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Glen Barton's Caterpillar/Case Study Tmgt 578 Ed Dempsey January 27, 2005

1141 words - 5 pages

Glen Barton's CaterpillarFor this week's group assignment we had to read and analyze, The Comeback of Caterpillar, 1985-2001" case study. Our teams divided on whether Caterpillar's grand strategy under the leadership of Glen Barton had its merits. Some of us felt the grand strategy was properly focused and directed. While the rest of us felt it was optimal at best and needed to be refocused. The main purpose of our paper is, first to analyze and give examples of Barton's grand strategy. Second to give examples in favor and against the strategy."Against" Glen Barton's Grand StrategyNew MarketsMarket development allows firms to practice a form of concentrated growth by identifying new uses for existing products and new demographically, psycho graphically, or geographically defined markets. Frequently, changes in media selection, promotional appeals, and distribution are used to initiate this approach (Pearce, Robinson, 2003, p166). According to Barton's theory for new markets, Caterpillar's sales to developing countries accounted for only 23% of the company's sales. His strategy was to increased sales of Caterpillar's equipment to the developing nations of Asia, Latin America, Eastern Europe, and the Commonwealth of Independent States (the former Soviet Union). He also surmised that developing countries had limited-access to water, electricity, and transportation, and therefore needed to invest in building highways, bridges, dams, and waterways. What I feel he didn't consider is marketing and advertisement would be needed to break into this new area. A market that he said did not have access electricity and transportation. Another reason I don't agree with this strategy is because underdeveloped countries are normally also poor, which would cause this strategy to be unsuccessful.DiversificationI also felt Barton's diversification strategy fell short of real success. In 1999, Caterpillar's overall sales fell by 6%. Yet Barton concentrated on Caterpillar's engine business. I understand the engine sales rose by 5%, but he his strategy does not appear strong enough to offset the losses in other departments. He should have concentrated on Market development, which Pearce- Robinson define as marketing present products, often with only cosmetic modifications, to customers in related market areas (p.165).Joint VenturesJoint ventures present new opportunities with risks that can be shared. On the other hand, joint ventures often limit the discretion, control, and profit potential of partners, while demanding managerial attention and other resources that might be directed toward the firm's mainstream activities (Pearce, Robinson, 2003, p179). In November 2000, Barton's Caterpillar announced a plan to form two joint ventures with DaimlerChrysler (DC), the world's leading manufacturer ofCommercial vehicles (Pearce, Robinson, 2003, p.49-17). One was for building medium-duty engines; the other was for manufacturing fuel systems. While there was a potential for...

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