Case Study Catapillar
A case study of Caterpillar and it’s response to bad business decisions
Management of all companies are faced with a rapidly changing business environment and unexpected events. Companies that have been dominant in their industries can see their fortunes turn for reasons of their own making or reasons totally out of their control. If a company fails due to reasons out of their control history may judge them as victims. If a company fails due to their own bad decision history will judge them as fools. Critical and strategic decisions must be well thought out. Often the results of a bad decision manifests itself sometime after the decision has been made. Caterpillar Inc. found itself in just such a position in the 1980’s.
Caterpillar has a long history of being the leader in their industry. The company has been manufacturing heavy industrial equipment since the early 1900’s. Since 1905 Caterpillar products have been involved in many major construction projects around the world. Caterpillar helped build the America that entered World War I and then its factories built many machines that help win the war. The worldwide demand for Caterpillar products kept its factories building even during the Great Depression. “In 1929 Caterpillar sold The Soviet Grain Trust 1,300 Caterpillar tractors and 750 Holt Caterpillar combined harvesters for use on its large farm cooperatives.”(1) Caterpillar is one of the first American companies to look to be a global player. During and after World War II the company continued to grow and find more international markets for its products. The company was profitable and the market leader up to the late 1970’s and early 1980’s.
Caterpillar faced a different global economic environment in the 1980’s. “Between 1980 and 1985, as Caterpillar slid into an uncompetitive position against its toughest competitor, Komatsu (Japanese Corporation), the dollar appreciated by about 50 percent against the Japanese yen,
Management of all companies are faced with a rapidly changing business environment and unexpected events. Companies that have been dominant in their industries can see their fortunes turn for reasons of their own making or reasons totally out of their control. If a company fails due to reasons out of their control history may judge them as victims. If a company fails due to their own bad decision history will judge them as fools. Critical and strategic decisions must be well thought out. Often the results of a bad decision manifests itself sometime after the decision has been made. Caterpillar Inc. found itself in just such a position in the 1980’s.
Caterpillar has a long history of being the leader in their industry. The company has been manufacturing heavy industrial equipment since the early 1900’s. Since 1905 Caterpillar products have been involved in many major construction projects around the world. Caterpillar helped build the America that entered World War I and then its factories built many machines that help win the war. The worldwide demand for Caterpillar products kept its factories building even during the Great Depression. “In 1929 Caterpillar sold The Soviet Grain Trust 1,300 Caterpillar tractors and 750 Holt Caterpillar combined harvesters for use on its large farm cooperatives.”(1) Caterpillar is one of the first American companies to look to be a global player. During and after World War II the company continued to grow and find more international markets for its products. The company was profitable and the market leader up to the late 1970’s and early 1980’s.
Caterpillar faced a different global economic environment in the 1980’s. “Between 1980 and 1985, as Caterpillar slid into an uncompetitive position against its toughest competitor, Komatsu (Japanese Corporation), the dollar appreciated by about 50 percent against the Japanese yen,
Bibliography: (1) http://www.caterpillar.com/en/company/history.html (2) p.27,The Caterpillar Way, Bouchard and Koch, McGraw-Hill, 2014 (3) p.24, The Caterpillar Way, Bouchard and Koch, McGraw-Hill, 2014 (4) p.31, The Caterpillar Way, Bouchard and Koch, McGraw-Hill, 2014 (5) The Secrets to Successful Strategy Execution, Gary L. Neilson, Karla L. Martin, and Elizabeth Powers, Harvard Business Press, 2008 (6) p.32, The Caterpillar Way, Bouchard and Koch, McGraw-Hill, 2014