Caterpillar Case
Caterpillar Case Analysis
EXTERNAL ENVIRONMENT ANALYSIS
Global . In 1915, the British military invented the armor tank and modeled it after Benjamin Holt’s steam tractor, Caterpillar. Also during World War I, the United States and its allies used Holt’s track-type tractors to haul artillery and supply wagons. Shortly after it formation, during World War II, Caterpillar served as the primary supplier of bulldozers to the US Army. Although it was a successful company for many years, for three consecutive years, 1982-1984 it had lost $1 million a day. This was partially caused by tough global competitive challenge and the collapse of the international markets.
Sociocultural / Demographic. Instead of focusing on large clients like multinational engineering and construction firms, Cat began marketing to a new category of customers like small scale owner operators and contractors. Developing nations in Latin America, Asia and Eastern Europe were a big part of Cat’s sales, accounting for 23% of total company sales. These countries have a strong demand for Cat’s equipment since they are undergoing development. Also, Caterpillar entered the market for rental equipment. Another sociocultural phenomenon that affected Caterpillar and other companies was the rise of unionization across America and their ability to make changes in a company’s structure.
Legal / Political. Caterpillar faces the policies and laws of many governments because of its heavy involvement in the international markets. High tariffs and taxes have a negative impact of foreign transaction. The company also faced legal challenges as the United Auto Workers Union (UAW) filed numerous charges with the National Labor Relations Board (NLRB) in claiming that Caterpillar had unfair labor practices.
Economic. Unfavorable currency exchange rates were one of the leading causes of Caterpillar’s loses during 1982-1984. The steep rise in the value of the dollar (relative to Yen and other currencies) made US
EXTERNAL ENVIRONMENT ANALYSIS
Global . In 1915, the British military invented the armor tank and modeled it after Benjamin Holt’s steam tractor, Caterpillar. Also during World War I, the United States and its allies used Holt’s track-type tractors to haul artillery and supply wagons. Shortly after it formation, during World War II, Caterpillar served as the primary supplier of bulldozers to the US Army. Although it was a successful company for many years, for three consecutive years, 1982-1984 it had lost $1 million a day. This was partially caused by tough global competitive challenge and the collapse of the international markets.
Sociocultural / Demographic. Instead of focusing on large clients like multinational engineering and construction firms, Cat began marketing to a new category of customers like small scale owner operators and contractors. Developing nations in Latin America, Asia and Eastern Europe were a big part of Cat’s sales, accounting for 23% of total company sales. These countries have a strong demand for Cat’s equipment since they are undergoing development. Also, Caterpillar entered the market for rental equipment. Another sociocultural phenomenon that affected Caterpillar and other companies was the rise of unionization across America and their ability to make changes in a company’s structure.
Legal / Political. Caterpillar faces the policies and laws of many governments because of its heavy involvement in the international markets. High tariffs and taxes have a negative impact of foreign transaction. The company also faced legal challenges as the United Auto Workers Union (UAW) filed numerous charges with the National Labor Relations Board (NLRB) in claiming that Caterpillar had unfair labor practices.
Economic. Unfavorable currency exchange rates were one of the leading causes of Caterpillar’s loses during 1982-1984. The steep rise in the value of the dollar (relative to Yen and other currencies) made US