Strategic Management – The Case of Caterpillar Inc

Strategic Management – The Case of Caterpillar Inc

Identify Caterpillar Inc.’s short-term and long-term goals.

Caterpillar Inc.’s goals are outlined in the company’s vision and mission. One of the company’s long-term goals is to leverage innovation and technology to enhance the sustainability of its services and products. The second long-term goal is to design a facility that supports Leadership in Energy Environmental design to offer leadership in people’s safety around and the company’s products. One of the company’s short-term goals is to reduce greenhouse emissions and water consumption by 50% and increase the use of alternative sources of energy by 20%. Another short-term goal is to improve the sustainability of solutions, products, and services by 20%, increase business sales by 20%, and increase the management fleet by 100%. The third short-term goal is to reduce recordable injury rates in the workplace to 0.6 and lost-time case rates to injury to 0.52.

Evaluate how mergers and acquisitions in the last 3-5 years have contributed to Caterpillar Inc.’s performance and affected its organizational goals.

Mergers and acquisitions play an essential role in helping companies expand to new markets. They also help maximize profit by increasing productivity, financing, or distributive capacities by achieving scope or economies of scale (Ibrahimi, 2018). Profit maximization also arises from maximizing the growth of sales, reducing risk, reaching a large customer base, and gaining bargaining power (Sherman, 2018). Mergers and acquisitions also eliminate resource constraints because companies have limited input resources since they use the resources of the acquired or merged company. Companies also grow within a short time and have low switching and acquisition costs. Caterpillar Inc. has acquired 35 companies with 2 acquisitions in private equity acquisitions in the last five years. Mergers and acquisitions have also contributed to Caterpillar Inc.’s performance by increasing profit margins because the company has expanded its market share by entering new global markets. Expanding to international markets via mergers and acquisitions has enabled the company to eliminate entry barriers within the global market and increase revenue while reducing competition. Mergers and acquisitions have also contributed to the company’s organizational goals because the company has had to change its operational strategies to align them with the strategies of the companies they work within the mergers and acquisitions. The company has also used mergers and acquisitions to reduce and accept charge costs in various countries through corporate inversions.

Determine the most critical merger or acquisition that has contributed to Caterpillar’s performance and success in achieving organizational goals. Defend your choice.

The most critical merger or acquisition that has contributed to Caterpillar’s performance and success is the acquisition of Bucyrus International Inc. Although the acquisition cost the company a lot of money, amounting to $8 billion, it enabled the company to expand its support for customers and leadership in the mining sector. The combination of Bucyrus’ responsiveness and speed and the process execution and discipline of the company enabled it to deliver more benefits and value that could not be accomplished by the two companies independently. The acquisition also enabled Caterpillar company to acquire higher sales, more reliability, and lower product costs driven by the use of the engines owned by Caterpillar and components in the products owned by Bucyrus and improved service and lower operating and owning costs caused by the company’s global manufacturing, purchasing, and supply chain capabilities. The acquisition also enabled the company to acquire more financial resources, allowing it to spare fuel through a power-thick engine that improves the motor’s thickness, creating a lighter bundle and more eco-friendliness by reducing emanations. The company has also developed an Energy Recovery System that assists in sparing fuel by reducing extreme motor speeds.

Evaluate the effectiveness of Caterpillar’s operational plan for global strategies (international, multi-domestic, global-standardization, or transnational). Include supporting research or data.

Caterpillar Inc. has managed to maintain success in various markets, including global markets. The success is attributed to the company’s operation strategies aligned with its long-term and short-term goals. Caterpillar’s operational plan includes setting up a local company in a foreign market. The company announced a global vision to achieve $30 billion in revenue and 10% savings in the costs incurred in the operations of the company, translating to $1 billion in savings on cost while ensuring that there are high levels of reliability and quality. The company has also focused on achieving worldwide coordination and national responsiveness by adopting a structure of unique items and segment assembling on a wide scale. The company also has generation plants in every market. The plants are in charge of fabricating segments that would match the needs of the customers in the neighboring markets. The company has also been characterizing its capital component and the world to ensure that authoritative goals are met. Innovations are used as a tool for publicizing growth. This relies on various market sectors where the company operates worldwide. The company has also been infiltrating multiple industries to ensure that it has a large customer base with different needs that its products and services can address.

References

Ibrahimi, M. (2018). Mergers & acquisitions: Theory, strategy, finance. Wiley-ISTE.

Sherman, A. J. (2018). Mergers and acquisitions from A to Z. Amacom.

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Identify Caterpillar Inc.’s short-term and long-term goals.

Strategic Management – The Case of Caterpillar Inc

Evaluate how mergers and acquisitions in the last 3-5 years have contributed to Caterpillar Inc.’s performance and affected its organizational goals.
Determine the most critical merger or acquisition that has contributed to Caterpillar’s performance and success in achieving organizational goals. Defend your choice.
Evaluate the effectiveness of Caterpillar’s operational plan for global strategies (international, multi-domestic, global-standardization, or transnational). Include supporting research or data.