What Would You Do? CAT Caterpillar Headquarters, Peoria, Illinois Caterpillar do

Question

What Would You Do? CAT Caterpillar Headquarters, Peoria, Illinois Caterpillar dominates the construction and earth- moving equipment industry, with $50 billion per year in revenues. However, Caterpillar has not been able to master the cyclical nature of its industry. When the heavy machinery industry booms, no one keeps up with demand, and everyone builds new factories and hires thousands of new employees. In- deed, Caterpillar doubled its workforce the last time global demand surged. But when the industry goes bust, factories are closed and tens of thousands of employees are laid off. What kind of dramatic swings does Caterpillar experience? A 43 percent spike in sales in April 2004 and a 52 percent decline in September 2009. Caterpillar's Doug Oberhelman had firsthand experience with an even larger sales swing in Argentina. He says, "We sold 1,200 ma- chines a year in Argentina in the late 70s. In 1981, 82, and '83, while I was there, we sold four total

Explanation / Answer

In an industry, upswings in sales or downturn is a routine matter. It happens to all industries without exception and quite often it has nothing to do with internal factors. It is the general economic or political environment that dictates sales graph. While external factors are prime and major industries are more susceptible to it, internal factors too affect sales figures. Failure to keep up with the market trend and demands, outdated features or specifications and poor after sales service may quickly result in sales down turn. At the same time constant upgrades, introduction of newer models, features and excellent country wide service centers would ensure upward swing in sales irrespective of external factors.

As the new CEO of Caterpillar, my prime objective would be to work and strengthen the core values of the company with priority over any other issue. A company can only survive and thrive on the basis of its products quality and service and there cannot be any compromise over this. I would therefore review the product line up, market trends and demands, competitors offerings and status of company's service centers before preparing the initial action plan. I would insist the R & D department of the company to constantly work out newer features for the existing models and work out to introduce a couple of new models every year at least.

Once the internal dynamics are worked out with regards to products, features, innovation and after sales service, my attention would be at the external factors. In an environment of economic downturn, the first casualty is the highly priced products. I would therefore work towards pricing our products at most competitive rates to avoid sudden sales drops. Depending upon the sales data of previous years, I would also ensure optimum inventory is maintained so as to avoid large unsold stock in an event of economic recession.

My attention will also be towards human resource the company has and would work with HR department to maintain necessary work force which is neither over staffed and nor deficient so as to ensure there are no layoffs in case of revenue loss.

The focus of my tenure as CEO will be to ensure stability in the company and resilience to overcome any issue that may happen due to internal or external factors. The prime motive would be not only to ensure profitability of the company but also to be humane, considerate and resist layoffs.

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