 “…the world’s largest manufacturer of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines.” -Caterpillar.com

 Daniel Best & Benjamin Holt  “…take the road with them”  Holt Manufacturing & Best Gas Traction merged in 1925 to form Caterpillar Tractor Co.

 Engine  Electronics  IT  Turbine  Apparel

 Be the global leader in customer value.

 Caterpillar will be the leader in providing the best value in machines, engines and support services for customers dedicated to building the world's infrastructure and developing and transporting its resources. We provide the best value to customers.  Caterpillar people will increase shareholder value by aggressively pursuing growth and profit opportunities that leverage our engineering, manufacturing, distribution, information management and financial services expertise. We grow profitably.  Caterpillar will provide its worldwide workforce with an environment that stimulates diversity, innovation, teamwork, continuous learning and improvement and rewards individual performance. We develop and reward people.  Caterpillar is dedicated to improving the quality of life while sustaining the quality of our earth. We encourage social responsibility.

 Competitors  Key Success Factors  Industry attractiveness

 Cat competes in two types of heavy equipment markets, Commercial Construction and Agriculture  Construction: Volvo, John Deere, Komatsu, and CNH Global  Agriculture: John Deere, Agco, and CNH Global

 Manufacturing and Distribution  Logistics  Quality and Durability  Marketing and Branding

 Take the economy into consideration  You have to have a global presence  Have constant innovation

 Strengths › Leading manufacturer in construction and mining equipment. › Diversified to offset impact of a cyclical industry › Name associated with quality › Large dealer network servicing 182 countries globally  Weaknesses › In a cyclical industry › Increasing Debt

 Government policies at home and abroad › Tariffs and quotas › Environmental regulations  Health of the economy at home and abroad  Other potential threats that come with doing business globally

 Logistics  Obtaining a large dealer network  Producing quality products

 Integrated Services › Logistics › Financing and Insurance options › Operator Training Program

 Labor › Caterpillar has declined its labor force close to 18,000 employees. › Caterpillar is facing increased expenses from retiree pension, health care, and related benefits. › Additional cuts include five plants in the states of Illinois, Indiana, and Georgia, by laying off another 2,500 workers.

 Debt › Cat has had to look for alternative capital sources to finance their acquisitions. › Recent cost of acquisitions has put CAT much further in debt.

 Acquisitions › Caterpillar has maintained a long history of acquiring companies, both foreign and domestic. › Right now CAT is taking advantage of the current market status. › These purchases will prove beneficial in the long run.

 Dividends › By being able to pay dividends on a regular basis and at an increasing rate it has allowed Cat to raise more capital from shareholders.

 International Operations › “butt kicked in India” by Jim Owens › Unbalanced Effort  i.e. acquisitions vary by location/market widely › Failure of one single global strategy  U.S. strategies will not work in every market › Six Sigma – Connects the global network

 International Operations › Price-Premium Strategy  High cost, competitors are low cost i.e. Komatsu › ‘Two-tier’ Attack  Buy local company and sell under multiple tiers  CAT – premium price, high quality and large  Local – cheaper price, less quality and smaller

 Labor › Southern Strategy approach › 60% of employees in 2001 outside of U.S. › In last 18 months, 20% of workforce laid-off › October ,500 employees laid-off were permanently let go and granted separation packages.

 Labor History › 1992 UAW (United Auto Workers) have union wide strike. CAT postpones R&D and uses engineers to man factories. › 2006 CAT has Class Action lawsuit filed against on behalf of retiree’s. Based on healthcare coverage in contracts. › Is Caterpillar ‘anti-union’ ? › Are layoffs part of Caterpillars global push for new markets?

 Global Growth slowdown › Caterpillar international growth model is too broad to succeed in all sectors. › Focus resources on few specific markets  i.e. India instead of China, Brazil, Japan, Ukraine › Acquisitions in 2008 all were in different global markets.  Canada, Japan, China, Brazil, North Dakota

 Marketing › Large marketing campaign to increase CAT’s brand perception in developing markets › New Product line introduction  Power tool product line  i.e. Caterpillar made Power saws, Power drills, nail guns, etc. › Use already tapped consumer markets and distribution channels for promotion › Caterpillars brand equity carries heavy weight with construction industry  Increase market share by utilizing long lasting loyalty and brand recognition

 Balanced Approach  Optimistic  Boldly Aggressive