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Caterpillar’s Strategy in Foreign Markets Case Study


Caterpillar Inc. (CAT) is the global leader in the manufacture of mining and construction equipment, industrial gas turbines, and diesel and natural gas engines. Caterpillar’s machineries are popular around the globe due to their efficiency in heavy commercial activities. Strategic decisions have enabled the company to conquer the market.

Caterpillar has operations in all six continents. The foreign direct investments of the company in these locations increase the company’s global presence. Caterpillar has a multi-country strategy that attempts to build the brand name of the company in foreign markets. The strategy strives to address the needs of the customers in these markets.

CAT strives to improve the company’s presence in foreign markets. The company is committed to providing high quality products that enable their customers to increase their productivity. High quality products provide the company with a competitive edge.

In addition, high quality products improve the company’s brand name and improve the trust and relationships of the company with its customers (Thompson, et al., 2011). Availability of funds provides the company with a competitive edge over its rivals. Acquisition is one of the major strategies that enable CAT to build its brand name. In addition, acquisition increases the product range of the company.

This increases the competitiveness of the company. CAT uses the strategic importance of a certain foreign market in determining the strategy that it would pursue in the country. In so doing, CAT takes into consideration the specific needs of the country. This enables the company to develop strategies that would enable the company to improve its presence in the markets.

China is one of countries that have a strategic importance in the future development of the company. Huge infrastructural development in the country provides a huge demand for the company’s products. Therefore, capturing this market would make the company reap huge financial rewards.

CAT has undertaken steps that would lead to the increase in the production of excavators in China. This would help in meeting the huge demand of the company’s products (Dugan, 2010). However, successful venture of the company in the market necessitates it address issues that face the Chinese society rather than enforcing the ‘American way.’ Marine and Petroleum customers are the major customers of CAT in Brazil.

The continued growth of the industries necessitates the company to increase its presence in the region. The recent discovery of a significant amount of gas and oil off the Brazilian coast guarantee the continued growth of the oil exploration industry in the future.

Development and expansion of Brazil’s petroleum reserves promise to increase the demand of CAT’s products significantly. This has spurred CAT to establish a local plant that is involved in the packaging of generator sets and diesel propulsion systems (Dugan, 2011). This plant would serve the needs of the marine and petroleum customers.

CAT also strives to increase its presence in developing countries. These countries have a huge potential for growth. In addition, the market of these countries is not saturated. On the other hand, the North American market is highly saturated. Therefore, this market has very limited growth potential.

Successful entry of the international market necessitates the company to take into consideration the specific needs of the market. It is extremely difficult use the same strategy in different markets.

However, the strategies strive to build a strong brand name through the manufacture of high quality products, which increase the customers’ profitability (Kotler & Kotler, 2012). Making sound strategic decisions enable the company to overcome stiff competition from other companies in the industry.

References

Dugan, J. (2010). Caterpillar to increase excavator production in China. Web.

Dugan, J. (2011). Caterpillar to package 3500 series engines in Brazil to support petroleum and marine customers. Web.

Kotler, P. & Kotler, M. (2012). Market your way to growth: 8 ways to win. Hoboken, NJ: John Wiley & Sons.

Thompson, A., Peteraf, M., Strickland, A. J. & Gamble, J. (2011). Crafting & executing strategy: Concepts and readings. New York: McGraw-Hill Companies.

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IvyPanda. (2019, August 21). Caterpillar's Strategy in Foreign Markets. Retrieved from https://ivypanda.com/essays/caterpillars-strategy-in-foreign-markets/

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1. IvyPanda. "Caterpillar's Strategy in Foreign Markets." August 21, 2019. https://ivypanda.com/essays/caterpillars-strategy-in-foreign-markets/.


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IvyPanda. "Caterpillar's Strategy in Foreign Markets." August 21, 2019. https://ivypanda.com/essays/caterpillars-strategy-in-foreign-markets/.

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IvyPanda. 2019. "Caterpillar's Strategy in Foreign Markets." August 21, 2019. https://ivypanda.com/essays/caterpillars-strategy-in-foreign-markets/.

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IvyPanda. (2019) 'Caterpillar's Strategy in Foreign Markets'. 21 August.

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