Caterpillar (CAT) Case Study

Read the Caterpillar Case Study on Page 350 and answer the questions at the end on page 351. Update the information from externals sources.From your research explain how you see the Service Quality Model from the text (pg 373) being applied by Caterpillar. Give example(s) and references.
Everywhere you see a construction site, a home being constructed or torn down, or new roads being paved for accesses to these construction sites, you will most likely some type of Caterpillar equipment there. Simply take a ride down Kamehameha or Farrington highways and you will see many different types of equipment form CAT including excavators, bulldozers, and even huge storage areas and generators.
According to Yahoo Finance, CAT had income revenue of $55 million in 2014. Compared to 2013, had a little less in revenue, but looking at 2012, income revenue decreased about $10 million from $65 million (Yahoo Finance). During the recession of 2009, CAT along with everyone else in the world experienced a decrease in sales or income revenue. For example in 2008, sales for CAT were $51 billion, but dropped considerable to $32 billion in 2009 (Keller).
What were some of the key steps that led to Caterpillar’s becoming the industry leader in earthmoving machinery?
During the 1980s, CAT faced some major challenges that affected their company and almost led them to bankruptcy: The recession of the early 1980s and the lengthy strike from the United Auto Workers. In the 1990s, CAT finally realized they needed to make changes in many areas including leadership. * CAT challenged the United Auto Workers and withstood two strikes and seven years of disagreements. This was a great success for CAT and showed they were willing to fight for their company at any cost. * Decentralizing and restructuring the company into business units and making them responsible for their own budgets and profit and losses were a great idea. Although these business units may interact with each other, they were only responsible for their areas. * Investing $1.8 billion in factory modernization was genius. Using new technology and automating where needed increased efficiency and allowed focus in more difficult areas that required more time for decision-making. This though had a downfall and that was laying off workers because the automation now did the work of a physical person. * As always, a company cannot increase at all or very little without investing in research and development. How else will you know what the new technologies are or what competitors are doing to be successful? Research and development proved to pave the way for CAT to become the number one or number two company in every industry (Keller 2012).

Discuss Caterpillar’s future. What should it do next with its product line? Where is the future growth for this company?
These changes helped CAT realize what they have sought to do with this company. Make it competitive today and remain strong in the future. Today, CAT puts $2 billion annually into R&D and develops new products every year (Keller). They also are focusing on being environmentally friendly and lowering emissions in their engines; an incredible feat considering what these machines require to keep them operating at a high level. Going green will definitely have positive results for CAT. With this company working mostly overseas in approximately 200 countries, CAT will need to continue to invest in the emerging countries that are entering the market (Keller 2012).
When looking at the possible gaps in the service quality model and the great success CAT has had since the 1990s, it is difficult to see that they don’t meet customer expectations today. Even during the early years of CAT when they were sought for their tractors with the track wheels, it was probably obvious that they would eventually grow and become successful. Using the wheel tracks during WWI and WWII was huge in my mind, and I could envision this being the start of something great if I were an innovator.
What I find interesting and shows CATs dedication to its customers is the online training they provide, not only for their employees, but for customers to view and learn more about what the company strives to do for one of their most important assets, the customers. CAT delivers their service with pride.
Another area that seems to cover the gaps that could occur according to the service quality model is the visitor center at CAT. According to reviews from visitors, this center is geared to customer service and sales, but is still a great place to see new products offered, including the huge 797 truck (CAT Reviews). Even as a young boy, I used to get these trucks, excavators, and bulldozers as Christmas gifts, and even as toys, these vehicles are monstrous and enjoyable to play with, especially at the park that had the huge sand dunes.

Caterpillar, (2015). Dealers and Customers. Retrieved April 5, 2015. http://www.caterpillar.com/en/company/dealers-customers/cat-university.htmlTripAdvisor, (2015).
CAT Reviews. Retrieved April 4, 2015. http://www.tripadvisor.com/Attraction_Review-g36538-d3518803-Reviews-Caterpillar_Visitors_Center-Peoria_Illinois.html
Philip Kotler and Kevin Lane Keller, (2012), Marketing Management, Global Edition. pp 373-375, 396.
Yahoo Finance, (2015). CAT Income Statement. Regtrieved April 4, 2015. http://finance.yahoo.com/q/is?s=CAT+Income+Statement&annual