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Caterpillar Tractor Company (CTC) is a large manufacturing firm headquartered in Illinois, USA. Its familiar \’CAT\” logo and yellow paint are known throughout the world. Indeed in its business, CTC has an estimated 37% of world market. Its closest rival, Japan\’s Komatsu has an estimated 15%. A multinational company CTC has manufacturing and dealer representatives throughout the world. The products, which the firm designs, manufactures and markets, can be classified into two basic segments:

Earth moving, construction and materials handling equipment-track type tractors, bulldozers, rippers, track and wheel type loaders, pipe layers, wheel dozers, compactors, wheel scrapers off highway trucks and tractors, motor graders, hydraulic excavators, long skidders, lift trucks and related parts and equipment.

Engines– for earth moving and construction machines on highways trucks, marine, petroleum, agricultural, industrial and electric power generation systems. Engines either, diesel or natural gas, have power ranges from 85 to 1600 horsepower or in generator set versions from 55 to 1200 kilowatts. Turbines range from 10 to 7,900 kilowatts.


CTC\’s market success is based to a great extent on its four-point product strategy. First, advances technology is incorporated into machines so that users derive optimal productivity and efficiency. To maintain the flow of product application the organization commits hundreds of millions of dollars each year to research and development. A second product guideline is quality. Within the last ten years several billion dollars have been spent on plant and equipment to ensure reliability in the hostile environments the machines endure. The third aspect of product strategy is to offer a full line of products. This implies machines capable of performing on job sites as small as a residential plot or as large as the Alaskan product line offers over 100 different machines within nearly infinite option/modifications. The fourth and final principle of the product strategy is to design and build only machines that can be produced on an assembly line, to take advantage of manufacturing expertise and efficiency of Caterpillar plant and to provide significant economies of scale.

Questions to be answered

  1. How important is new product development to Caterpillar?
  2. What sources of new product ideas might a company like caterpillar use?
  3. Evaluate CAT as a brand name.
  4. Evaluate each of the four points of CTC\’s strategy.




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