Caterpillar, Inc.

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Case Study: Caterpillar, Inc. Submitted by: Michelle Xu MKT720 Fundamentals of marketing September 29, 2014 Professor LaBay Executive Summary For nearly 90 years, Caterpillar, Inc. has been making sustainable progress and driving positive change on every continent. As one of the leading engineers, Caterpillar plays a key role in manufacturer of engines and construction equipment in the world. However, since 1988, Caterpillar was faced with severe loss which was attributed to several factors, including a continued global recession and one-time payments associated with facility closings, consolidation, and employment reduction. In addition, the environmental issues influence the demand of industrial equipment, which hinder the further development of industrial equipment market for Caterpillar. In response to the challenges, Caterpillar made changes include plant modernization program and company reorganization since 1980s. Unfortunately, two changes still did not result in the desired result: caterpillar’s end markets remain unstable even its realignment and cost-cutting measurement continue. In order to maintain Caterpillar’s position as a market leader, under the uncertain environment of industrial market, Caterpillar needs to focus more on diversification efforts, and increase revenues from other segments like energy and transportation. Also, the growth in emerging economies, like in China, in Africa provides an opportunity for Caterpillar to establish trading companies. But the trade barrier and local restriction, like in Brazil, will inhibit the development of Caterpillar. Facing with uncertain environment, the company must decide whether there is a profitable future as a leadership in the area of heavy construction equipment and diesel engines. Situation Analysis Environment Economic conditions and trends According to recent research,
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