Internal and External Environment of Caterpillar Inc
Caterpillar Inc. is one of the leading producers of diesel and natural gas engine, industrial gas turbine, mining equipments & construction equipments (History, 2012). The company operates throughout the world, and due to this it becomes significant for it to have up-to-date information about its internal and external environment, which can be scanned through SWOT and PESTLE analysis: SWOT Analysis: As per the internal and external environment business case study assignment help experts, the company internal environment is influenced with its following strengths, weaknesses, opportunities, and threats:
Strengths’: Caterpillar Inc operates with a strong dealer network and has a network of more than 200 dealers. As well, the company also have an effective production line with more than 300 products with specific specialization. The company’s Financial Services Corporation provides its customers with different financing options, which in turn have directed it towards attaining a global presence (Alkhafaji, 2003).
Weaknesses: Recently, the company has seen several downtowns as its sales volume is decreasing since 2003, which in turn have directed it towards less revenue. The long-term debts are increasing. Most of its sales are done through independent dealers. Its dealers don’t show confidence in company’s new forecasting system (Lussier, 2008).
Opportunities: The company has significant opportunities in developing countries such as India and China. In developing countries demand of construction equipments and engines is increasing as well as the population growth also demands more construction. Through joint ventures and acquisitions, the company may develop a lot in future and become more competitive.
Threats: The threats to the company are increase in the prices of raw materials particularly metal prices. This in turn increases company’s manufacturing cost and bring a decrease in its profits. The demand of the company’s mining equipments relies on the population growth and Gross Domestic Product growth which is actually very unsure (Alkhafaji, 2003).
PESTLE Analysis: External forces affecting company operations are as follows: Political: Political factors like a country’s laws and legislations, rules and regulations, import and export policies etc. need to be considered effectively by Caterpillar to serve customers throughout the world (Miller, 2011). Economical: Economic factors affecting the company are the recession, inflation, population growth, growth in GDP etc. All these factors influence the prices of raw material, petrol, diesel, import and export costs etc. These factors in turn affect manufacturing costs and company prices (Lussier, 2008).
Social: The company operations in diversified countries make it critical for it to consider social factors like values, culture, religions, attitudes etc. Without considering all these social factors, the company would not become able to avoid discrimination related claims. Technological: The Company being a manufacturing firm need to keep its technology updated, and this concern Caterpillar keep using latest technologies for manufacturing construction equipments. Environmental: With increasing environmental concerns, it becomes essential for Caterpillar to become environment-friendly and use new technologies and innovations, which are able to improve efficiency without affecting environment in any way (Lussier, 2008). Legal: Being a multinational company, it is vital for Caterpillar to operate by considering every country’s specific laws and regulations in regard to employment, labor etc.
Caterpillar Competitive Advantage and Strategy Caterpillar competitive advantage is its globalized distribution system, which was adopted in early phase of business. The company competitors are not able to expand their distribution network at such a large scale (Strategy, 2013). The company operates with the use of competitive strategy, which makes use of different cost reduction strategies, which in turn enables it to serve its customers with high quality construction equipments (Miller, 2011).
Value Creation and Sustaining Competitive Advantage The company operates with an aim to serve its customers with the highest quality product at a rational price by focussing on customer relations. The large network of independent dealers extensively assists it in creating value by serving customers as per their needs, which in turn also assist it in sustaining its competitive advantage (Koontz & Weihrich, 2006). With the use of competitive strategy and use of independent dealer networks, company successfully serve its customers at reasonable prices. This in turn also assists it in strengthening its dealer’s network and sustains company’s competitive advantage in long run (Wheelen, Hunger & Thomas, 2011). In addition to this assignment help, the company also keep changing its business strategies for its own development and to compete efficiently with its contenders. From time-to-time it keeps updating its strategies and approach for different markets as well as also provides time-to-time training to its dealers so that, it could become easy to create value and sustain competitive advantage (Lussier, 2008).
Measurement Guidelines to Verify Strategic Effectiveness From the time of its operations, the company is making use of different measurement guidelines to verify strategic effectiveness. One of the key measurement guideline, used by it in this regard is to evaluate its strategies and approaches from time-to-time. For evaluating and appraising its current strategies and approaches, the company make use of several strategic tools such as PESTEL Analysis for examining the macro environment, SWOT Analysis for analysing its own capabilities and weaknesses as well as Porter’s Five Force Analysis to assess the market, competitors, customers, suppliers etc (Wheelen, Hunger & Thomas, 2011).
Value Judgement regarding Caterpillar Product and Service The company approach towards serving its customers with high quality products through its individual dealer network, appropriate it to serve them with high quality products. In addition to this, the company keep developing its strategies and manufacturing processes with the use of advance technologies and this is also a reason to its potential to serve with high quality products (Koontz & Weihrich, 2006). In present, Caterpillar designs, manufactures, market and sell heavy equipments, machinery and engines as well as it is also involved in selling financial services to its customers throughout the world (Miller, 2011). The company guidelines to measure its strategic effectiveness as well as use of effective business strategies has directed it towards becoming the world’s largest producer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. Today, it is serving all over the world, which was not possible with creating value concerning its products and approaches (Lussier, 2008). The success of its products also depends on company effective strategic planning, which provides a framework to attain success and serve customers as per their needs and with value products (Wheelen, Hunger & Thomas, 2011).
References Alkhafaji, A.F. (2003). Strategic Management: Formulation, Implementation, and Control in a Dynamic Environment (21st ed.). London: Routledge. History. (2012). Caterpillar. Retrieved from http://www.caterpillar.com/company/history Koontz, H. & Weihrich, H. (2006). Essentials of Management (7th ed.). New York: Tata McGraw-Hill Education. Lussier, R.N. (2008). Management Fundamentals: Concepts, Applications, Skill Development (4th ed.). USA: Cengage Learning. Miller, S. (2011). The Essential MBA. London: SAGE. Strategy. (2013). Caterpillar. Retrieved from http://www.caterpillar.com/company/strategy Wheelen, T.L., Hunger, J.D. & Thomas, L.W. (2011). Concepts in Strategic Management and Business Policy (12th ed.). India: Pearson Education. Get Project management plan assignment help and business strategy assignment help services from Australia and US by experienced experts. We assure you that you will get perfect and complete business plan assignment help services from our experts