Caterpillar Inc.--Early 1990s
The assessment of opportunities and threats is the foundation upon which planners develop strategies. The Caterpillar case illustrates some of the problems associated with the identification of opportunities and threats, especially in a situation where previous successes are notable. Attempting to pattern long-term growth on the basis of previously valid assumptions is one of the classic dilemmas facing the strategic planner whether in consumer or organizational markets.
Why was Caterpillar able to meet Japanese competition and succeed while other major U.S. manufacturers failed? For example, what did Caterpillar do that the big three auto makers have not done?
While Caterpillar ignored the Japanese until eroding market share and huge losses forced the company to react, once started, the company made tough decisions quickly. In particular:
* Caterpillar cut prices to meet the prices being offered by competitors. The company sacrificed short-term profits to protect its market share.
* Caterpillar has always maintained its reputation as a producer of quality products.
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