by-product materials, and an increase in the use of alternative energy sources (Caterpillar, 2019). As for product stewardship, the company aims at providing leadership in the safety of people handling its products and improving the sustainability of its products through technology and innovation (Caterpillar, 2019). Furthermore, Caterpillar’s goal is to “increase managed fleet hours by 100% from 2013” and “increase remanufactured and rebuild business sales by 20% from 2013” (Caterpillar, 2019, p. 6). Thus, the company’s goals are directed mainly toward profitable growth and sustainability.

Contribution of Mergers and Acquisitions to Caterpillar Inc.’s Performance and Goals

On their way to fulfilling strategic goals and gaining competitive advantages, organizations may decide on acquiring or merging with other companies. Throughout its history, Caterpillar Inc. has acquired 30 organizations, and three of these acquisitions occurred in the last five years (Crunchbase, n.d.). The company acquired Kemper Valve & Fittings Corp. on March 28, 2017; then, on May 5, 2017, it acquired Yard Club, and on June 29, 2020, it acquired Marble Robot, Inc. (Crunchbase, n.d.). These acquisitions have contributed to Caterpillar Inc.’s performance and helped it achieve its organizational goals. For example, the acquisition of Kemper Valve & Fittings Corp. has widened Caterpillar’s range of products, enriching its product portfolio with products for the good service industry (Cat, n.d.). The acquisition of Yard Club has brought more technological advances to Caterpillar and contributed to the fulfillment of Caterpillar’s organizational goals since the visions of the two companies are aligned (Lawler, 2017). Thus, employing acquisitions, Caterpillar Inc. strengthens its market position and achieves its organizational goals.

The Most Critical Acquisition

Caterpillar Inc.’s acquisition of Bucyrus International, which occurred in 2011, maybe considered the most critical one since it has contributed to Caterpillar’s performance and success in achieving its goals. According to Rothaermel (2016), the main benefits of mergers and acquisitions are increased differentiation, lower costs, and reduction in competitive intensity. By acquiring Bucyrus International, Caterpillar Inc. managed to weaken the competitive pressure from its rivals, particularly Komatsu (Pope, 2019). In addition, this acquisition increased Caterpillar’s product differentiation by adding large mining equipment to its product line (Pope, 2019). Apart from that, the acquisition was friendly, which is also an attribute of a successful acquisition.

The Effectiveness of Caterpillar’s Operational Plan for Global Strategies

Caterpillar’s operational plan for the global strategy can be considered effective since it helps the company to achieve its organizational goals. According to Rothaermel (2016), organizations may choose among four types of global strategies when they aim at marketing their products worldwide: international strategy, multi-domestic strategy, global-standardization strategy, and transnational strategy. Caterpillar’s global strategy may be characterized as transnational, which combines high local responsiveness with high pressure for cost reduction (Rothaermel, 2016). In foreign markets, Caterpillar tries to act as a domestic company, adding local features to its products. In addition, its global dealer network and plants operating in different regions help the company to reduce costs (Pope, 2019). This strategy is effective since it allows Caterpillar to maintain its position as a leading manufacturer of heavy equipment.

References

Cat. (n.d.). Caterpillar acquires Kemper Valve & Fittings Corporation. Web.

Caterpillar. (2018). 2018 proxy statement and notice of annual meeting of shareholders of Caterpillar Inc. Web.

Caterpillar. (2019). 2019 sustainability report. Web.

Crunchbase. (n.d.). Caterpillar. Web.

Lawler, R. (2017). Caterpillar acquired Yard Club, a marketplace for construction equipment.TechCrunch. Web.

Pope, S. (2019). Caterpillar innovates as competition escalates.Morningstar. Web.

Rothaermel, F. (2016). Strategic management: Concepts (3^rd ed.). McGraw-Hill Education.

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Caterpillar Inc.’s Short-Term and Long-Term Goals

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