UOP Strategic Management Caterpillar Inc SWOT Analysis Research Journal Entry

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ZngglTert

Business Finance

University of Phoenix

Description

Strategic management includes an analysis of a business’s current state. Continuing with your research of Caterpillar, Inc., you will leverage the business SWOT tool to identify and drive organizational strategic decision making and evaluate problem-solving strategies for the company.

Review the Strategic Management Project Background document.

Create a Word doc and title it Strategic Management Research Journal Part 2.

Write a 350- to 525-word response to the following prompts in your journal entry:

  1. Conduct a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis of Caterpillar, Inc. Each SWOT quadrant must contain 7-10 items, (this is not included in the 525-word count).
  2. Analyze Caterpillar’s strengths and include specific examples based on your SWOT analysis findings.
  3. Evaluate the weaknesses and threats for any common themes that might be a risk.
  4. Compare Caterpillar’s weaknesses against its opportunities.
  5. Propose problem-solving strategies to address Caterpillar’s weaknesses or threats that could be mitigated by a business opportunity or business decision.

References: List a minimum of 2 references researched for this Journal assignment.


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Explanation & Answer

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Running Head: STRATEGIC MANAGEMENT RESEARCH JOURNAL: PART 2

Strategic Management Research Journal: Part 2
Student’s Name
Name of University or College
Course Title and Section
Instructor’s Name
Due Date

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STRATEGIC MANAGEMENT RESEARCH JOURNAL: PART 2

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Strategic Management Research Journal: Part 2
Caterpillar Inc.: SWOT Analysis
Strengths
As the largest manufacturer of construction equipment, Caterpillar Inc. has multiple
strengths that help it dominate its industry, including:


Strong brand image: The company is known for offering high-quality construction
equipment in all its global locations (Thompson, 2018).



Product innovation: Caterpillar Inc. continually develops new products to meet the varying
needs of its customers.



Large employee base: As of 2019, Caterpillar Inc.’s workforce consists of 103,400
employees (Statista, 2020). Additionally, the workforce is highly skilled as employees go
through rigorous training and learning programs.



Strong dealer community: Caterpillar Inc. has established a culture among dealers and
distributors where the dealers promote the company’s products and train the sales team to
explain to customers how they can fully exploit the equipment.



Dependable suppliers: The company has a dependable supplier base, enabling it to
overcome business process bottlenecks.



Mergers and acquisitions: Among its many praises, the company is known for integrating
complementary companies through acquisition and mergers. It has integrated a handful of
technology companies to standardize its operations and establish a dependable supply chain.



Accountability: The Company uses a strategy known as “Across the table” to enhance
accountability among its dealers (Caterpillar, 2015).

Weaknesses

STRATEGIC MANAGEMENT RESEARCH JOURNAL: PART 2


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Gaps in the product range: There are gaps in the company’s product range, and this can
give new competitors who are ready to provide a wider product range an upper hand in the
market.



High rate of attrition: Compared to other companies in its industry, Caterpillar Inc. has a
higher rate of attrition, meaning it has to pump more money into training and developing its
workforce.



Falling sales: At the close of the second quarter of 2020, the company announced a 31
percent decrease as its revenues dropped to $10 billion from $14.4 billion. The Company
reported that the decline resulted from lower sales volume due to reduced end-user demand
(Caterpillar, 2020).



Poor innovation: The Company’s investment in development and research is below its
competitors. Instead, it concentrates on improving existing equipment, leaving no room for
developing and introducing new equipment (Thompson, 2018).



High debt-to-equity ratio: The Company’s debt-to-equity ratio is shockingly high (258%).
Thus, it needs to constantly boost margins and make sure that cash flow can cover debts and
interest (Chamaria, 2017).



Europe accounts for most of Caterpillar Inc.’s revenues: Europe accounts for almost a
quarter of the company’s revenues. As such, an imminent crisis in the continent is always a
concern, and the occurrence of such can significantly impact the company’s top line
(Chamaria, 2017).



Problems with integrating some firms: The Company has had problems integrating other
companies with different work cultures.

Opportunities

STRATEGIC MANAGEMENT RESEARCH JOURNAL: PART 2


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Customer Preference for environment-friendly machinery: Customers in modern society
prefer purchasing natural-gas-powered vehicles (Dzombak, 2017), and this is an avenue that
the company can capitalize on.



Powerful acquisitions: After it acquired Bucyrus International, Inc. (Caterpillar, 2011), the
company now has a wider mining product range compared to its biggest competitor, Joy
Global. Thus, it can successfully grab a larger portion of the mining market.



Mining and construction opportunities: An increase in mining and construction activities
serves as an opportunity for Caterpillar Inc. to penetrate emerging markets.



New taxation policies: News taxation policies can positive...


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