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Caterpillar Inc.: Strategic Management Research Paper

Introduction

Every organization faces competition from its rival; however, ways to increase competitive advantage have been analyzed in different sectors. Caterpillar is one of the organizations that have been in the construction market for decades. The company has various goals that have enabled it to become more competitive. Moreover, approaches such as innovation, merging, and acquisition have been utilized to improve the company’s performance. Therefore, this report focuses on Caterpillar Inc.’s strategic management and the approaches that the company has exercised to increase its sales and remain competitive.

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Caterpillar Inc.’s Short Term and Long-Term Goals

There are different objectives that have enabled Caterpillar to become more productive. Moreover, growing a business requires setting valid short-term and long-term goals. These objectives are also essential in increasing the competitive advantage of an organization. In this case, Caterpillar Inc. has set some short-term goals, such as increasing its advertisements to create awareness of its products (Shunko et al., 2018). Another short-term goal for the company is to ensure that it improves its market share by expanding its sales in different countries. For instance, the organization has targeted developing countries due to their increased use of machines in construction. The company has also focused on ways it can attract more skilled workers to ensure that it increases its performance.

The long-term goals have also been set to guarantee that Caterpillar Inc. is one of the leading manufacturers of locomotives. In this case, the firm has set objectives for the next five years, such as developing the best team of people by focusing on world-class safety and inclusion. Hence, the hiring process in the business involves acquiring the best candidates that will help the organization reach its aims (Barrett, 2018). Another long-term goal is to become a global leader by improving the quality of its products. Delivering superior results by focusing on earnings per share growth and operating profit after the capital charge is another long-term goal. Thus, the company focuses on these aims and encourages innovation to ensure that they are achieved.

How Mergers and Acquisitions have Contributed to Caterpillar Inc.’s Performance

Mergers and acquisitions are essential since they can make a company stronger by expanding its consumer base and minimizing competition. In this case, Caterpillar has benefited from acquisition and merging since the approaches have created value that is greater than what Caterpillar can offer individually (Barrett, 2018). The company has increased its sales over the last five years due to the merging and acquisition which increased Caterpillar’s market share. Additionally, Caterpillar owns Cummins, whereby Cummins uses Caterpillar’s engines. Also, Bucyrus International’s acquisition has helped Caterpillar reach its goals for the past five years by expanding its sales in various regions that Bucyrus International originally dominated.

Most Critical Merger That has Contributed to Caterpillar’s Performance

One can argue that its most essential merger involved the Holt manufacturing company. The approach can be termed the best since it largely increased the sales of the organization. Holt Company was one of the leading manufacturers of construction machines (Shunko et al., 2018). It merged with Caterpillar leading to the formation of the Caterpillar Tractor Company, which attracted many consumers in different regions (Barrett, 2018). The strategy also increased the company’s market share, with many people preferring the corporation’s products.

Effectiveness of Caterpillar’s Operational Plan for Global Strategies

The global strategy involves the plans that an organization has developed to target growth beyond its borders. In this case, Caterpillar Company has ensured that it markets its products in various countries to increase its sales (Sheth et al., 2020). The business has also developed branches in various nations to guarantee that it increases its sales in various states. These approaches have been of great significance since they have created international brand awareness. For instance, many developing countries in Africa are engaging in construction activities, whereby many Caterpillar products are being used. Thus, the global strategies have effectively increased the performance of the company. Multi-domestic approaches have also been used by the company to ensure that Caterpillar competes independently in different domestic markets (Shunko et al., 2018). For instance, the firm has ensured that it advertises its products in the domestic markets to guarantee that many people can use their machines. Global standardization has also been exercised by the firm, whereby it uses the same marketing approach in different countries and across various cultures (Barrett, 2018). In this case, advertising is the marketing approach used by Caterpillar in different states.

Conclusion

Organizations have various ways of improving their productivity and attracting more consumers. Caterpillar has focused on global strategies to guarantee that its brand is recognized universally. Innovation in the modern world is one of the aspects that attracts many people. Consequently, Caterpillar Inc. has embraced innovation, which has significantly helped the company reach its goals. Therefore, various approaches have been utilized by Caterpillar Inc. to guarantee that it seizes the opportunities in the market and becomes more productive.

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References

Sheth, J., Jain, V., & Ambika, A. (2020). Repositioning the customer support services: The next frontier of competitive advantage. European Journal of Marketing 54(7) 1787-1804. Web.

Shunko, M., Yunes, T., Fenu, G., Scheller‐Wolf, A., Tardif, V., & Tayur, S. (2018). Product portfolio restructuring: methodology and application at Caterpillar. Production and Operations Management, 27(1), 100-120. Web.

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