Ch. 2 - Strategic Planning for Competitive Advantage -WI Students Begin Marketing Plan

Before you come up with a strategy to help you gain the upper hand in the market or any situation for a matter of fact, you must first know your enemy. Your enemy is not limited to a person, it can be a school exam, a riddle or even trivial matters, what matters if that you know your enemy and plan accordingly to ensure you emerge victorious. The reason as to why CAT INC. is at the top of their industry is because they constantly observe their competitors, market and the world so that they know what to work on later in the near future to help themselves as a company achieve the upper hand. CAT INC. plans things beforehand and that helps them prepare for problems faced ahead which would normally injure them significantly had they decided to wing it.

Given the size of CAT INC. there are a large amount of high ranking people each divided into their respected departments. When CAT INC. goes over their company goals for the year or in general, they hold a meeting. Every officer sits down with their management teams, and then as a group, and talks with everyone and assesses their long-term potential/goal. The CEO or even the founder of CAT INC. can not decide what the company should or will do because they lack perspective. In order to make the right decisions one must consult with others and gain their perspectives on the problem at hand.

I'll give a recent example of CAT INC. strategically planning for their competitive advantage. In 2010 CAT INC. noticed that they had a lack of sales in the Brazilian quarry market. Apparently the customers' perception of CAT trucks sold in Brazil costed too much and weren't worth the money so CAT INC. responded with a plan to prove that the trucks were worth the money. CAT INC. had to study their competitor in the Brazilian quarry market which were Brazilian companies whose trucks costed half of the CAT trucks, and then they planned accordingly to help them prove that their trucks would have a higher output/payload per truck compared to the trucks that costed half of theirs. The team in Brazil simulated activities in the quarry and gathered data to produce a report that showed that the CAT truck offered more output/payload capacity, traveled at greater speeds and offered operators of the trucks greater comfort, visibility and safety than the other truck. They also offered financing through their Financial sector (CAT Financial) and promised follow up visits every 500 hours or whenever needed to make sure that their CAT trucks were operating  properly. The financing and followed up visits may seem like customer service and nothing more but it is part of CAT INC. strategy. It is part of their strategy because it helps them build reputation in Brazil where they demonstrated the capabilities of their trucks and ultimately sold their trucks. CAT INC.'s strategy was great because they thought about and planned how they could convince the Brazilian quarry market that their trucks were a must have. If they had tried to sell their trucks that costed twice the amount of the Brazilian company trucks without any evidence to back up their claims then they would most likely not have been able to sell any trucks at all to the quarry market.

CAT 770/772 truck being sold in the Brazilian quarry market

The size of the CAT truck affects the cost-per-ton value

Another good example of CAT INC. strategically planning for a competitive advantage would the recent closing of a couple CAT factories do to the economy's recent fall a couple years back. The reason as to why this is a "good" strategy played out by CAT INC. is because they knew they had to cut back on production. If the economy is bad then the amount of CAT machinery being bought will be affected as well. Creating products and having them ready to be shipped out to the next customer is great and all but even when it sits in the storage waiting to be sold it will cost you money to have it stored there. Because CAT INC. saw the direction in which the economy was going at the time they closed down some of their factories to help cut down on production and other expenses which is important to help them keep their other sectors up and operational in their dire time (remember that CAT INC. has three sectors and isn't just confined to construction and mining machinery), as well as change some of their prices to help keep a steady flow of income. Using aggressive sales techniques might help the company grow but you must always keep in mind whether or not it would benefit the company as a whole or not, in which this case CAT INC. went smart and decided that for the time being they would halt certain areas of the company and come back to them at a later time when the economy is able to support it. Sometimes it is better to take it easy rather than seriously because if you're focused too much on making money even in tough times then your reputation will be affected negatively.

Caterpillar factory