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Caterpillar Inc. Core Competency

1. Introduction. Caterpillar Inc., is an American corporation which designs, manufactures,

markets and sells machineryand enginesand sells financial productsand insurance to

customers via a worldwide dealernetwork. Caterpillar is the world's leading manufacturer of

construction and mining equipment, diesel and natural gas engines, industrial gas turbines and

dieselelectric locomotives. !ith more than "#$%& billion in assets, Caterpillar was ranked

number one in its industry and number overall in the ())& *ortune +)).

Caterpillar is a global leader in helping countries worldwide build their infrastructure. As

world leaders of mining and construction equipment, diesel and natural gas engines, and

industrial gas turbines, they have continued to cultivate and advance our global societys

standard of living. Indirectly, their accomplishments have helped our country build a prominent

reputation in industriali-ing and capitali-ing developing countries. his claim is supported by

their %) years of dedication as a prominent ".#.A. company, with over /0 of its revenue being

generated from foreign countries 2cat.com3. he biggest reason behind their foreign dominance

is their rich history with the ".#. and 4ritish military, the most powerful military forces in the

world. Caterpillar machinery is recogni-able by its trademark 5Caterpillar 6ellow5 liveryand the

5CA5 logo.

(. History

a. Origin . In 1%/, sometime around the great 7old 8ush, three brothers, Charles,

!illiam, and Ames 9olt left their hometown Concord, :ew 9ampshire to embark on their

dreams in #an *rancisco. Coming from fairly strong entrepreneurial parents, who owned

sawmill that processed hardwoods for wagon construction, the three brothers found their

gold in their business, C.9. 9olt and Co. C.9. 9olt and Co., primarily dealt with

hardwood, lumber, and wagon materials, in creating structural applications. hey

synergi-ed with their parents business by getting hardwood shipped from their

hometown. As the business developed and speciali-ed the 9olt brothers renamed the

company #tockton !heel Co.

b. ;nce the #tockton !heel Company, established, the baby of the family,

4en

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that did not rely on horses. he magnitude of the popularity was tremendous, due to the

tractors power to harvest an entire field for only one si=th of cost of horsedrawn

combines. >espite his tractors success 4en

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. Core competencies

rahalad and 9amel 21&&)3 define core competencies as those capabilities

which are central to an organi-ations achievement of a sustainable competitive

advantage. *or the capability to be termed as a core competence, it has to meet fourcriteria as spelled out by the G8I; framework.

a. The Question of ValueF 5Is the firm able to e=ploit an opportunity or

neutrali-e an e=ternal threat with the resourceHcapability5b. The Question of RarityF5Is control of the resourceHcapability in the hands

of a relative few5c. The Question of ImitailityF 5Is it difficult to imitate, and will there be

significant cost disadvantage to a firm trying to obtain, develop, or

duplicate the resourceHcapability5d. The Question of Organi!ationF 5Is the firm organi-ed, ready, and able to

e=ploit the resourceHcapability5

It must be valuable, rare, inimitable, and the organi-ation must be sufficiently

organi-ed to e=ploit it. !hile Caterpillar Inc has a very broad product line and wide

geographical spread, this can be easily replicated by its rivals through a deliberate

strategy of market development and product diversification. Its supply chain capabilities

can also be easily replicated through undertaking demand and supply chain integration

activities such as maintaining low inventory levels and adopting fle=ible manufacturing

systems. Caterpillar Inc. attests that its main core competencies therefore are its

innovation capabilities, its superior financial position, and its superior customer

service.

http://en.wikipedia.org/wiki/Value_(economics)http://en.wiktionary.org/wiki/Rarehttp://en.wiktionary.org/wiki/Rarehttp://en.wikipedia.org/wiki/Imitationhttp://en.wikipedia.org/wiki/Organizationhttp://en.wikipedia.org/wiki/Value_(economics)http://en.wiktionary.org/wiki/Rarehttp://en.wikipedia.org/wiki/Imitationhttp://en.wikipedia.org/wiki/Organization