You are expected to use the information in the case study ‘The Comeback of Caterpillar XXXXXXXXXX’ by Cohen, I. cited in De Wit, B. and Meyer, R XXXXXXXXXXStrategy: Process, Content, Context. An...

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Case Study – ‘The Comeback of
Caterpillar, 1985-2001’
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Abstract

Strategy facilitates an organization to induce the changes within the organization that makes
it fit into the external business environment. This report focuses on evaluating the strategic
actions taken by Caterpillar Inc from 1985 to 2002. During the period, company faced many
ups and downs imposed by internal and external market scenario. Major reasons for the
downfall of the company in different time periods were poor market scenario, global
economic downturn, poor employee management etc. Company was operated by different
leaders and all have followed different strategic approaches to manage change for the growth
of the company. Major findings states that integrated strategic actions including restructuring,
marketing mix, strong leadership and other helped the company to win back its market
position and growth.
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Table of Contents

Abstract ...................................................................................................................................... 2
Introduction ................................................................................................................................ 4
About the organization ............................................................................................................... 4
Major internal and external factors forcing Caterpillar to renew its strategy in the period
1985-2001 .................................................................................................................................. 5
Adverse market condition ...................................................................................................... 5
Poor economic scenario ......................................................................................................... 6
Increasing market competition ............................................................................................... 6
High dependence on foreign market ...................................................................................... 7
Increasing cost of production ................................................................................................. 7
Measures to overcome ............................................................................................................... 7
Global outsourcing ................................................................................................................. 7
Improving labour relation ...................................................................................................... 8
Broader product line .......................................................................................................... 8
Reorganization ....................................................................................................................... 8
Resistance to change .................................................................................................................. 9
Resistance to change during the reign of CEO’s Schaefer and Fites’ ................................... 9
Resistance faced by CEO Barton ........................................................................................... 9
Revolutionary changes at Caterpillar ....................................................................................... 10
Evolutionary changes at Caterpillar ......................................................................................... 11
Perspectives to change ............................................................................................................. 12
Structural functional change ................................................................................................ 12
Integration perspective ......................................................................................................... 13
Findings.................................................................................................................................... 14
Recommendations .................................................................................................................... 14
Conclusion ............................................................................................................................... 15
Bibliography ............................................................................................................................ 16
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Introduction
With globalization and industrialization eternal market has become highly competitive. For
this reason organization need to ensure effective strategic planning in order to attain
competitive advantage in the market over its competitor. Strategic planning focuses on
overall development of organization with the development of various departments. The
central idea of this report is to analyze the strategic position of Caterpillar after 1985, after
the downfall of the company, how the management of the organization regained its market
position with the help of effective strategic planning. The success or failure of the company
depends largely on its strategic actions, it is the method of planning and implementing
necessary changes in the organization to gain desired organizational position.
This report will include various information and data about the downfall of caterpillar and
then again the growth of the company. It will include information on the external market
analysis of the company, the reason behind its downfall and the changes required to
overcome the situation. Further, this report also includes future recommendation for the
management of the company. This report will of great help for the management of the
company as well as its competitors. Students will able to understand application of various
strategies in different scenarios.
About the organization
Caterpillar Inc. is a US based firm and the market leader in manufacturing construction and
mining equipments. The company is operating in the market since 1925, it was founded in
California. Currently, the headquarters of the company is at Peoria, USA. In the initial period
of its formation it was formed with the merger of two well known brands that was Holt
Manufacturing Company and the C. L. Best Tractor Company and known as Caterpillar
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Tractor Company. Later one, in 1986 the company was reorganized and several strategic
changes occurred in the company.
Presently, the organization has diversified itself into many other sectors such as natural gas
engines, industrial gas turbines, Caterpillar remanufacturing services, diesel-electric
locomotive, financial services and progress rail services. In the year 2011, total revenue of
the company was amounting to of $60.138 billion (cat.com, 2012). There are 125,099
employees working for the company. The vision of the company is to help every continent in
making positive and sustainable changes in their organization.
Major internal and external factors forcing Caterpillar to renew its
strategy in the period 1985-2001
Business is highly dependent on its external factors which are constantly changing, it is very
crucial to cope with those changes with appropriate strategic action. In this section of this
report, various factors will be analyzed that forced Caterpillar to change its strategies.
Here analysis of an overall industrial environmental factor will be undertaken, that influence
the market position of Caterpillar Inc adversely.
Adverse market condition
Before 1985 company was doing pretty well in the market, with huge expansion and growth.
By 1981, the company became the market leader. However, since...