The main aspects of Caterpillar’s strategy are to provide services and manufacture products of the highest quality. The company relies on efficiently using all available resources to achieve its goals and mission. Caterpillar has several goals that must be met within a specific time frame (Caterpillar Inc., 2022). Depending on how much time is allocated for a specific task, goals are divided into short-term and long-term goals. Short-term goals are envisaged to be achieved no later than three years. In some cases, such goals may serve as preparation for longer-term projects. In addition, the company places great emphasis on caring for the environment, so many goals are explicitly focused on reducing the harmfulness of production.
In addition to short-term goals, the company also has a number of long-term targets that need to be completed. Such goals include the design of all construction projects by energy and environmental standards. In addition, long-term goal also states the use of modern technology and innovation to improve the company’s products. Another long-term goal is to provide leadership in the safety of people working with the company’s products.
Influence of Merges and Acquisitions on Caterpillar Inc. Performance
The main motive for mergers and acquisitions of enterprises is the optimization of their management. According to Palmer (2019), mergers and acquisitions are the act of bringing companies together in order to stimulate their growth and increase market share. Such operations allowed Caterpillar to increase its market presence and sales significantly. These actions lead to the fact that companies are expanding their customer base and markets.
According to Macrotrends (2022), the Caterpillar merger for 2019 increased by 156.25% compared to the previous year and amounted to $0.041 billion. In 2020, the level almost halved to $0.025 billion, which is 39.02% lower than in 2019. In 2021, Caterpillar increased its M&A rate by 44% to $0.036 billion. Such mergers have a strong impact on the organization and how it builds its targets. They had a positive impact on the company’s performance as they opened up access to new technologies and opportunities through the acquired firms.
The Most Critical Merge
The most crucial merger that has had a beneficial effect on the company’s success can be called the acquisition of Bucyrus International Inc. This purchase cost Caterpillar $8.8 billion, making it the company’s largest acquisition (Zippia, 2022). This merger was beneficial as it brought in new customers and expanded the mining market. By combining the technologies of both companies, they could combine to make the equipment produced better and more efficient. The benefits of the merger included higher sales, lower product costs, and more excellent reliability through the use of Caterpillar engines and components in Bucyrus products.
Evaluating the Effectiveness of Caterpillar’s Operational Plan for Global Strategies
Caterpillar’s strategy combines global goals and plans with flexibility in how they are achieved. The transitional strategy of the company is to satisfy the consumer by providing him with the best product on the market. The organization strives for global integration and national responsiveness through a global strategy (Caterpillar Inc., 2022). This allows a company to use the same components and centralize production facilities, greatly facilitating logistical tasks. Global integration allows companies to increase production capacity through acquisitions of other firms (Grøgaard et al., 2019). However, this does not mean that all products are entirely the same. Depending on which market this or that product is going to, it differs in specific characteristics necessary for different regions. The company maintains a competitive advantage by allocating resources and customizing production for individual markets differently.
Conclusion
This paper helped identify Caterpillar’s key drivers and goals. Targets were analyzed both for the short term and the long term. They all correlate with each other forming a unified development strategy for the company. In addition, the company’s merger and consolidation operations were considered in detail. In the last three years, the level of merger operations has been dynamic and has not remained at the same level. Summing up, we can say that the company conducts successful financial activities, considering all its advantages.
References
Caterpillar Inc. (2022). Caterpillar’s strategy. Web.
Grøgaard, B., Colman, H. L., & Stensaker, I. G. (2019). Legitimizing, leveraging, and launching: Developing dynamic capabilities in the MNE. Journal of International Business Studies, 1-21. Web.
Macrotrends. (2022). Caterpillar net acquisitions/divestitures 2010-2022 | CAT. Web.
Zippia. (2022). 100 best manufacturing companies to work for in Wisconsin. Web.