Strategic Management: Operations Analysis of Caterpillar Company

This report provides a comprehensive analysis of Caterpillar's operations management. It begins with an examination of the internal environment, including a SWOT analysis, VRIO analysis, and an assessment of the company's strategic capabilities. The report then delves into the external environment using a PESTLE analysis to identify political, economic, social, technological, legal, and environmental factors impacting the business. A stakeholder analysis identifies key stakeholders and the issues they face. The report further investigates major corporate social responsibility (CSR) issues and current CSR activities undertaken by Caterpillar. Finally, it discusses the balance of intended and emergent approaches in Caterpillar's strategic management, outlining their advantages and disadvantages. The analysis incorporates multiple academic sources to support its findings.

Running head: OPERATIONS MANAGEMENT
OPERATIONS MANAGEMENT
Name of the student
Name of the university
Author note

1OPERATIONS MANAGEMENT
Table of Contents
1. Analysis of Caterpillars...................................................................................................................................2
Task 1..............................................................................................................................................................2
1.1 Internal environment and the Strategic capabilities of Caterpillars..........................................................2
1.1.1 SWOT Analysis.................................................................................................................................2
1.1.2 VRIO of Caterpillars..........................................................................................................................3
1.1.3 Analysis on the strategic capabilities.................................................................................................4
1.2 External environment of Caterpillars (Macro- environmental analysis)...................................................5
1.2.1 PESTLE analysis................................................................................................................................5
Task 2..............................................................................................................................................................6
Stakeholder analysis of the organization.....................................................................................................6
Issues faced by the organization.................................................................................................................7
Task 3..............................................................................................................................................................9
Major CSR issues........................................................................................................................................9
Current activities undertaken by the organization for developing CSR...................................................10
Task 4............................................................................................................................................................11
Balance of intended and emergent approaches.........................................................................................11
Advantages and disadvantages of the balance of intended and emergent approaches.............................12
References.........................................................................................................................................................14

2OPERATIONS MANAGEMENT
1. Analysis of Caterpillars
Task 1
1.1 Internal environment and the Strategic capabilities of Caterpillars
1.1.1 SWOT Analysis
Strengths
 Brand name of the organization
 Significant investments made in the R&D
operations
 Enhanced performance of the CAT financial
division
 Strong relationship with dealers and suppliers
has assisted the business in maintaining the
efficiency of the operations (Boulouta and
Pitelis 2014)
Weaknesses
 Diminishing rate of revenues and profits
 Issues in the inventory management and
turnover of the same
 The organization also has certain levels of
Debt obligations
 Increasing cost of labor and operations
Opportunities
 Open opportunities for market expansion in
the developing economies
 The rising demand of the renewable energy
markets
 The growing rate of urbanization
Threats
 Market volatility might affect the operations
of the business in the different regions
 Maximization of costs due to the growing
economic tension n between US and China
(Jiraporn et al. 2014)
 Growing rate of competitors in the market
The SWOT assessment helped in identifying the different capabilities and competencies of the
organization. The major strengths of the concerned organization is based on the fair rate of investments made

3OPERATIONS MANAGEMENT
by the same in the R&D initiatives. The developments in the R&D operations have helped the concerned
organization in supporting the continuous innovations in the processes (Casey and Grenier 2014). On the
other hand, the diminishing rate of revenues and profitability along with the maximization of the operational
costs has affected the capabilities of the concerned organization in upholding the efficiency of the operations
in accordance to the needs of the business.
1.1.2 VRIO of Caterpillars
Resources Valuable Rare Inimitable Organized
Competitive
Advantage
Supply Chain
Flexibility
Yes Yes,
Organized
supply chain
of the
organization
No,
The
competitors
also have
flexible
supply chains
Yes,
Organized
supply chain
and inventory
management
systems
Uninterrupted
operations of
the business
Financial
Resources
Yes No,
Equal
financial
position of the
organization
in the volatile
markets
No,
Higher level
of market
volatility and
liquidity is
also applied
to the
different
competitors
Yes,
Company
holds a
sustainable
financial
position
Partial
Competitive
Advantage
Brand
Positioning
Yes No,
Brand
positioning
structure is
lucid and
adapted
No,
The
marketing and
positioning
activities of
the concerned
organization
is easily
imitable
Yes,
the firm
positioned the
brand
depending on
the
assessment of
consumer
behavior
Partial
Competitive
Advantage
Marketing
Expertise of
Caterpillar
Yes No,
Builds on the
marketing
expertise
based on the
assessment of
demand
which is done
No,
Competitive
pricing
strategies are
undertaken by
the concerned
organization
which is
Yes,
the firm
heavily
depends on
the in- house
capabilities of
the same in
managing
Temporary
Competitive
Advantage

4OPERATIONS MANAGEMENT
by moist of
the
competitors
subject to
imitation
marketing
operations
Access to Raw
Material
Yes Yes,
Organization
holds a
dominating
position in the
market and
thereby have
greater access
to raw
materials
No,
Might be
imitated by
competitors
due to the
continuous
supply of raw
materials
Yes,
high access to
raw materials
through
positive
relationship
with the
suppliers
Sustainable
Competitive
Advantage
Market
Presence
Yes Yes,
The
organization
holds global
and local
market
presence,
which is rare
No,
Imitation
might be done
by the
competitors
on the basis
of huge funds
Yes,
The
concerned
organization
is diversified
holding local
and global
presence
Strong
Competitive
Advantage
Brand
awareness
Yes, Yes,
The brand
awareness
strategies that
are utilized by
the
organization
are rare,
which has
helped the
same in
gaining a
competitive
edge over the
other players
Yes,
Brand
reputation and
awareness
cannot be
imitated
Yes,
Caterpillar
utilized the
leading
brands for
attracting the
attention of
the target
customers
towards their
propositions
Sustainable
Competitive
Advantage
1.1.3 Analysis on the strategic capabilities
The different developments that are made by the concerned organization has helped the same in
maintaining the efficiency of the operations i0n accordance to the sustenance related needs of the same. The
R&D related operations and the continuous improvements in the processes have helped the business in

5OPERATIONS MANAGEMENT
developing resources for gaining a competitive edge. Moreover, the market dominion of the business has
contributed to its operations through greater accessibility to the raw materials. The local and global presence
of the organization and the diversified range of product offerings have provided the organization with a
sustainable edge. However, the volatility in the markets has affected the capabilities of the concerned
organization in facilitating the uninterrupted operations of the same. The US- China economic tensions have
also contributed to the issues that are faced by the concerned organization (Jamali, El Dirani and Harwood
2015). Therefore, the development of the different resources of the organization has incapacitated the same
while enhancing the resource- based operations.
1.2 External environment of Caterpillars (Macro- environmental analysis)
1.2.1 PESTLE analysis
Political
 The development of the free trade regulations
in most of the developing economies has
helped the concerned organization in making
an extensive market expansion (Story and
Neves 2015)
 The minimization of the tax rates has
supported the growth and expansion of the
organization in the different developing
economies.
Economic  The increasing volatile market structures have
affected the capabilities of the concerned
organization in locating potential customers.
 The growing economic tension between
China and US has affected the capabilities of
the organization in facilitating mass
expansion (Tingchi Liu et al. 2014)
 The maximization of the fluctuations in the
market and the greater costs of operations has
affected the capabilities of the organization in
supporting the growth of the same in the
diverse markets (Wang, Dou and Jia 2016).
 The modification in the commodity prices
and the lower potentiality of the customers
has affected the revenue streams of the
organization while operating in diverse
economies.
Social  Increasing population rate and the
development of different emerging
organizations, the market has facilitated the

6OPERATIONS MANAGEMENT
growth and expansion of the concerned
organization in the different markets.
 The Safety standards that are assured with the
products has helped the concerned
organization in gaining a competitive edge
over the other players in the market while
attracting the attention of the potential
customers towards the offerings
 The community- based operations that are
undertaken by the concerned organization
supported the mass- marketing initiatives of
the same in order to facilitate the smooth
functioning of the systems. The development
of diverse range of CSR activities has helped
the concerned business in attracting the
attention of the potential customers
(Chaudhri 2016)
Technological  The development of the digital technologies
has helped the concerned organization in
enhancing the marketing operations of the
same for ensuring better expansion and
growth in the different markets
 It has been noted that more than 79% of the
areas where the organization aimed at holding
operations have an access to diverse range of
internet services (Story and Neves 2015).
The better accessibility to the internet
services has helped the concerned
organization in maintaining the proficiency of
mass media marketing operations.
 The growing trend of automation and the
implementation of robots in the
manufacturing process will be helping the
concerned organization in enhancing the
productivity (Farooq et al. 2014). On the
other hand, the implementation of the robots
in the organizational processes will assist the
venture in gaining a competitive edge through
enhanced quality of the products.
Environmental  Diverse range of stringent environmental
regulations might affect the uninterrupted
functioning related objectives of the business
Legal  The concerned organization might
face ,different issues relating to the legal and
regulatory aspects of knowledge
management. On the other hand, the
concerned organization does not have a
flexible structure, which has affected the

7OPERATIONS MANAGEMENT
capabilities of the same in maintaining the
efficiency of the operations in the diverse
economies.
Task 2
Stakeholder analysis of the organization
The major stakeholders of the concerned organization are employees, managers, owners, creditors,
suppliers and customers. Kim (2014) stated that the stakeholders of an organization play a key role in the
management and operations of the business.
Stakeholders of the organization Role of the stakeholders
Managers Supervises the different departments and reports the
progress made by the same while achieving the common
objective of the business
Owners Develops strategy through the assessment of the market
position and customer needs
Creditors Provides capital for the organization to enhance the rate of
R&D operations of the same
Suppliers Supplies raw materials to the organization for upholding
the uninterrupted functioning of the processes with the
aim of achieving the common goal of the business
Customers The customers of the organization play an important role
among the stakeholder as the organization develops the
products in accordance to the needs of the same. On the
other hand, the customer also provides feedbacks to the
organization for enhancing the suitable development of
the offerings.
Employees The employees operate in adherence to the needs of the
organization and significantly contributes to the processes
that are designed by the hierarchy of management for

8OPERATIONS MANAGEMENT
gaining a competitive edge
Issues faced by the organization
The concerned organization also faced different issues relating to the stakeholders, which has affected
the flow of operations. In this relation, the concerned organization must identify the issues that are faced by
the same in order to incorporate mitigation strategies for future course of actions. The identified issues of the
organization are being discussed in the following section.
Lack of suitable communication among stakeholders
The major issue that is faced by the stakeholders is based on the lack of suitable communication
among the same. Casey and Grenier (2014) stated that communication among the stakeholders assist an
organization in upholding the efficiency of the operations in adherence to the common goals. In this relation,
the lack of suitable communication between the employees and the respective managers or supervisors might
affect the collaborative functioning of the workforce towards the common goal of the business. Moreover,
the lack of suitable communication between the different departments might affect the uninterrupted
functioning of the processes. On the other hand, the lack of proficient communication of the organization
with the customers has affected the capabilities of the same in bringing forth improvements in the existing
processes. Therefore, communication might be taken as one of the primary issues that are encountered by the
concerned organization while maintaining the efficiency of the operations.
Lack of stakeholder engagement in the processes
The secondary issue that is encountered by the organization related to the stakeholders are dependent
on the lack of suitable involvement of the same in the different processes that are designed by the venture.
Boulouta and Pitelis (2014) stated that the lack of stakeholder engagement affects the capabilities of an
organization in facilitating changes in the processes. The changes that are planned by the concerned
organization are dependent on the assessment of the market trends and the changing preferences of the
customers. Therefore, the lack of suitable stakeholder engagement in the processes of the concerned
organization affected the potentials of the same in forging different modifications based on the requirements

9OPERATIONS MANAGEMENT
of the customers. On the other hand, the collaborative functioning of the stakeholders assists an organization
in upholding the efficiency of the operations in accordance to the needs of the customers. In this relation, the
concerned organization faced different issues relating to the lack of proficient communication.
Fluctuations in the economy and creditors
The fluctuations in the market and the lower revenue earned by the concerned organization has
affected the trust and confidence of the creditors. The creditors provide the organization with the capital
through which the business maintains the efficiency of the operations. in this relation, the lack of trust and
confidence among the creditors has affected the capabilities of the organization in undertaking uninterrupted
operations. Tingchi Liu et al. (2014) sated that the creditors provide the concerned organization with the most
important resources which helps the same in maintaining the efficiency of the operations. Therefore, the loss
of trust and confidence of the creditors might affect the capabilities of the organization in forging different
developments and innovations.
Task 3
Major CSR issues
The CSR activities that are undertaken by the organization helps the same in supporting the
sustainability of the same in diverse market environments. The development of the different strategies has
helped the organization in maintaining the efficiency of the operations in accordance to the needs of the
customers. Chaudhri (2016) noted that the CSR related issues that are faced by organizations has challenged
the sustenance related options of the same. In this relation, the concerned organization Caterpillar (CAT) has
faced different CSR related issues that has affected the competitive edge of the business. The section will
delineate the issues that are faced by the organization in order to identify the future modifications that might
undertaken by the same.
 Accusation of Tax Frauds- Kim (2014) noted that Caterpillar has been avoiding taxes and did not
comply with either U.S. tax law or U.S. financial reporting rules. The accusation affected the brand
name of the organization apart from the lower social contributions made by the same. The
investigation report on the company’s tax avoidance was not publicized. On the other hand,

10OPERATIONS MANAGEMENT
Filatotchev and Stahl (2015) noted that in the year 2014 it was found that the organization avoided
tax bills amounting to $2.4 billion over the last 13 years, which was moved to the earnings of a Swiss
subsidiary. The unethical activities of the organization affected the interests of the government and
the communities. On the other hand, the tax related fraudulent activities that were undertaken by the
business affected the brand name of the same.
 Degrading stock value due to fluctuations in the oil price- The degradations in the stock value of
the organization due to the US- China conflicts and the degrading oil prices has affected the revenue
streams of the business (Wang, Dou and Jia 2016). On the other hand, the degradations in the
revenue streams has affected the capabilities of the organization in attracting the attention of the
investors and credit providing institutions, which incapacitated the R&D operations of the venture. It
has been reported that the concerned organization recovered from the US- China Trade war losses
while quoting $158 per share, which was only 10% below the pre-trade situations (Drucker 2017).
However, the slowdown in the market relating to the dropping price of Oil has degraded the share
quotes by 24% amounting to $121 per share (Drucker 2017). The degradation in the price of the
shares has affected the capabilities of the concerned organization in attracting the attention of the
potential investors towards investing on the different research activities.
 Environmental issues and stringent policies in the nations- The concerned organization faced
numerous issues relating to the lack of suitable emission free technologies. Therefore,; the concerned
organization aimed at developing Advanced Combustion Emissions Reduction Technology (ACERT)
which aimed at reducing the rate of emission while following the legal guidelines. The establishment
and introduction of ACERT has helped the organization in gaining a competitive edge in the markets
(Jamali, El Dirani and Harwood 2015). However, the stringent environmental regulations mostly in
the European Union (EU) have affected the capabilities of the concerned organization in maintaining
the efficiency of the operations in accordance to the needs of gaining a sustainable edge (Wang, Dou
and Jia 2016). The development of the relevant technologies has helped the organization in
modifying the operations. However, the stringent environmental regulations in most of the countries
have affected the capabilities of the organization in gaining a competitive edge.

11OPERATIONS MANAGEMENT
Current activities undertaken by the organization for developing CSR
The different sustainability based activities that are undertaken by the concerned organization has
helped the same in maintaining the efficiency of the operations that are undertaken by the same. However, it
has been noted that the concerned organization encountered different issues relating to the CSR activities.
Therefore, the current operations that are undertaken by the concerned organization have helped the same in
maintaining the efficiency of the CSR activities. The section will enumerate the different initiatives that are
undertaken by the business for developing the CSR priorities of the same.
 Certified Rebuild- The concerned organization, CAT, has taken steps to stimulate the “Certified
Rebuild” program with the aim of preventing the older machine from being discarded through
rebuilding the same (Filatotchev and Stahl 2015). It has helped the concerned organization in
reducing the rate of energy consumption by 50-60%, which has helped the organization in adhering to
the environmental conservation related needs (Chaudhri 2016). On the other hand, the Recycling
process that is being undertaken by the concerned organization has helped the same in reducing the
costs of operations resulting to economic sustainability for the business venture.
 The 2020 sustainability goals of the organization- The concerned organization has taken steps to
develop their operations through the establishment of the LEED project, which aimed at creating a
benchmark of sustainability related to energy conservation. The LEED (Leadership in Energy and
Environmental Design) aimed at designing the operations of the business in accordance to the green
standards (Boulouta and Pitelis 2014). The different aspects of change in the organizational
operations will support the enhancement of the brand name.
 Emission free products- The concerned organization aimed at developing a partnership with
Tenneco, Inc. in order to develop reengineered products, which will create less or no emissions. The
concerned organization developed a Clean Emissions Module (CME), which will aim at installing
ACERTTM engines (Kim 2014). It will support the needs of the organization in adhering to the
stringent environmental regulations that are imposed by EU.

12OPERATIONS MANAGEMENT
Task 4
Balance of intended and emergent approaches
The intended approach of strategy formation is based on the assessment of the long term needs of the
venture in order to maintain the sustenance of the same. Chaudhri (2016) stated that the intended approach
of strategy formation helps an organization in foreseeing the future needs of the same. In this relation, the
concerned organization has taken steps to develop different environmental protection related programs and
policies for developing the CSR activities of the same. Moreover, the development of the environmental
protection activities has helped the concerned organization in maintaining the efficiency of the CSR activities
of the same while operating in diverse international markets. Wang, Dou and Jia (2016) stated that the
intended strategy formation steps that are undertaken by the organizations are dependent on the smooth
functioning of the systems in accordance to the needs of the customers. For an instance, the development of
the certified rebuild initiative by the organization is one of the intended approaches of strategy formation,
which helped the business in maintaining the efficiency of the operations in accordance to the conservation
related needs of most of the nations. On the other hand, the development of the program has also helped the
business in adhering to the stringent environmental legislations that are developed by the nations.
The emergent strategies are based on the different contingent situations that emerge while an
organization operates in diverse markets. Drucker (2017) stated that the emergent strategies helps an
organization in maintaining the efficiency of the operations in accordance to the needs of the same in
adhering to specific market environments. On the other hand, Wang, Dou and Jia (2016) noted that the
emergent strategies helps an organization in developing different modifications in the organizational
operations through the delineation of the emerging opportunities and challenges. In this relation, the
concerned organization has taken steps to develop potential product offerings in order to sustain in a volatile
market structure. The diversification of the products that are developed by the organization has helped the
same in maintaining a steady revenue stream in the context of oil price degradation and the US- China trade
war (Chaudhri, 2016). The development of a diverse range of product offering apart from the oil diggers
will be helping the same in supporting its sustenance while operating in the global scenario. The

13OPERATIONS MANAGEMENT
development of the emergent strategies helps an organization in maintaining the efficiency of the operations
in accordance to the changing market scenario.
Advantages and disadvantages of the balance of intended and emergent approaches
The balance in the approaches of the intended and emergent approaches of strategy formation will be
helping the concerned organization in maintaining the efficiency of the operations in accordance to the needs
of the customers. The major advantage of balance in the intended and emergent approaches is based on the
change readiness of the organization in diverse market conditions. In this relation, the approaches will
support the sustenance of the concerned organization while operating in volatile markets. Casey and Grenier
(2014) stated that the diverse range of activities that are undertaken by the organizations are based on the
long term and short term objectives of the same. Therefore, the enumeration of the intended approach of
strategy formation helped the concerned organization in developing its resources in accordance to the
environmental protection related needs of the same. On the other hand, the emergent approach assisted the
concerned organization in developing the activities while adhering to the volatility in the markets and the
US- China trade conflict. Therefore, the combination and balance in the intended and emergent approaches
of strategy formation has helped the concerned organization in ensuring the sustainability of the same. On the
other hand, the major disadvantage of the strategy is based on the lack of proper identification of the possible
steps that might be undertaken by the concerned organization for adhering to the strategies. Farooq et al.
(2014) stated that the lack of suitable design of the activities might affect the capabilities of an organization
in developing their resources in adherence to the needs of the same.

14OPERATIONS MANAGEMENT
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15OPERATIONS MANAGEMENT
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