StrategicManagementJournalPart2.docx

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Strategic Management Journal Part 2

Strategic Management Journal Part 2

SWOT Analysis of Caterpillar Inc.

Strengths

-Strong brand image
-Business line diversification
-Expertise
-Stakeholder loyalty/satisfaction
-Reliable suppliers
-Excellent open cash flow
-Experience

Weaknesses

-Restricted innovation
-High prices
-Contributes to climate change
-Stagnated in core business
-Limited options from competition
-Low manufacturing rate
-Limited product development

Opportunities

-Growth and expansion
-Can exploit other avenues
-AI & robotics
-New customers
-Cheaper transportation options
-Low inflation rate
-Market development

Threats

-Competition
-C19 pandemic
-Construction go-slow in the U.S.
– Political instability
-Mining reliant on material supply
-Climate change and policies
-Inflation

Caterpillar Inc.

Caterpillar Inc.’s mission involves enabling economic growth by means of development of infrastructure and energy, as well as providing society with solutions that support their way of life, in addition to protecting the environment (CAT, 2021). Its’ vision is to have a world where the basic needs of the human population are met in a way that is environmentally sustainable. This is an indication that the company willingly engages in activities that are beneficial to its stakeholders. As a company that enjoys limited competition in manufacturing, construction and mining equipment, it uses innovation and improvement to boost its operations. Caterpillar Inc. improves sustainable development by creating structures that improve its business advantages while reducing its economic, social, and environmental bills of ownership.
The company has a good reputation of manufacturing. This increases its opportunities for business, as well as establishing loyalties that are important. Its ability to create good communication and advertisement channels gives it its success. Together with its good approach of doing business, the company claims a large market share that is sustained by its stakeholder loyalty. The continued growth in construction from the real property market in the United States as well as China’s construction investment projects in African and South American nations has increased the company’s opportunities for growth and expansion. At the same time, markets in these developing countries have increased its monetary growth. As such, its financial position has been strong over the years, though sales has slightly fallen at times (Vault, 2021). However, there has been a growing inflation rate in the industry, and competitor companies have emerged strongly. In addition, companies such as Kobelco and Joy Global are gradually rising and claiming part of the market share.
The industrial sector promises growth through construction development and thus, the need for machinery continues to grow. This means that the company could continue experiencing development and financial growth periods in the industry. Based on the strengths of the SWOT analysis, Caterpillar Inc.’s position in business is stable. The company has built itself a strong brand image, and its products are built expertly, making them reliable (Vault, 2021). This helps the company maintain its market share. The company manufactures a wide range of products, which diversifies its line of business, giving it more opportunities to compete in the industry. Looking at its weaknesses, the company highly prices its products, and given the present economic situation caused by the Covid-19 pandemic, many businesses have been affected. As such, the company could lose a fraction of its market share to its competitors with better prices.
Regarding opportunities, Caterpillar Inc. has the opportunity to keep growing. New markets are emerging in developing countries, where construction, infrastructure and real property development are rising. The company could opt to exploit these markets by opening companies there, or benefit from international customers who are involved in these businesses. Threats that the company faces comprise rising competition from cheaper manufacturers, inflation, and slowed down business by the pandemic, political issues, suppliers, and new policies on climate change that discourage the use of natural gas, which could lower demand for mining equipment (Vault, 2021). However, these can be resolved by focusing on more stable markets as well as diversifying to include green energy field.

References

CAT. (2021). Caterpillar Inc. Mission, Vision & Values. https://www.comparably.com/companies/caterpillar/mission
Vault. (2021). Caterpillar Inc.
https://www.vault.com/company-profiles/auto/caterpillar-inc