Glen Barton's Caterpillar
For 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 Strategy
Market 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.
I 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...