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).
A SWOT analysis of Caterpillar's marketing and management practices shows that its marketing strengths include branding itself as a "leading global manufacturer of off-road trucks, tractors and other multi-terrain vehicles" ("Caterpillar Brand Profile"), and its weaknesses include its marketing mix, which resulted in lower retail sales in every marketing region due to failure to adjust to fluctuations in coal mining ("Caterpillar Inc.(8K"). In management, its strengths include its flexibility to change as market conditions change, as when it reorganized and when it responded appropriately to economic conditions; its weaknesses include its poor handling of the 1991 strike, after which it "has not been able to regain workers' trust" (Pitterle & Paul 5).
In its mature industry, Caterpillar is already capitalizing on the demand for construction of large infrastructure projects but needs to focus on "emerging markets as a critical succes...