Caterpillar, Inc. is a global manufacturer of construction and mining equipment, machinery, and engines.

Caterpillar, Inc. is a global manufacturer of construction and mining equipment, machinery, and engines. Caterpillar (CAT) was founded during the early 1900s and has become a staple in the construction industry. The company has established itself domestically and internationally. Caterpillar is best known for its more than 300 machines, including tractors, forest machines, off-highway trucks, and underground mining machines. These products are provided under an array of brand names that include AsiaTrak, Progress Rail, CAT Financial, and CAT Logistics. From a technological standpoint, Caterpillar provides its customers with equipment to turn their inputs into final products.

Although Caterpillar has been a profitable company, this has not come without some hardships along the way. Caterpillar has to carefully consider its environment in order to understand the different factors that impact its operations. It has had some difficulty regarding its internal environment, facing difficulties with unionized employees. Multiple strikes occurred in various locations and warehouses in the 1990s when Caterpillar imposed cost-cutting devices that impacted employees. More recently, Caterpillar closed its Canadian plant after a worker strike and subsequent lockout. Caterpillar claimed that it is less expensive to move to the United States, but some questioned the ethics of such a decision.

However, the company has also worked to emphasize its commitment to employees and took efforts to support employees through different groups and networks. These include the African American Network, Armed Forces Support Network, Chinese Affinity Group, Korean Affinity Group, Women's Initiative Network, and Young Professionals of Caterpillar. The company also recognizes employee safety, and has worked in conjunction with employees to reduce all incidents for hours worked. CAT has established benchmarks and goals to aide in these attempts and has progressively decreased injuries over the past seven years.

To ensure a positive task environment CAT implemented its Worldwide Code of Conduct in 1974 and has since updated it to reflect current goals. This was to ensure ethical standards are met for customers, suppliers, and all stockholders. The vision strategy describes the strategic direction of the company and states the company's plans to achieve superior results and become a global leader through its exceptional team and impeccable product lines.

CAT has stated its plans to become more customer-focused and pledges to hold itself more accountable for results. It is working to establish a strong dealer network that helps it achieve all responsibilities to customers, employees, suppliers, and distributors. The company developed a Guiding Principles of the Caterpillar Production System to ensure crucial steps in manufacturing stages are followed. These include reducing waste and fixing defective products before they are placed into customer hands. CAT also uses Six Sigma to improve operations and manage process variations that lead to product defects. This method ensures the equipment is high quality, which produces positive relationships with customers.

Sustainability has become a large part of the company culture. Annually, CAT releases a Sustainability Report that informs all stakeholders of progress in this area. This reflects the sociocultural changes occurring among consumers as more show concern for sustainability. CAT created a "Certified Rebuild," which allows older machines to be rebuilt, as opposed to being discarded. This benefits CAT and the environment simultaneously. CAT has also attempted to reduce waste by recycling 87 percent of its operations and products. The company has set a goal to hold water consumption to a flat rate until 2020. The company's headquarters has also been LEED certified and has reduced overall energy consumption and greenhouse gas emission by 48 and 44 percent respectively.

One way that Caterpillar did not adequately monitor its global environment was in its acquisition of China's Zhengzhou Siwei. Caterpillar believed that acquiring the company would help it to gain a foothold in China's mining industry. However, Caterpillar did not look closely enough at the Chinese company's accounting practices. After purchasing the company, Caterpillar discovered accounting misconduct that forced it to write off $580 million (the company was acquired for $700 million). As the world's leading manufacturer of construction and mining equipment, Caterpillar is likely to bounce back from this disaster. However, in the future the company must exert caution when dealing with stakeholders and analyzing environmental forces.17

1.    Describe some of the challenges Caterpillar has faced in its internal environment.

2.    Describe how Caterpillar has attempted to create a positive task environment.

3.    What mistake did Caterpillar make in assessing its global environment in its acquisition of Zhengzhou Siwei?