• Caterpillar Inc.: George Schaffer Takes Charge
In 1982, just after recording the highest sales and profits in its history, CAT experienced its greatest crisis triggered by the worldwide economic recession and caused UAW workers to strike for 205 days. The crisis lead to a very strong dollar and in return CAT’s strong profits turned into heavy losses, while its rival Komatsu was enjoying increasing market shares.
George Schaefer knew that the situation was not just a consequence of the crisis, but also Caterpillar’s inefficient working style when he took charge of the company as the new CEO in 1985. His first years passed with cost reduction by closing more plants and reducing employees and inventories. After the Business Strategy Conference (BSC), when he got started with the actions to implement a new strategy to rebuild the company on a more competitive base, the management team was sure that the existing structure will not continue forever. Actually, Schaffer saw the inevitable shrinkage process in the crisis period as an opportunity for a healthier growth.
After analyzing CAT’s social, political and economical environment, new technologies, the competitive situation, and the company’s capabilities and limitations, the teams concluded that Caterpillar could best achieve its long term objectives by building on its core business rather than diversifying. However due to slow growth of industry, they decided to develop additional, related products and services.
There were plenty of actions to take in order to improve CAT’s market share in its core business. These included improvements of plant efficiencies, considering some outsourced procurement, entering into small contractors segment by developing new machines such as a backhoe loader, re-organizing CAT’s internal structure and introducing the company as only “One Voice” with the corporate communications campaign.
“Plant With A Future (PWAF)” manufacturing strategy enabled Caterpillar to fill the cost gap between its rival Komatsu, while its flexible
George Schaefer knew that the situation was not just a consequence of the crisis, but also Caterpillar’s inefficient working style when he took charge of the company as the new CEO in 1985. His first years passed with cost reduction by closing more plants and reducing employees and inventories. After the Business Strategy Conference (BSC), when he got started with the actions to implement a new strategy to rebuild the company on a more competitive base, the management team was sure that the existing structure will not continue forever. Actually, Schaffer saw the inevitable shrinkage process in the crisis period as an opportunity for a healthier growth.
After analyzing CAT’s social, political and economical environment, new technologies, the competitive situation, and the company’s capabilities and limitations, the teams concluded that Caterpillar could best achieve its long term objectives by building on its core business rather than diversifying. However due to slow growth of industry, they decided to develop additional, related products and services.
There were plenty of actions to take in order to improve CAT’s market share in its core business. These included improvements of plant efficiencies, considering some outsourced procurement, entering into small contractors segment by developing new machines such as a backhoe loader, re-organizing CAT’s internal structure and introducing the company as only “One Voice” with the corporate communications campaign.
“Plant With A Future (PWAF)” manufacturing strategy enabled Caterpillar to fill the cost gap between its rival Komatsu, while its flexible