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Catepillar Case


The company can now change production levels with a week's notice where it uses to take six months at the height of its 1980's crisis. Manufacturing time has fallen 75% in1997. Cat is now realizing faster production and Fites is able to slash inventories. He no longer has long order backlogs, dealer inventories on the books, and Fites refuses orders of more than three months in advance.
             A second strategic analysis found that Caterpillar was getting hurt on price and because their models had changed very little compared to key Japanese competitors. Newer competitors had begun to differentiate themselves based on providing product line extensions with varying product features.
             Mr. Fites sought to differentiate Caterpillar's products by introducing products that enhance construction efficiency while representing basic product line extensions or adaptations of Caterpillar's manufacturing and design capabilities. By aggressively redesigning the manufacturing system, Cat broadened its products. In the last two years, they have introduced 90 offerings; some all new, some well targeted fine extensions that enhance construction site efficiency and capabilities in specific construction tasks. .
             A third strategic analysis showed Caterpillar being affected by currency fluctuations, by development opportunities outside the U.S. and cyclical downturns, and labor costs in the U.S. versus overseas markets.
             Mr. Fites chose to focus on selected national markets where establishing incountry plants and distribution provide cost advantages while allowing potential synergy across global markets in selected product offerings. With a recession ending at this time and coupled with reduced costs help to restore Caterpillar's finances. Mr. Fites chose to explore new markets where he focused on Asia, where infrastructure development created huge demand. In addition, markets in Latin America, Central Europe, Russia and other former Soviet states.


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