Caterpillar Value Chain Strategies Assignment Example | Topics and Well Written Essays - 3000 words

Caterpillar Value Chain Strategies - Assignment Example Through transforming itself to be more focused, responsive, variable and a resilient enterprise, that can connect their businesses end-to-end with suppliers at the one end, and customers at the other, by fusing the best business practices and technology, Caterpillar Inc have successfully introduced accelerated value creation. Caterpillar Inc is the worlds leading manufacturer of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. The company is a technology leader in construction, transportation, mining, forestry, energy, logistics, electronics, financing and electric power generation. In 2005, Caterpillar posted sales and revenues of $36 billion and a profit of $2.8 billion, maintaining its position as an International supplier and leading U.S. exporter. Currently Caterpillar has more than 85000 employees in its different businesses and divisions world wide. The current success achieved by Caterpillar was no mere coincidence, but due to the strong influence and direction set by its current and former CEO's in periods were Caterpillar lost ground against competitors and registered huge losses. Many different factors influenced the productions, sales and operations during these periods. Factors such as and overvalued dolor, collapse of major markets, union strikes and an inefficient supply chain. To be able to better understand the factors that forced Caterpillar to introduce major changes we need to review each of these trouble periods individually. 1980's Caterpillar has already established an international network of manufacturers, suppliers and dealers after being in the business for more than 75 years. But by 1982 Caterpillar was in trouble with over $1 billion dolor from 1982 through to 1984, with an annual sales figure of approximately $5 billion annually. Factors that contributed to the losses were an overvalued dolor, the concurrent collapse of world markets, a crunching labor strike and the emergence of a fast growing and highly productive competitor, Komatsu. External factors can be seen as an end to a decade long growth in the demand for construction machinery and declining oil prices, led to a decline in investment in the oil exploration and mining operations. The strong dollar versus other currencies resulted in a cost disparity for Caterpillar in relation with their competition and Komatsu an relatively unknown Japanese firm won the market share at the expense of Caterpillar. Komatsu could under price Caterpillar by up t o 30% due to a much higher productivity level. During this time Caterpillar reacted to the downturn in the market by reducing labor cost through freezing employee's wages. This resulted in a national U.S. strike, led by labor unions, which caused huge losses. 1990's In the early 1990's Caterpillar yet again found itself in trouble due to the rise in the value of the dollar and slowing down of demand in construction equipment. At the same time Caterpillar was doing very badly at the stock exchange, limiting the access to capital to support its operations. The CEO of the time took drastic actions to reorganize the company and to yet again cut