Mergers and acquisitions present a vital source of development for companies in global distribution strategy. Caterpillar Inc. specializes in developing, manufacturing, and marketing construction and mining machinery and engines, and other construction equipment. According to the company’s website, Caterpillar’s long-term goal is profitable growth, which prioritizes investments in product and service development (Caterpillar, n.d.). The primary short-term goal for the company follows the long-term goal of delivering a quality customer experience through the double increase of services in machinery and energy transportation in 2026 compared to the 2016 baseline (Caterpillar, n.d.). Therefore, the company targets a combination of increased service sales and investments in potentially profitable areas to improve the company’s competitive position.
Furthermore, the process of investments in perspective areas for Caterpillar often includes acquisitions of other companies who have distinguished themselves by developing outstanding technologies compatible with Caterpillar’s activities. In 2021, Caterpillar acquired Enhanced Energy Group, also known as CarbonPoint Solutions, which specializes in the development of technologies of carbon capture that allow further sequestration or utilization of CO2 (Caterpillar, 2021). Implementation of CarbonPoint Solutions’ technology in Caterpillar machinery engines favors the company’s environmental goals by reducing greenhouse gas emissions from Caterpillar products. Furthermore, in 2020 Caterpillar announced the acquisition of Marble Robot Inc., specializing in autonomous technology solutions in construction and industrial sites (Caterpillar, 2020). The acquisition presents one of the most important components of the company’s automation strategy, demonstrating Caterpillar’s commitment to investments in technological development and prioritization of customer service quality.
Thus, Caterpillar acquires companies that center on technologies that can be implemented in the company’s machinery manufacturing and application on construction sites. According to Skyline Market Research LLP (2021), the worldwide mining equipment marketplace is expected to grow significantly by 2027. Furthermore, by acquiring a company specialized in autonomy technology, Caterpillar strengthened its competitive abilities in the future and established a substantial basis for further expansion in the field of mining equipment services. Thus, the acquisition of Marble Robot Inc. could be acknowledged as one of the most critical Caterpillar acquisitions as it reflects the organizational goals and contributes to the organization’s competitive advantage in the future.
Lastly, considering Caterpillar’s operational plan for global distribution, the company adheres to the transnational strategy. The central operations are performed in Illinois, U.S., while other functions such as research and development, marketing, and manufacturing are located worldwide. Moreover, the company features a wide net of dealers, allowing easier and more effective customer service. Dealers provide the foundation for the company’s relationships with customers expanding the range of services provided by the company. According to sales statistics data, the majority of Caterpillar products in 2021 experienced an increase in demand, which suggests that even after the pandemic crisis, the transnational strategy proved to be effective (Caterpillar, 2022). Therefore, Caterpillar’s use of a transnational global strategy favors accomplishing the organization’s short-term goal of increased machinery sales.
In conclusion, this paper analyzed the activities of the Caterpillar company through the prism of short-term and long-term goals. Caterpillar’s long-term goal is profitable growth, and the short-time goal is to increase the number of machinery services for customers. To achieve the long-term goal, Caterpillar acquires companies that develop technologies compatible with Caterpillar’s products. On the other hand, the company utilizes a transnational strategy where most operations are conducted in one country, but a global network of dealers engages in sales services, resulting in increased machinery sales.
References
Caterpillar. (2021). Caterpillar acquires CarbonPoint Solutions.
Caterpillar. (2020). Caterpillar announces acquisition of Robotic Expertise.
Caterpillar. (n.d.). Strategy.
Caterpillar. (2022). Quarterly retail sales statistics.
Skyline Market Research LLP. (2021). Global mining equipment market size to exhibit 5% CAGR through 2027. Yahoo Finance.