Caterpillar Case: Marketing and Management

The Caterpillar, Inc. case provides an excellent example of how a company can compete effectively even in an adverse situation such as a market collapse. When the collapse hit, Caterpillar met the Japanese competition and succeeded where other U.S. firms failed by instituting a 22% cost reduction program, reducing and discounting prices, eliminating plant capacity, and switching to a just-in-time inventory system (Eckley 4-5). Caterpillar conserved cash by using "global sourcing to achieve lowest costs" and identifying "core" products that each plant could make instead of purchasing them outside (Eckley 5). Strategy changes included reversing the company's policy of "avoiding the purchase of finished machines for resale" and expanding its lighter product lines (Eckley 5). Caterpillar did something that the big three U.S. automakers have not done; it used "conservative accounting practices" that resulted in positive cash flow all through the crisis except in 1982 (Eckley 6).

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Category: Business - C