The Comeback of Caterpillar, 1985-2002(Case summary) Strategic decisions at Catterpillar.

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Caterpillar Inc., A Fortune 100 Company, headquartered in Peoria, Illinois, is the world's leading manufacturer of construction and mining equipment, diesel and natural gas engines as well as industrial gas turbines. The company is a technology leader in construction, transportation, mining, forestry, energy, logistics, electronics, financing and electric power generation.

SymptomsGeorge Schefer and Donald Fites faced and overcame many obstacles during their terms. During George Schefer's term 1985 - 1990 he to face 1) a global recession, 2) a costly strike, 3) lower mark-ups on light construction equipment, 4) high production costs, 5) outdated plants and equipment, 6) low demand for heavy equipment for highway construction, and 7) the value of the dollar rose steeply. Throughout Donald Fites term 1990 - 1999 he faced costly labor strikes as well, but also had to overcome 1) a decrease in the company's earnings as well as 2) lower industry-wide demands in both the domestic and international markets, and 3) Fite's management style.

In February of 1999 Donald Fites retired, leaving newly elected CEO, Glen Barton, to face many challenges: 1) Barton could not count on Caterpillar's continual success due to the downturn of the North American construction industry. 2) During Barton's first year (2000), the company's sales declined by 6 percent and earnings by 37 percent. 3) An accelerated change over from diesel generators manufacturing to natural gas generators for manufacturing.

Caterpillar needed a strategy implemented that would allow it to withstand the forecasted grind of economy and the construction industry as a whole. Barton needed to decide whether the strategies of the previous CEOs needed to be refined, reversed, or totally restructured.

ProblemCaterpillar needs to recognize that global competition is increasing and in order to maintain its role as the industry leader a stable long term strategy of the company...