Strategic Marketing Cases: Caterpillar Inc. Essay

1894 words - 8 pages

Caterpillar Inc.--Early 1990sThe assessment of opportunities and threats is the foundation upon which planners develop strategies. The Caterpillar case illustrates some of the problems associated with the identification of opportunities and threats, especially in a situation where previous successes are notable. Attempting to pattern long-term growth on the basis of previously valid assumptions is one of the classic dilemmas facing the strategic planner whether in consumer or organizational markets.Why was Caterpillar able to meet Japanese competition and succeed while other major U.S. manufacturers failed? For example, what did Caterpillar do that the big three auto makers have not done?While Caterpillar ignored the Japanese until eroding market share and huge losses forced the company to react, once started, the company made tough decisions quickly. In particular:* Caterpillar cut prices to meet the prices being offered by competitors. The company sacrificed short-term profits to protect its market share.* Caterpillar has always maintained its reputation as a producer of quality products.* Caterpillar had a competitive advantage in its strong network of dealers and effectively capitalized on this strength.* Caterpillar has taken a long-term view investing heavily in modernizing plants and cutting costs to produce equipment.* Caterpillar made tough decisions to close plants, eliminate jobs, and reorganize the entire corporate structure.Alternatively, the U.S, automakers had allowed quality to slide on most of their models. These companies have been stymied in their efforts to reorganize by uncooperative unions and did not reduce prices or costs until overseas competitors had taken large amounts of market share. In addition, the shareholders at the big three automakers have sometimes had to force necessary changes.Evaluate Caterpillar Inc.'s marketing and management strengths and weaknesses.Caterpillar's Strengths:* Product-orientation, widely recognized, technologically superior product line; immediately integrating latest advances.* Most extensive dealer-service-parts network in the industry; recognized as one of the most important reasons for buying Caterpillar equipment.* Market share leader for earth-moving machinery.* Brand equity--the name Caterpillar has evolved as synonymous with the finest equipment available.Caterpillar's Weaknesses:* U.S.-based manufacturer with higher labor costs.* Caterpillar has followed a policy of promotion from within. Because of this policy, the management team has a conservative, introspective perspective toward worldwide operations. In addition, the company has extensive global operations but its senior executives are U.S. citizens. Executives appear trapped in a classic case of marketing myopia, especially as Caterpillar looks to aggressively expand in Eastern European and Asian markets.* Labor-Management adversarial approach to contract talks.* Caterpillar receives majority of its revenues in an industry...

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