U.S. Major Home Appliance Industry in 2002

Topics: Komatsu Limited, Peoria, Illinois, Harvard Business School Pages: 3 (728 words) Published: April 20, 2007
With the help of two different CEO's, Caterpillar transformed itself. For three consecutive years, 1982, 1983, and 1984, the Caterpillar Company lost $1 million a day. Caterpillar's major competitor was a Japanese company call Komatsu. Due to tough global challenges, the collapse of its international markets and an overvalued dollar, Caterpillar had to reinvent itself or stop business. With the help of two different CEO's, Caterpillar transformed itself. CEO George Schaefer introduced cost-cutting measures and employee involvement programs also outsourced machines, parts and components. CEO Donald Fites diversified Caterpillar's product line and reorganized the company structurally. Facing weak competition both at home and abroad, Caterpillar charged premium prices for its high-quality products, paid its production workers union-scale wages, offered its shareholders high rates of return on their equity and enjoyed superior profits. In 1982 following a record year of sales and profits, Caterpillar suddenly plunged into three successive years of rising losses totaling nearly $1 billion. The crisis of 1982 – 1984 came from a global recession, a costly strike and unfavorable currency exchange rates. The competition with Komatsu and the crisis of 1982 – 1984 forced Caterpillar to reexamine its past activities. In 1985 – 1990, CEO George Schaefer devised and implemented a series of strategies that touched on every important function of the company including purchasing, manufacturing, marketing, personnel and labor relations. George came up with Global Outsourcing, a broader product line, labor relations, and employee improvement. Caterpillar's employee involvement plan went hand in hand with a $1.8 billion plant modernization program launched by Schaefer in 1986. Finally, Caterpillar improved product quality. The transformation of Caterpillar was far from over. The company stock lagged far behind its earnings; Cat shares underperformed the...

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