CATERPILLAR INC

In every organization, the management team plays a very critical role in ensuring that the targets and goals are achieved within their set time frames. It is through proper management that an organization can face the stiff external competition and fair well regardless of the severe conditions that may persist in the regular running of the business. The overall functions and roles of a manager include planning, staffing, organizing and controlling all the activities that are carried out in an organization. Managers are supposed to be well equipped regarding expertise so that they can carry out their critical roles effectively and efficiently. They are supposed to be open-minded so that they detect any necessary improvements that would, in turn, promote the performance and output of the organization regarding quality and quantity. 

The supply chain management includes a variety of activities that are involved in the overall planning, controlling and execution of an organization’s products’ flow. These activities occur from the initial stage of obtaining raw materials and proceed to the production stage ad to the final distribution of the finished materials and products to the consumers. Their primary objectives include maximizing the customer value and enabling the organization to achieve and sustain a competitive advantage over other related organizations. Effective supply chain management allows an organization to enjoy an economy of sales through profit maximization and lowering the overall costs of production (Christopher, 2016). Besides, supply chain management enables companies to meet the ever-changing customer demands and requirements, therefore, making them fit for the highly competitive business world. 

Caterpillar company is a global company that has dominated in the field of designing, development, engineering, manufacturing, marketing and selling construction and mining machinery and equipment, engines and other related electronic equipment (Caterpillar.com, 2018). It has been ranked to be the largest manufacturer of construction equipment across the world. This report explores some methodologies that are meant to assist the management team of the Caterpillar company in improving the performance of the company so that it is able to match with the endless changes associated with the today’s highly globalized world. Moreover, the concepts are aimed at enabling the company to achieve sustainable profitability in its operations which can only be made by increasing its market share and number of consumers. 

Need Identification

Over the recent years, Caterpillar company has faced reduced demand for its products and machinery as contributed by the company’s reduced share in the overall global market. Initially, the company has experienced and benefited from an increase in the total number of sales of its products across the world. Constant evolution in industrialization across the globe in the former years created a high demand for construction machinery. Caterpillar, been the world’s most reputed company concerning manufacture and sale of construction materials, benefitted greatly from this period of uncontrolled industrialization (Burgess et al., 2017). Most developing countries across the world experienced an enormous construction urge as most of the industries were being set up. Among the developing countries that created the largest market for construction equipment include China and India. 

However, the demand was followed by a period of recession and the increased demand that the company enjoyed came to an abrupt halt. This was mainly contributed by a downturn in the global economy that forced the countries across the world to sustain their economies to avoid possible inflations (Caterpillar.com, 2018). Additionally, most of the developing countries had already set up most industries, and they were now capitalizing on growth and development. Ever-since, the demand for construction machinery has gone down, and the enormous profits that Caterpillar company used to make from the sale of the equipment have decreased significantly. Caterpillar company has dominated in its field for a longer period and it does not face any stiff external competition from the new entrant companies. The recession in the global economy has weakened the company and significantly affected the profitability of the company, therefore creating the need for a broader evaluation and analysis of any methodologies that could assist the company to boost its performance. 

Another blow that has affected the market share of the company is the tainted reputation of the company, especially in the Middle East countries, which once were a great consumer and a market for the company’s products. The negative perception was built up when Caterpillar’s equipment was used in fights between Middle East countries, such as Israeli and Palestine. Caterpillar construction machinery was used by the military troops of Israeli to destroy homes and property belonging to the people of Gaza City in Palestine. As a result, the company was faced with some ethical fights where it was eyed to have contributed in the fight by taking side with the Israeli military groups. Despite the desperate attempts of the company to redeem itself in the persuasion that it did not have any control over the uses which their machinery was imposed to by their consumers, the negative picture and reputation have always taken root in the Middle East countries such as Palestine (Mokhiber & Weissman, 2002). 

Development of Operations Approach and Strategy

A strategy or approach refers to a plan of actions that are aimed to assist an organization to achieve its long-term targets and objectives. Operational strategies are those methods that companies employ to facilitate the achievement of their set goals. Effective operational strategies enable a company to survey, analyze and implement competent systems that will allow it to use the available capital and human resource efficiently and effectively so that the performance of the company is improved. The management of any aspiring company focuses on operational strategies that could help them to grow and expand their share in the overall market (Sell, 1999). This also helps to build a positive reputation for such companies which helps to attract and retain new customers, therefore increasing the total productivity of the companies.

Caterpillar company has faced two major problems, which include an abrupt loss in the total market share which has, in turn, reduced its profitability and performance. Secondly, the brand name of the company has been tainted and currently, it suffers from a negative reputation which has eventually led to the loss of consumers and across a number of Middle East countries. Strategic decisions are concerned with the long-term goals of a company (Sell, 1999). They are made and implemented by the top management of any organization, and they have the potential to affect the entire operations and direction that a company takes. Such decisions are supposed to be easy to implement even though they are able to transform the normal functioning of the company. Besides, they are supposed to offer support to the existing strategies rather than undermining them. 

In the case of Caterpillar Inc, the company’s top management could employ a selling strategy that would enable them to make optimum sales to their consumers with less manufacturing of any new machinery. Such a strategic decision would mean that the company should focus more on making sales and selling the already manufactured machinery, and temporarily stop any production of new equipment until such a time when most of the current stock is sold out (Hout, Porter & Rudden, 1982). This would save the company from any possible depreciation of machinery, which could eventually lower the selling price of such equipment, making them less profitable for the organization. Besides, considering the constant evolution in technology, new machinery will often be manufactured to replace old and less performing equipment. Such an evolution would make the manufactured unsold machinery to run out of the market. This would make the company suffer tremendous losses. 

Correcting the negative brand image and building a positive reputation could help the Caterpillar company to benefit from an increased market share. A negative company name and brand repulses new potential customers and discourages them from making purchases in such a company. Strategic decisions that could help Caterpillar company to alter and build a positive brand in the Middle East and the whole globe at large could serve a significant role in facilitating the achievement of the company’s goals and targets. Any efforts that could help to build positive relations especially between the company and the Middle East countries could be a great benefit and advantage to the company (Mokhiber & Weissman, 2002). Middle East countries such as Syria and other Islamic countries are rich, and they provide a large market for industrial construction and development equipment. 

Effective marketing strategies have, over time, been used to develop and build a positive brand name in many industries. Considering the rapid evolution of technology, marketing has been made easier and cheaper. Additionally, the advancements in technology have converted the whole world into a small global village. Caterpillar company could employ the use of technology to market their products to create awareness and convince any potential consumers of the need to purchase their machinery. Platforms such social media sites have provided a convenient and effective marketing grounds that creative companies can use to advertise and market their products (Gay, Charlesworth & Esen, 2007). Another great advantage that is offered by such sites includes the large population which finds access to such platforms. This means that a single marketing advertisement placed on a social media platform such as Facebook is potentially able to reach millions of people across the world, despite their geographical locations and differences. 

Moreover, online retailing has made easier the process of online trading and e-commerce. Companies are now able to find new customers across the world and vice versa, provided there is an active internet connection. Online retailing involves the sale of products and services through the internet. The great advantage associated with online retailing is that companies are able to sell their products to customers across areas where such companies have not accessed through branches (Gay, Charlesworth & Esen, 2007). Caterpillar company could employ online retailing in attempts to increase its market share across the world. Most people in the present age have access to devices such as mobile devices and computers, and the ability of the company to make sales via the internet could assist the company to make additional sales that would boost the total profitability of the company. 

Managerial Skills and Competencies

Different organizations require that managers possess different skills and competencies. Caterpillar company operates on a global scale, and its management team is required to have the essential skills that will enable them to deal with the pressure associated with such a high scale (Stevenson & Hojati, 2007). They are required to understand and familiarize with different economic statuses of the various countries in which they operate in. Such understanding will help them to set the prices in which their equipment could be sold in the different states. Additionally, the managers are supposed to possess efficient marketing skills that will enable them to effectively sell out their company brand and equipment across the globe. Proper leadership skills such as communication skills are essential for such managers. This is because the top management deals with more operational management teams and the ability to communicate effectively across the different levels will significantly benefit the company. 

Operations Function and Optimum Layout

The success of any business organization highly relies on quality management and useful operation functions. Such success relates to the quality of output, the overall speed and time are taken to make the successful production of output and the assurance of continued production. Another basis in which success relates to includes the flexibility of the organization and the ease to switch to the more profitable activities and production, and the ability of the organization to cut the overall production costs while still maintaining the quality of its products (Stevenson & Hojati, 2007). On the basis of quality, a company is required to access appropriate resources regarding capital, workforce and raw materials. A combination of these resources is more likely to lead to increased profitability through minimization of wastage during the production processes and the final production of quality products. 

Similarly, the speed of production highly influences the success of an organization. As an aspiring company, Caterpillar company should invest in speed production that ensures that the consumer’s needs are met on time. This helps to build customer loyalty and saves the company any unnecessary costs related to storage expenses. Long periods of storage after the initial production of the products makes them depreciate, making them lesser profitable (Stevenson & Hojati, 2007). Companies should refrain from storing their products for longer periods, especially in such a time when there are constant technological advancements as their products are more likely to be overtaken by more superior products that may be innovated to improve the performance of the initial machines (Wheel, 1984). This would, in turn, result in wastage of resources and tremendous losses to such a company. 

The functional layout to be employed by a company depends on the goods and products that such a company deals with. It refers to the defined positioning of useful and essential resources within the production processes and activities. It is concerned with the allocation of tasks among different workers in a company to ensure continuity in the operations of the organization, which in turn facilitate profitability of the company. There are distinctive types of layouts depending on the processes being carried out by an organization such as manufacturing of provision of services. Fixed position layout occurs when the direct recipient of the processing activity is static, and the other resources are dynamic. The resources are therefore capable of moving from one area to another while the recipient cannot. It applies to processes such as the construction of large buildings that require that the construction materials and human workers operate it from a static position (Hout, Porter & Rudden, 1982). 

Other types of layouts include functional layouts in which there are numerous different products that are developed so as to march with the requirements of the consumers. The consumers are therefore free to make any preferences and characteristics of their most desired products. The type of operations in Caterpillar company involves bulky equipment, and it employs the fixed-position layout where all the construction activities are carried out from a static site, and the recipients are stationary (Safronov, 1975). 

Conclusion and Recommendations

The main issues that are currently faced by the Caterpillar company are addressed in this report. These problems include the loss of sales and market share, a factor that has been mainly contributed by the recessive period that occurred in the recent years across the global economy. As a result, most countries opted to sustain their economies by reduction of extra purchases and unnecessary constructions, which posed a big blow to the Caterpillar company (Safronov, 1975). The second problem involves the negative brand name that the company has acquired especially in the Middle East countries. Implementation of proper marketing strategies can help to boost the total number of direct sales that the company achieves to make. The use of social media as a marketing platform can help the company to reach out to larger numbers of people across the world. Online retailing, on the other hand, can enable the company to make sales to different people across the globe, irrespective of their geographical locations (Hout, Porter & Rudden, 1982). These are some of the strategies that the management of the company can employ to improve quality and sales in the company. 

References

Burgess, T.F., Grimshaw, P., Huaccho Huatuco, L. and Shaw, N.E., 2017. Mapping the operations and supply chain management field: a journal governance perspective. International Journal of Operations & Production Management, 37(7), pp.898-926.

 Caterpillar.com. (2018). Caterpillar. [online] Available at: https://www.caterpillar.com/en.html [Accessed 18 Jun. 2018].

Christopher, M., 2016. Logistics & supply chain management. Pearson UK.

Gay, R., Charlesworth, A. and Esen, R., 2007. Online marketing: A customer-led approach. Oxford University Press.

Hout, T.M., Porter, M.E. and Rudden, E., 1982. How global companies win out. Graduate School of Business Administration, Harvard University.

Mokhiber, R. and Weissman, R., 2002. Bad Apples in a Rotten System: The 10 Worst Corporations of 2002; Andersen; BAT; Caterpillar; Citigroup; DynCorp; M&M/Mars; Procter & Gamble; Schering Plough; Shell; Wyeth. Multinational Monitor, 23(12), p.8.

Safronov, A. (1975). New construction and road machines of the caterpillar company. Hydrotechnical Construction, 9(8), pp.781-786.

Sell, S.P.D., 1999. Introduction to supply chain management.

Stevenson, W.J. and Hojati, M., 2007. Operations management (Vol. 8). Boston: McGraw-Hill/Irwin.

Wheel Wright, S.C., 1984. Manufacturing strategy: defining the missing link. Strategic management journal, 5(1), pp.77-91.