Strategic Business Areas - Case Study with Caterpillar

Incredibly, the construction equipment manufacturing company has also specialized in insurance and financing, as well as equipment training and maintenance services. And based on the product offerings, the company has gotten perceived to have a moderate degree of organizational diversification, with strategic business operations in the heavy equipment industry, financial services, and engines industry. Based in Illinois within the United States, the company has spread out its products and services across different regions of the world and has certainly grown to become the globe’s leading manufacturer of construction equipment. Nonetheless, the giant organization has to compete with other large business organizations such as Toyota Industries and Mitsubishi Heavy Industries.

Mission Statement

The company’s mission statement involves a combination of four strategic missions that inform the organization’s decisions and strategies. As such, Caterpillar’s mission statement has been “the provision of the best value for consumers, develop and grow a profitable organization, as well as encourage and reward social responsibility” (Byrne, Lubowe, & Blitz, 2007). For that reason, Caterpillar’s mission statement points to four crucial points:

a. Provision of the best value for consumers.
The organization intents to remain the leader in the provision of best-value engines, machines, and support services.

b. Grow a profitable operation.
Individuals within the organization likely would increase shareholder value by an aggressive pursuit of profits and growth opportunities that leverage manufacturing.

c. Reward and develop people.
The organization intends to provide its global workforce with suitable environments that stimulate innovation, diversity, consistent learning, and teamwork.

d. Encourage social responsibility.
The organization appears dedicated to the improvement of quality of life while maintaining the quality of the planet. The company encourages social responsibility.

Vision Statement

The corporate’s vision, “be a world leader in consumer value”, aims at establishing global leadership within the heavy equipment and construction industry through strategic services and high-quality products that meet the needs of consumers (Ardichvili, Page, & Wentling, 2002). The organization has also effectively developed its business value from marketing and distribution networks across the globe. Hence, the organization follows the vision statement and consistently continues to provide the best value for customers. It is reasonable that the company’s vision statement may get perceived as good considering the conventional guidelines on which the statement has gotten developed. While the company’s vision may be simple and short thereby easier to comprehend, the vision statement may have issues when it gets to specificity to the organization’s business. The statement may not have sufficient information to associate it with the organization’s kinds of industry or business.

Business Strategy

Following its involvement in the second world war, the company, Caterpillar, has been quick in developing new industrial innovations that improve efficiency and productivity in different regions. The company’s focus on strategic solutions that improve the productivity of consumers, as well as its unprecedented commitment to the development of robust brands across the globe, has resulted in exceptional profitability and growth. Beyond the organization’s consistent focus on bolstering its services and products for different markets across the globe, the Caterpillar company invests extensively in research and development to ensure quality solutions to consumers – as evident in the company’s latest venture into batter-powered mining trucks and other electric drives to support goals set by customers concerning green energy (Ardichvili, Page, & Wentling, 2002). And by simply investing in critical areas that create opportunity and value through the Execution and Operating model, the company has remained exceptionally committed to its enterprise value competency which involves the identification of critical segments that have growth potential and the implementation of essential strategies that enhance profitability.
The company certainly boasts extensive partnerships with significant global leaders within all its primary business operations, with critical deals that yield growth opportunities. To Caterpillar company, the strategy means a competitive advantage that considerably helps the company in differentiating its services and products, as well as the services and products of associated partners, away from the competition (Paper, Rodger, & Pendharkar, 2001). The competitive advantage further helps the organization to deliver reliable and quality solutions that address different challenges facing the construction industry. It has been revealed that strategic associations and acquisitions constitute significant boosts when it gets to the growth and development of the Caterpillar company, particularly associations that offer diversified and distributed manufacturing solutions and opportunities, as well as new markets (Byrne, Lubowe, & Blitz, 2007). A suitable instance reflects on the company’s acquisition of CarbonPoint Solutions, a carbon capture organization that has the potential to aid Caterpillar in bolstering its efforts in carbon emissions reduction.

Dealer Network and Brand Strength Dig a Wide Moat

The company’s wide moat solely rests on Caterpillar’s intangible assets, which also involve the extensive dealer network and the strength of its brand across the globe. Perhaps strengthened by a large number of Caterpillar-branded boots and clothing available on popular channels such as Amazon, Interbrand ranked the Caterpillar company as the globe’s 89th valuable brand. To a lesser extent, a relatively intellectual property that bolsters the moat; the company focuses on a low total cost of ownership which gets believed to be properly engineered into manufactured construction equipment from design (Kirkpatrick & Kirkpatrick, 2006). The lower total cost of ownership was perhaps the reason the organization had over twenty thousand patents, having been granted five hundred and five patents in 2017, thereby ranking 69th on the list of companies that had the most patents awarded by the United States Patent and Trademark Office within 2017. For mining equipment, reasonable switching costs get introduced considering the machines have long operational lifespans with intricate service agreements.
Additionally, there exists a limited pool of talent capable of servicing large pieces of heavy equipment which may be difficult to transport; which may also lead to tight associations between owners and dealers of equipment. It is worth noting that many of the markets and industries services by Caterpillars remain highly sensitive to downtime, thereby making crucial service and the delivery of equipment parts essential. Similarly, some of the company’s more expensive and larger offerings – that is, turbines, large mining equipment, and locomotive – may not get easily manufactured by new entrants (Min, 2009). It is reasonable that Minestar and Cat Connect have increasingly been able to demonstrate considerable financial benefits to consumers, with selling attributes including Collison avoidance, remote engine diagnostics, and autonomous dozing.

Conclusion

Business organizations have different ways of attracting consumers and improving services and products manufactured. Caterpillar, in particular, has focused on strategic measures that have ensured that the organization markets its services and products in different nations to guarantee worldwide brand recognition. And considering the modern world get driven by innovation, Caterpillar has embraced the innovation of construction equipment based on green energy designed to aid not only the business organization reach its set objectives but also help other companies associated with Caterpillar to realize their sustainability objectives. As such, different measures have gotten used by the company to ensure that its operations capture any opportunities within the construction, finance, and services markets, and therefore become more profitable and productive.

References
Byrne, G., Lubowe, D., & Blitz, A. (2007). Using a Lean Six Sigma approach to drive innovation. Strategy & Leadership, 35(2), 5-10.
Min, H. (2009). The best‐practice supplier diversity program at Caterpillar. Supply Chain Management: An International Journal, 14(3), 167-170.
Kirkpatrick, D., & Kirkpatrick, J. (2006). Evaluating training programs: The four levels. Berrett- Koehler Publishers.
Ardichvili, A., Page, V., & Wentling, T. (2002). Virtual knowledge‐sharing communities of practice at Caterpillar: Success factors and barriers. Performance Improvement Quarterly, 15(3), 94-113.
Paper, D. J., Rodger, J. A., & Pendharkar, P. C. (2001). A BPR case study at Honeywell.
Business Process Management Journal, 7(2), 85-99.