
“…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.
$0.45
$0.40
$0.35
$0.30
$0.25
$0.20
$0.15
$0.10
$0.05
$0.00
As Reported Amount Per Share ($)
1-Aug-09
1-Jan-09
1-Jun-08
1-Nov-07
1-Apr-07
1-Sep-06
1-Feb-06
1-Jul-05
1-Dec-04
1-Oct-03
1-May-04
1-Mar-03
1-Aug-02
1-Jan-02
1-Jun-01
1-Nov-00
Split-Adjusted *** Per Share ($)
1-Apr-00


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 2009 2,500 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