Caterpillar Strategy Report
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ID: 7442777
International Business Strategy, Foundation Skills
BMAN 20002
Company Background Caterpillar Inc designs, manufactures, and sells various machinery products. It is the largest manufacturer of heavy machinery, diesel and gas engines. Its yellow trucks can be found all around the world, with 62% of sales generated outside of the United States in 2010. CAT operated in three business segments (Machinery, Engines and Financial Products) in 2010. (Caterpillar Annual Report 2010) Caterpillar has acquired a great number of different companies that add to its core competence. These companies are both located domestically and internationally. The management also disinvests the compartments that do not add to its core competence. Mergers and acquisitions play an important role in company‟s structuring. For example, recently the company has sold ASV, Inc to Terex Corporation (Terex Press Release 2008) and has announced the acquisition of Bucyrus. (Caterpillar Press Release 2010) Caterpillar’s Performance in 2007 Caterpillar was implementing the global expansion policy. It had expected that the revenues from North America will drop, therefore increasing its outlook in the emerging markets. Caterpillar had posted another record year with extremely high expectations for the next 5 years due to the rapidly increasing production in the emerging markets and overseas in general. (Caterpillar Annual Report 2007) Figures 1 and 1.2 clearly show that Caterpillar has experienced a steady growth in the stock price and revenues for years before the financial crisis of 2007.
Figure 1
Revenues
60,000.00 40,000.00 20,000.00 0.00 2001 2002 2003 2004 2005 2006 2007 Revenue
1
ID: 7442777
Figure 1.2
International Business Strategy, Foundation Skills
BMAN 20002
* source Google Finance
However annual report suggests that Caterpillar was preparing for the eventual downturn as it knew very well that the industry that they are in is very cyclical. Caterpillar Inc had prepared...
International Business Strategy, Foundation Skills
BMAN 20002
Company Background Caterpillar Inc designs, manufactures, and sells various machinery products. It is the largest manufacturer of heavy machinery, diesel and gas engines. Its yellow trucks can be found all around the world, with 62% of sales generated outside of the United States in 2010. CAT operated in three business segments (Machinery, Engines and Financial Products) in 2010. (Caterpillar Annual Report 2010) Caterpillar has acquired a great number of different companies that add to its core competence. These companies are both located domestically and internationally. The management also disinvests the compartments that do not add to its core competence. Mergers and acquisitions play an important role in company‟s structuring. For example, recently the company has sold ASV, Inc to Terex Corporation (Terex Press Release 2008) and has announced the acquisition of Bucyrus. (Caterpillar Press Release 2010) Caterpillar’s Performance in 2007 Caterpillar was implementing the global expansion policy. It had expected that the revenues from North America will drop, therefore increasing its outlook in the emerging markets. Caterpillar had posted another record year with extremely high expectations for the next 5 years due to the rapidly increasing production in the emerging markets and overseas in general. (Caterpillar Annual Report 2007) Figures 1 and 1.2 clearly show that Caterpillar has experienced a steady growth in the stock price and revenues for years before the financial crisis of 2007.
Figure 1
Revenues
60,000.00 40,000.00 20,000.00 0.00 2001 2002 2003 2004 2005 2006 2007 Revenue
1
ID: 7442777
Figure 1.2
International Business Strategy, Foundation Skills
BMAN 20002
* source Google Finance
However annual report suggests that Caterpillar was preparing for the eventual downturn as it knew very well that the industry that they are in is very cyclical. Caterpillar Inc had prepared...