Background
Goalsetting is vital for any business that strives to be as successful as possible, as it allows the company to map out its strategy and determine key performance indexes to evaluate its progress. While long-term goals usually refer to more general achievements and summarize the company’s main direction, short-term goals are focused on specific milestones that need to be reached in foreseeable future. Thus, one can say that Caterpillar, Inc.’s long-term goal is to grow the company’s profitability and sales via strategic planning and managerial measures to strengthen its market position (Caterpillar, 2018). Moreover, the company strives towards sustainability and meeting customers climate-related objectives (Caterpillar, 2018). The short-term goals of the business are determined by these intentions and include: reducing workplace injury rate, facilitation of industry health and work safety, implementation of water management strategies, and increasing revenue from remanufacturing sales (Caterpillar, 2018). Overall, it can be concluded that Caterpillar, Inc. has taken the direction towards building a more eco-friendly and customer-oriented approach.
The Role of Merges and Acquisitions in Caterpillar, Inc.’s Performance
Merging with or acquiring other companies is a competitive strategic tool that can help an organization to grow and expand on the market. According to Crunchbase (2022), Caterpillar, Inc. has acquired a total of 33 companies from the beginning of its history up until today, with the latest acquisition – Tangent Energy Solution – occurring in 2022. The acquired companies play a vital role in the Caterpillar, Inc.’s operations and production capabilities, as they supply products in areas adjacent to the organization’s main field. For example, the acquisition of Weir-Oil and Gas Division, which was part of Caterpillar, Inc.’s supply chain, allowed the company to reduce the costs of fuel and gas, as well as to secure their constant supply. Moreover, according to general manager of Caterpillar Oil and Gas Dave Dunlevy, acquisition of Kemper Valves & Fittings Corp provided the expansion of existing array of Cat® well service products (Pullen, 2017). Thus, one can say that by acquiring new companies, Caterpillar, Inc. works towards increasing their portfolio and securing its production operations and supply.
Most Critical Merge/Acquisition for Caterpillar, Inc.’s Performance
The company Marble Robot, that was acquired by Caterpillar, Inc. in 2020, can be considered its most effective strategic move as of late. According to Caterpillar, Inc.’s (2020) website, “it plans to leverage the deep expertise of the new team to bring scalable solutions to meet the changing needs of construction, quarry, industrial and waste industries” (para. 1). The technology and human resources provided by Marble Robot became an invaluable asset for the company, as it has been lacking specific solutions and innovations to secure further growth and sustainability. The World Construction Today website (2020) reports that “Caterpillar intends to leverage the team’s fully integrated on-board autonomy technology – including perception, localization and planning – to continue delivering more productive and cost-effective solutions to customers” (para. 3). Subsequently, the introduction of more innovative production means allowed the company to reach better profitability in the following years.
The Effectiveness of Caterpillar, Inc.’s Operational Plan for Global Strategies
Seeing as the company has been overall successful in achieving its goals, one can say that its operational plan is rather effective. 2021 has shown a significant growth in revenues and sales after the market crisis of 2020, when the pandemic was in its prime – $51.0 million against $41.7 million (Caterpillar, 2022). The company was also able to increase their profits: the operational profit rose to $6.9 million in 2021 as opposed to $4.6 in 2020, and the profit per share showed an exceptional growth too (Caterpillar, 2022). In all areas of company’s operations, the demand increased, and the company performed well both in domestic and foreign markets. According to Caterpillar (2022), the business experienced “growth in services driven by customer-focused solutions such as Customer Value Agreements, Prioritized Service Events and customized repair and rebuild offerings” (para. 5). This is a direct result of Caterpillar, Inc.’s global operational plan which highlights its effectivity in the long run.
References
Caterpillar. (2018). 2030 sustainability goals. Web.
Caterpillar. (2020). Caterpillar announces acquisition of Robotics expertise. Web.
Caterpillar. (2022). 2021 Annual Report – performance at a glance. Caterpillar. Web.
Crunchbase. (2022). Caterpillar – funding, financials, valuation & investors. Crunchbase.
Pullen, S. (2017). Caterpillar acquires Kemper Valve & Fittings Corp., expanding Cat® well service suite of product offerings. Caterpillar.
World Construction Today. (2020). Caterpillar acquires Robotic Specialist Marble Robot Inc. World Construction Today.