Caterpillar Corporation’s Strategy Evaluation

When it comes to Caterpillar Corporation, there are two main elements of its strategy. The first one is investments in technology, which produces great benefits. Essentially, the company can now promise its customers the most innovative machinery, tractors, and other products, which helps to differentiate it from a myriad of other businesses operating in the same industry. The second crucial aspect of Caterpillar Corporation’s strategy is data analytics. The company adopts data technology to collect and analyze a massive amount of business data.

As a result, instead of overly relying on personal experience and flawed predictions from experts, Caterpillar can now utilize its own datasets. On the one hand, such data is imperative to predict customer demand, identify possible issues with the machinery, plan the manufacturing of new upgraded models, and so on. On the other hand, it can be used to solve the smallest immediate problems to ensure the highest quality of the products and customer service offered by Caterpillar Corporation.

It is important to mention that Caterpillar is far from being the only company that employs this strategy. A great example is Tesla, which puts emphasis on collecting data from all of its vehicles. The cars are supplied with a sim that provides them with a wireless connection to Tesla’s corporate cloud. Adopting a data-centered strategy allows the engineers to design updated software according to the primary issues faced by Tesla owners, which are evident through the insights collected. Additionally, employing data technology ensures that the manufacturer can give the customer an option of various updates in software without the need to go to a dealership, which saves time and money. Another data-driven enterprise is Amazon, which has a large number of computer farms that collect crucial business data through machine learning algorithms developed specifically for online sales.

In terms of the bargaining power of suppliers, Caterpillar’s strategy is very advantageous as it ensures that the crucial business data is collected by the corporation itself. Owning the day sources makes the data exclusive and the products – harder to replicate. As for the bargaining power of buyers, it is unclear whether the company actually collects the data itself. However, it uses a separate data analytics firm, which can put it at a disadvantage if the data for analysis is not commoditized and needs a niche group of experts who are often hard to find.

In regards to the threat of new entrants and industry rivals, Caterpillar’s strategy allows the competition to remain relatively low as a small proportion of enterprises can both collect data and implement it directly into their business operations. As for the threat of substitutes, Caterpillar’s focus on technology and data allows it to make continuous changes and optimize the products regularly, which makes them harder to replace. The primary pitfalls include becoming overly dependent on IT, ensuring the customers’ private data is secure, and making changes to the organization’s culture to sustain innovation.

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