Swot Analysis Of Caterpillar

A SWOT analysis is a tool used by organisations to identify its internal strengths and weaknesses, but also the external opportunities and threats. Therefore, this allows the organisation to assess what can be used to aid in achieving their objectives, i.e., strengths and opportunities, as well as aspects that can be improved on or potential problems that can be faced, i.e., weaknesses and threats, as they pursue on achieving business objectives and/or decision making.

Explained S.W.O.T. Analysis:

a) Strengths

Caterpillar Inc. holds a very strong brand image worldwide that directly associates it with high quality products that they provide. In 2014, Caterpillar ranked as the number one brand in heavy equipment followed by a strong competitor,
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Hence, customers would feel more confident in their investment, knowing that their money would not be put to waste, especially as brand image is determined from the perception of existing, as well as, potential customers. Apart from the product aspect, Caterpillar also hold a strong brand image regarding its corporate social responsibility. That it strives to have zero accidents as well as creates products that benefit the environment. Additionally, Caterpillar holds a large portfolio of products. This supports the firm in catering for a wider range of customers and their needs accordingly. As a result of the recent acquisition of Bucyrus, Caterpillar was able to complete its range of mining products that it needed to compete with Joy Global, Komatsu Ltd., etc, as seen in Fig. 1. Furthermore, Caterpillar offers an excellent and extensive dealer service that is standardised around the world. For example, Monark CAT, the dealership in Philippines offers online ordering of equipment parts, as well as the rental store and product support which can be compared to Trakindo, in Indonesia and even in Quinn CAT in Central and Southern California and to be seen offer the same
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lacks solidified connections with firms in emerging markets. For instance, after entering the Chinese market, the firm has not been successful in gaining market share, but instead started losing market share due to many local companies grabbing sales, such as Sany Heavy - the principal rival of CAT in China, hence only contributing 3% to CAT’s worldwide sales. Due to CAT’s objectives, they could be less competitive with prices, as locally produced goods — those by Sany Heavy or Siwei for instance — are less costly and hence cheaper for customers, whilst CAT persist on delivering premium products. Thus, the lack of connections or partnerships and alliances with local companies make it more difficult for CAT to successfully earn revenue. In the United States, CAT is reliant on the real estate housing market to ensure revenues. After the US subprime lending crisis in 2008, that took a toll on the earnings of CAT from heavy equipment, CAT still relies on the construction industry as one of its main revenue streams, as seen in fig. 2. A point can be made that if Caterpillar doesn’t rely more on other revenue streams such as its financial products, a downturn in the real estate market can damage CAT’s earnings