Analysis of Operations and Threats of Caterpillar Inc

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Caterpillar Inc, s popularly known as CAT in investment circles, is a manufacturing behemoth with varied product groups and services and presence in a multitude of industries such as construction, mining, power, infrastructure, and so on. It is one of the leading industrial machinery and equipment manufacturing machinery Company in the world. The company has a significant presence in other sectors also through its group services
-CAT Financial, Caterpillar Remanufacturing services, CAT Logistics services and others. Earth moving equipments form the biggest segment in terms of revenues, contributing 15.3%, followed by excavation (13.8%), mining (12%) and turbines (10%)(Seeking Alpha,2011).

CAT has a global presence with revenues from North America, Latin America, EAME(Europe, Africa, Middle East) and Asia Pacific.

2013 was a challenging year for CAT with lower sales and revenues, operating profit, profit per share and global employees as compared to 2011 and 2012. CAT still closed with healthy financials in 2013, in spite of the difficulties in 2013.

A study of the external environment is crucial if an organization has to be successful. Companies that were once very successful, often fall by the way side when the environment becomes more challenging. The reason being that they don't open up to new possibilities presented by the environment or do not respond to a distressing external situation. Companies need to be innovative and open to change and even make a paradigm shift in strategy when the external environment compels them to do so.

Here we will go on to study the opportunities and threats facing CAT. One must keep in mind that while strengths and weaknesses are internal to an organization, Opportunities and Threats are external or lie outside the organization.

Opportunities for CAT
Widening of WTO membership
1.The membership of the world trade organization has widened, with Russia finally accepted as a member in 2012. This will mean lower import duties, which will ease trade.
CAT will be looking at more demand for its construction equipment in the years to come from Russia.
Increased Government infrastructure spending
2. Many construction activities revolve around Government funded projects. On the national level, state and local governments finance a significant portion of infrastructure construction. Politicians decide whether governments borrow when tax revenue is not sufficient to cover investments (Nippala et al, 2012). The KPMG Global survey shows respondents feeling that national governments' infrastructure plans are the single biggest driver of market growth in the construction industry (KPMG, 2013). In 2013, with the recession receding, there seems to a renewed demand for construction activities, with increased funding available to maintain and build infrastructure ( KPMG, 2013).
Recovering Construction industry post 2013
3. There has been a gradual improvement in world economy post 2013.Construction equipment demand was down in 2013, and is gradually improving. (Caulderwood, 2014). With KPMG depicting a very positive outlook for the construction industry worldwide, there is a bright future for CAT construction equipment from 2014 onwards. Africa and the middleeast areas are showing attractive economic growth, coupled with adequate resources, for construction projects. Global demand for construction machinery is expected to grow 6.0 percent per year to $189 billion in 2017, accelerating from the 2007-2012 period. This expansion will be fueled primarily by continued growth in the Asia/Pacific region, particularly China, where the market will expand at a double-digit annual pace as construction spending, particularly on ...