Organizational study Report

on
“Caterpillar.Inc” at Bengaluru
SUBMITTED BY
Mr. Parikshith Gowda H S
(1NX19MBA04)
Submitted to
VISVESVARAYA TECHNOLOGICAL UNIVERSITY,
BELAGAVI

In partial fulfilment of the requirements for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION
Under the guidance of
INTERNAL GUIDE

Dr. Shilpa Ajay

Assistant Professor
Department of Management Studies
NMIT, Bengaluru

NITTE MEENAKSHI INSTITUTE OF TECHNOLOGY

Department of Management Studies
BENGALURU-560064
2019-2021
 NITTE MEENAKSHI INSTITUTE OF TECHNOLOGY

Department of Management Studies

P.B.NO 6429, Yalahanka, Bengaluru-560064

BONAFIDE CERTIFICATE

This is to certify that Mr. Parikshith Gowda H S bearing USN 1NX19MBA04, is a Bonafide
student of master of business administration, 3rd semester NMIT, Bengaluru, affiliated to
Visvesvaraya Technology of University, Belagavi, organization report on “Caterpillar.Inc”
Company is prepared by him under the guidance of Dr. Shilpa Ajay, Assistant Professor,
NMIT in partial fulfillment of requirement for the award of the degree of Master of Business
Administration of Visvesvaraya Technology of university, Belagavi, Karnataka.

Dr. Shilpa Ajay Dr. H.C. Nagaraj

(Internal Guide) (HOD of MBA) (Principal)

 DECLARATION

As I am Mr. Parikshith Gowda H S student of 2ndyear MBA I hereby declare that I have
prepared this report on “Caterpillar.Inc” Hosur district under the guidance of Dr. Shilpa Ajay,
Assistant Professor of MBA department, Nitte Meenakshi Institute of Technology, Yalahanka,
Bangalore.

I also declare that this project is the result of my own efforts and has not been submitted earlier
to any other university or institution for the award of any degree or published any time before.

Place: Bangalore Signature;

Date:
 ACKNOWLEDGEMENT

This piece of work is fruit of assistance of several people while it is impossible to mention all
by names, there are some whom the investigator particularly would like to thank.

First and foremost, we acknowledge our deepest gratitude to our Principal Dr.H.C Nagaraj for
their help to complete the project work. We would like to thank our parents for their constant
support and encouragement to complete this work successfully.

It is my privilege to thank Dr. Shilpa Ajay, Assistant Professor of MBA Department for her
valuable suggestions and advice while drafting this project work.

It is my pleasure to thank the founder of “Caterpillar.Inc” found for granting the permission to
do the project by giving a timely guidance and co-operation as external guide.

I like to thank all of our friends, who are close to our heart, for supporting and helping us to
conduct this project successfully.

Thank you one and all

 Part A
Industry profile
Introduction
The Heavy Equipment industry has large opportunity for growth, especially if organizations
embrace advanced analytics and business intelligence to assist executives in making optimized
decisions. Research and Markets provides a comprehensive overview of the Heavy Equipment
industry, writing, “The global heavy construction equipment market is estimated to reach USD
166.05 Billion by 2020, with a projected CAGR of 6.80%, signifying a steady increase in the
demand for heavy construction equipment.
Heavy construction equipment is a critical tool for any construction project. They are used
extensively at construction sites to reduce labor cost and time. The high construction and
infrastructural growth, technological developments and their adaptations, and rapid
urbanization have fueled the growth for heavy construction equipment. Infrastructure is the
largest end-use area for heavy construction equipment especially in emerging markets such as
China, Brazil, and India.
The global heavy construction equipment market is witnessing decent growth based on heavy
investments done in the infrastructure recreation to accommodate smart residential and
commercial buildings. The developing markets in Asia-Pacific are witnessing a strong demand
for heavy construction equipment; therefore, large investments are made in these regions.
The heavy construction equipment market is dominated by large firms such as Caterpillar Inc.
(U.S.), CNH Global N.V. (The Netherlands), Hyundai Heavy Industries Co., Ltd. (South
Korea), Volvo Construction Equipment AB (Sweden), JCB Ltd. (U.K.), Komatsu Ltd. (Japan),
Deere & Company (U.S). They provide advanced heavy construction equipment, and by
gaining considerable expertise and experience over the years, have optimized their processes
and practices to become even more efficient.
The material handling equipment segment is projected to grow at the highest CAGR of 8.42%
from 2015 to 2020. The key players of heavy construction equipment market implement
different strategies such as expansions, agreements, contracts, joint ventures, and partnerships
to garner a larger share in the market. The leading heavy construction equipment providers are
focusing on countries with emerging markets that are estimated to show potential for industrial
development in the near future.
The heavy construction equipment market is a highly fragmented one owing to the huge
infrastructure demand and changing technologies. Major companies rely on regional and local
distributors to increase their share as well as geographical presence in the market. One of the
major developments observed in the heavy construction equipment market is agreements,
contracts, joint ventures, and partnerships. Companies are adopting inorganic growth strategies
such as acquisitions to cope with the increasing demand for heavy construction equipment in
key emerging markets. These strategies have aided companies to create a large customer and
partner base in key markets. The applications requirements for heavy construction equipment

1
and well as the operating conditions are continuously changing making it essential for the
manufacturers and service providers to continually invest in research and development
activities and come up with innovative solutions.”
Growth
Construction Equipment Market size exceeded USD 135 billion in 2019 and is estimated to
grow at a CAGR of over 4% between 2020 and 2026. According to the market report, the rising
number of building maintenance and reconstruction activities in several countries across the
globe is augmenting the demand for construction equipment.
Market share
Construction Equipment Market size exceeded USD 135 billion in 2019 and is estimated to
grow at a CAGR of over 4% between 2020 and 2026. According to the market report, the rising
number of building maintenance and reconstruction activities in several countries across the
globe is augmenting the demand for construction equipment.
By region, the heavy construction equipment market is analyzed across North America,
Europe, Asia-Pacific, and LAMEA. Asia-Pacific dominated the market in 2019, accounting for
the highest share, and is anticipated to maintain this trend throughout the forecast period. This
is attributed to the increased funding by the government agencies and rise in focus to develop
infrastructure in this region.

Competitors

CE Sales (million Share

No. Company Country
USD) of total

1 Caterpillar United States 28,283 17.8%

2 Komatsu Japan 16,877 10.6%

Hitachi Construction
3 Japan 7,790 4.9%
Machinery

Volvo Construction
4 Sweden 7,785 4.9%
Equipment

5 Terex United States 7,390 4.6%

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 CE Sales (million Share
No. Company Country
USD) of total

6 Liebherr Switzerland 7,129 4.5%

7 John Deere United States 6,581 4.1%

8 XCMG China 6,151 3.9%

9 Sany China 5,424 3.4%

10 Doosan Infracore South Korea 5,414 3.4%

Governmental regulation
• To create an enabling scheme as a pilot for 'Heavy Industry Export & Market
Development Assistance Scheme (HIEMDA)' with a view to enhance the export of
Indian made capital goods. This will also require developing a comprehensive branding
plan for the CG sector with the support of India Brand Equity Foundation (IBEF) and
such like organizations.
• Strengthen existing capital goods scheme: The policy recommends increasing the
budgetry allocation & scope of the present 'Scheme on Enhancement of
Competitiveness of Capital Goods' which include setting up of Centers of Excellence,
Common Engineering Facility Centers, Integrated Industrial Infrastructure Park and
Technology Acquisition Fund Programme. The policy recommends increasing the
scope of the present 'Scheme on Enhancement of Competitiveness of Capital Goods' by
adding a set of components including technology, skills & capacity building, user
promotional activities, green engineering and energy, advanced manufacturing and
cluster development
• To launch a Technology Development Fund under PPP model to fund technology
acquisition, transfer of technology, purchase of IPRs, designs & drawings as well as for
commercialization of such technologies of capital goods.
• To create a 'Start-up Center for Capital Goods Sector' shared by DHI and CG
industry. Industry association in 80:20 ratio to provide an array of technical, business
and financial support resources and services to promising start-ups in both the
manufacturing and services space. These services should focus on Pre-incubation,

3
 Incubation and Post-Incubation phases of a start-up's growth to ensure that a robust
foundation is established.
• Mandatory Standardization which includes, inter alia, defining minimum acceptable
standards for the industry and adoption of International Organization for
Standardization (ISO) standards in the absence of other standards, to institute formal
development program for promoting and framing Standards with Standards Developing
Organizations (SDOs) including Bureau of Indian Standards (BIS), international
standard bodies, test / research institutions and concerned industry/ industry
associations.
• To upgrade development, testing and certification infrastructure such as Central
Power Research Institute (CPRI), and set up 10 more CMTI like institutes to meet the
requirements of all sub-sectors of capital goods.
• Skill development: To develop a comprehensive skill development plan/scheme with
Capital Goods Skill Council and to upgrade existing training centers and set up 5
regional State-of-the-Art Greenfield Centers of Excellence for skill development of CG
sector.
• Cluster approach:-To provide schemes for enhancing competitiveness through a
cluster approach, especially for CG manufacturing SMEs. Thrust to be on critical
components of competitiveness such as Quality management, Plant maintenance
management, Energy management, Cost management, Human Resource management
and prevention of corrosion with the Government support to the extent of 80% of the
cost.
• To modernize the existing CG manufacturing units, especially SMEs by replacing
the modern, computer controlled and energy efficient machineries across capital goods
sub-sectors, there is need to create a scheme based on capital subsidy to promote the
manufacturing of quality products.

4
 Company profile
Introduction
Caterpillar Inc. is a global leader in heavy machinery manufacturing for the construction,
transportation and mining industries. Founded in 1925 in Peoria, Illinois, the company has
grown to over $50 billion in sales over its 90 year history. The company has 2 principal
reporting segments. The Machinery, Energy and Transportation segment represents the
majority of revenues and encompasses the entirety of Caterpillar’s manufactured products. This
unit is further subdivided into Energy & Transportation, Construction Industries, Resource
Industries, and All other Segments. Caterpillar’s other reportable segment is its Financial
Products segment, which primarily provides financing resources for purchases of Caterpillar
equipment. The financial product segment includes Caterpillar Financial Services, Caterpillar
Financial Insurance Services, and their respective subsidiaries. This segment plays an
important strategic role in providing financing for customers that might otherwise not be able
to obtain it.
Energy & Transportation and Construction have been the traditional largest business segments
for Caterpillar. The company’s 2011 acquisition of Bucyrus International for $8.8 billion
significantly strengthened its position in the mining equipment space, now reported under
Resource Industries. Caterpillar competes globally across its various markets. Emerging
markets have driven a majority of the growth in the past decade, however this trend has
reversed recently due to global economic slowdown and North America has again grown
slightly as a percentage of sales.
Globally Caterpillar is a major competitor and market leader in a majority of business
segments. The company has increased its revenues and market share over the past decade
through a combination of organic growth and strategic acquisitions, most notably the 2011
purchases of Bucyrus International and ERA Mining Machinery Limited (China). The
company competes in heavy and advanced machinery industries that require significant capital
investment in both manufacturing and R&D. Current R&D expenditures are around $2.1B per
year, and we forecast this dollar amount to remain relative stable to moderate growth given the
commitment to innovation and need to develop products in compliance with tighter emission
standards. Caterpillar products are sold through a worldwide network of independently owned
and operated dealers. The size and scope of this dealer network is strategic advantage relative
to other global heavy equipment manufacturing companies. By Caterpillar’s estimates, there
are 177 global dealers that collectively employ 160,000 people and are worth over $23 billion.

Promoters

• Jim Umpleby - chairman and CEO

• Kelly A. Ayotte
• David L. Calhoun
• Daniel M. Dickinson
• Juan Gallardo

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 • Dennis A. Muilenburg
• William A. Osborn
• Debra L. Reed-Klages
• Edward B. Rust, Jr.
• Susan C. Schwab
• Miles D. White
• Rayford Wilkins, Jr.
Vision
The Caterpillar Foundation is transforming communities to be stronger, more resilient, and
more sustainable.

Mission
We build thriving communities by investing in the skills people need to join the modern
workforce, and the natural and vital infrastructure they rely upon.

QUALITY-POLICY:
• Quality-Policy: The main quality objective of the company is to ‘Maintain market
leadership through continuous quality performance”
• Safety-Policy: Safety and health of the employees shall be the first priority of the
company. It is the responsibility of each and every individual in the organization,
regardless of the position he occupies, to ensure that everyone in the factory returns
home without any injury. The company offers ‘ACCIDENTFREE SAFE
PRODUCTION’ not only in letter but also in spirit, for the benefit of one and all
through this policy.

Achievements and awards

• World’s Most Admired Companies – Fortune Magazine
• #58 on the 2019 Fortune 500 – Fortune Magazine
• All-America Executive Team – Institutional Investor
• Best Global Brands Top 100 – Interbrand
• Top 150 Global Licensors – Global License
• #162 on the Best Employers for Women 2019 – Forbes
• #87 World’s Most Valuable Brands 2019 – Forbes
• America's Best Employers for Diversity – Forbes
• #180 Best Employers for New Grads 2019 – Forbes
• #121 Global 2000 2019 – Forbes
• #444 America's Best Employers 2019 - Forbes
• #49 Just Companies 2019 - Forbes
• Military Friendly Employers Silver Award – Victory Media
• Top Veteran-Friendly Company – U.S. Veterans Magazine
• Top 5 Places to Work in Brazil – Forbes

6
• #1 Great Place to Work – Great Place to Work Institute (Brazil)
• #1 Great Place to Work in the Ag Business - Great Place to Work Institute (Brazil)
• #1 Best Company to Work in Paraná State - Great Place to Work Institute (Perkins -
Brazil)
• Top 5 Best Companies to Work – Indeed: Caterpillar (Brazil)
• Top 10 Best Companies to Work For in Brazil (Perkins - Brazil)
• Great Place to Work – Companies from 100 to 500 employees for Central America
2019
• Great Place to Work in Panama 2019
• Top of Mind Company “Industry category” (Piracicaba, Brazil)
• Sports-Friendly Company – Ministry of Citizenship and Special Sport Secretary
• 2019 Entrepreneurial Company in Piracicaba & Region - Piracicaba City Council
• Certification on Promoting Work-Life Balance in Hyogo Prefecture – Hyogo Work and
Life Center (Japan)
• Hyogo’s Women’s Success in Business Promotion Company – Hyogo Women
Empowerment & Promotion Center (Japan)
• Hanada Award for WIN Akashi – Hyogo Women and Future Association (Japan)
• The 2020 Certified Health & Productivity Management Outstanding Organizations
Recognition (Japan）
• “Outstanding Contribution Business Entity” – International Infrastructure and
Investment Construction Forum Committee (China)
• “Special Contribution” – China Construction Machinery Association (China)
• “2019 TOP 50 Innovative Enterprise” – JIEMIAN News (China)
• “2019 The Happiest Enterprise – Talent Development” – FESCO & PEOPLE.COM
(China)
• Caterpillar’s IPSD Hosur facility wins Gold category – Frost & Sullivan’s ‘India
Manufacturing Excellence Awards (IMEA) 2019’ (India)
• Equipment India’s awards (annual) for best sellers in the “Wheeled Loaders” and
“Motor Graders” – (India)

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Product and services
Products
Equipment’s
• Articulated trucks
• Asphalt pavers
• Backhoes loaders
• Cold planners
• Compactors
• Compact track and multi terrain loaders
• Dozers
• Draglines
• Drills
• Electric rope shovels
• Excavators
• Hydraulic mining shovels
• Material handlers
• Motor graders
• Off highway trucks
• Pipe layers
• Road reclaimers
• Skid steer loaders
• Track loaders
• Underground hard rock
• Underground longwall
• Utility vehicles

Attachments
• Adapters
• Augers
• Backhoes
• Bale Grabs
• Bale Spears
• Blades
• Brooms
• Brushcutters
• Buckets - Backhoe Front
• Buckets - Backhoe Rear
• Buckets - Compact Wheel Loader
• Buckets - Excavator
• Buckets - Loader
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 • Buckets - Mining Shovels
• Buckets - Skid Steer Loader
• Buckets - Telehandler
• Cold Planers
• Compactors
• Couplers - Backhoe Rear
• Couplers - Excavator
• Couplers - Loader
• Flail Mowers
• Forks
• Generator Set Control Panels
• Generator Set Enclosures
• Generator Set Fuel Tanks
• Grapples
• Hammers
• Material Handling
• Mulchers
• Multi-Processors
• Pulverizers
• Rakes
• Rippers
• Rotors
• Saws
• Shears
• Silage Defacers
• Snow Blowers
• Snow Plows
• Snow Pushes
• Stump Grinders
• Thumbs
• Tillers
• Tilt Rotate Systems
• Trenchers
• UTV Accessories
• Water Delivery System
• Winches

Power system
• Electric Power
• Industrial
• Marine Power Systems

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 • Oil and Gas

Services
• Financing & Insurance
• Maintenance
• Operations
• Safety Services
• Technology & Solutions

Area of operation
Major facilities in Europe:

• Belgium: Gosselies (1965): Hydraulic Excavators, Medium Wheel Loaders,

components (factory closed in 2016)
• France: Grenoble and Échirolles (1961): Track Type Tractors, Track Type Loaders,
Wheeled Excavators, Undercarriage components
• Hungary: Gödöllő: Fabrications, Buckets
• Italy: Minerbio: Paving Products
• Poland: Sosnowiec and Janów Lubelski: Fabrications
• Russia: Tosno: Fabrications
• UK: Leicester: Mini-excavators; Peterlee: Articulated Dump Trucks; Peterborough:
Engines; Larne and Belfast: generating sets.
Major facilities in Latin America:

• Mexico: Torreón, Acuna, Monterrey, Reynosa, San Luis Potosí, Tijuana

• Brazil: Campo Largo, Piracicaba, Curitiba, Hortolandia, Sete Lagoas
Remanufacturing
Major facilities in Latin America:

• Mexico: Oradel Industrial Center, Nuevo Laredo, Tamaulipas, México (Since 1988)
Distribution
Caterpillar products are distributed to end-users in nearly 200 countries through Caterpillar's
worldwide network of 220 dealers. Caterpillar's dealers are independently owned and operated
businesses with exclusive geographical territories. Dealers provide sales, maintenance and
repair services, rental equipment, and parts distribution. Finning, a dealer based in Vancouver,
Canada, is Caterpillar's largest global distributor. Gmmco Ltd is India's No. 1 Dealer for
Caterpillar Machines.
Most dealers use a management system called DBS for their day-to-day operations.
As of the first quarter of 2006, 66% of Caterpillars sales are made by one of the 63 dealers in
the United States, with the remaining 34% sold by one of Caterpillar's 157 overseas dealers.

10
Future growth and prospects
• Caterpillar raises quarterly cash dividend by 20% to $1.03 per share of common stock
• Company plans to return substantially all Machinery, Energy & Transportation
(ME&T) free cash flow to shareholders through continued dividend growth and more
consistent share repurchases
• Caterpillar expects to double ME&T services sales to $28 billion by 2026 and deliver
higher adjusted operating margins through the cycles of three to six percentage points
above historical performance
CLAYTON, N.C. – Caterpillar Inc. (NYSE: CAT) will host a meeting with investors and
analysts today, detailing the progress made in executing the company’s enterprise strategy, its
plans for future profitable growth and its intention for more consistent and enhanced return of
capital to shareholders.

“Our enterprise strategy for profitable growth is working. We achieved or exceeded the
financial targets we communicated during our 2017 Investor Day, which resulted in record
profit per share in 2018 and the first quarter of 2019,” said Caterpillar Chairman and CEO Jim
Umpleby. “We will continue to execute our strategy while investing to double services sales
by 2026, an area of significant opportunity for further profitable growth.”

Strategy Driving Improved Profitability, New Margin Targets

Caterpillar has significantly improved its financial performance over the course of the last two
years. On about $55 billion of sales in 2014, Caterpillar’s adjusted operating margin
performance was 11%. At the 2017 Investor Day, Caterpillar targeted improving adjusted
operating margin by 2% to 5% the next time sales returned to that level. In 2018, Caterpillar
sales and revenues were again about $55 billion and its adjusted operating margin of 16% was
at the top end of the targeted improvement range. The company is now targeting future adjusted
operating margins through the cycles of three to six percentage points above historical
performance from 2010 to 2016.

Caterpillar attributes much of its improved profitability, as well as its confidence to achieve
future targets, to the execution of its enterprise strategy for profitable growth through
operational excellence and investing in expanded offerings and services. These investments are
guided by the Operating and Execution Model, which helps the company allocate resources to
the products and services that generate the greatest returns. With the success of the company’s
strategy execution, strong cash flow generation and its commitment to maintaining a
competitive and flexible cost structure, Caterpillar’s balance sheet remains strong. The existing
balance sheet capacity will also support inorganic growth opportunities.

Returning Value to Shareholders

Reflecting this improved performance and profitability, the company’s board of directors
authorized an increase to the quarterly cash dividend of 20% to $1.03 per share of common
stock, payable August 20, 2019, to shareholders of record at the close of business on July 22,

11
2019. Caterpillar expects to increase the dividend in each of the following four years by at least
a high single-digit percentage. With its remaining free cash flow, the company intends to
repurchase shares on a more consistent basis, with the goal of at least offsetting dilution in
market downturns.

“Through the execution of our strategy, Caterpillar is now a stronger and more profitable
company that can produce higher free cash flow through the cycles,” added Umpleby. “We
plan to return substantially all ME&T free cash flow to shareholders through dividend increases
and more consistent share repurchases to create more long-term value for shareholders.”

Emphasis on Services Growth

Caterpillar’s executive leadership team will describe its plans to grow services, which offer
additional opportunity for profitable growth. Caterpillar intends to double ME&T services sales
to about $28 billion by 2026, from a 2016 baseline of about $14 billion.

Caterpillar’s services offerings encompass all the ways the company supports customer success
after the equipment purchase, including aftermarket parts sales and digitally-enabled solutions.
Services aim to maximize asset utilization and minimize downtime for customers, making them
more efficient and lowering their owning and operating costs while providing a more consistent
revenue stream for Caterpillar and improving profitability through the cycles.

12
 PART B
Mc KINSEYs 7S MODEL
INTRODUCTION
McKinsey’s 7S Framework was developed in late 1970s at the McKinsey and company which
is a reputed Management Consultancy firm in US.
The model serves as a basis for aligning the decisions of the firm to perform well.
The 7 elements in this model:

• Strategy
• Structure
• Style
• Systems
• Skills
• Staff
• Shared Values

These 7s help in analyzing how the organization elements are related to each other and any
changes will affect the performance of overall organization.
The 7 inter-reliant factors which are categorized is involved in 7s model as either “HARD” or
“SOFT” elements.
HARD elements in the management can directly influence them by defining easily, these are
strategy reports, graphs of the organization and reporting lines of the formal processes.
SOFT elements to describe can be more difficult. It is less tangible more influenced by culture,
if the organization is going to be successful. The soft elements are as important as the hard
elements.
The interdependency of the elements and specifies how a change in one affects all the others
the model depicted below represents:

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 HARD Ss

SOFT Ss

7s model is used in where an alignment perspective is useful, for example, to help:

• Improve the performance of a company.

• The likely effects and the future changes of a company is been examined.
• Align departments and processes during a merger or acquisition.
• To implement a proposed strategy it determines how best it is.

Let’s know each of the elements specifically:

➢ STRATEGY: To build competitive advantage over the rivals the plan is devised

➢ SYSTEMS: The daily activities where the staff members are engaged to get the job
done.

➢ STRUCTURE: The way the organization is structured and the communication flow in
the organization.

➢ SHARED VALUES: Shared valued also called as “super-ordinate goals” s it was first
developed, the core-values of the company that are evidenced in the corporate culture
and the general work ethic.
➢ STYLE: The leadership style adopted.

➢ STAFF: The general capabilities of the employees

➢ SKILLS: The competencies and the actual sills of the employees working for the
company.

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Mc KINSEY’s 7S Framework with reference to the Catterpillar.Inc
Catterpillar.Inc ORGANIZATIONAL STRUCTURE

DEPARTMENTS
Each and every department is headed by the general manager who holds the expertise,
knowledge in the area under his/her supervision. Caterpillar.Inc gives a vision about the
functioning of the different departments. There always exists an ergonomic atmosphere which
is often made possible by the close interaction between all members in each department.
The strategies and policies of the top management molds to make sure that the middle
management implements them properly.
Weekly inter-departmental meeting aims at bringing coordination between the different
departments.
Open forums are held once in a week in all plants where the employees can raise their concerns,
suggestions etc.

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Production Department
The following are the main functions of production department:-
Planning for production process every month:
Monthly plan is given to the plant by central planning, planning department will prepare a
simulation plan by dividing the month into 3 segments of 10 days each.
QUALITY ASSURANCE DEPARTMENT
Quality is considered as the most effective tool to improve productivity, to achieve cost
effectiveness, to improve profitability and market share and to remain competitive in the global
market. In the business environment of today, quality impacts not only the products and
services but also many other relevant entities such as process, systems, people and
organization.
A low level quality can be caused by the weakness either in the design of the product, or in its
manufacture. It is therefore appropriate to distinguish between quality of design and quality of
manufacture. Two products which have the same use but which are designed in different ways
can be of different quality of design.
Quality of design is evident in the specifications to which the product will be manufactured. A
product may confirm in varying degrees to the specification. This varying degree of
confirmation to the specification will lead to varying degree of quality of manufacture.
Functions of Quality Assurance Department
➢ Quality assurance department’s primary aim is customer satisfaction. Hence its prime
duty is to ensure that all customer complaint should be taken seriously and is to be
communicated to all concerned. Problem solving tools are employed to ensure that the
problem is solved and error proofing methods are adopted to ensure that such problems
don’t occur again.
➢ Improve the profitability of the company by reducing defects and waste generation.
This is done by initiating projects for waste reduction and forming task forces for close
follow up.
➢ Specific targets are fixed in each area for waste reduction and forming task forces for
close follow up.
➢ Specific targets are fixed in each area for waste reduction and quality improvement and
it is done in co-ordination with all other connected departments.
➢ The main function of quality assurance department is process audit and final product
inspection. This will include monitoring the inspection status of incoming materials, in-
process materials, process parameters and finished product inspection. Ensuring
identification and traceability of all materials is also the function of QA.
➢ Educating workmen on Quality Standards and the consequences of not following
quality norms is also done.

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HUMAN RESOURCE DEPARTMENT
The Human Resource Department is known as the heart of an organization. It performs a
number of activities concerned with the employees of their organization. It interacts with other
departments to ensure effectiveness of the company
The following are the various activities being undertaken in taken in HR Department
1. Recruitment and Selection of employees
2. Performance Appraisal
3. Welfare activates
4. Training
5. Industrial relation and labor management
6. Canteen service
7. File management.
Other activities controlled by HR Department are

• Medical insurance scheme

• Family welfare canteen
• Co-operative Society
• Recreation club
Skill
A skill is the ability, knowledge, undertaking and judgement to accomplish a task. The
employees at Catterpilla.inc are well qualified and possess sound knowledge in technical know
– how.
At Catterpillar.inc annual training plan is prepared and conducted throughout the plant. The
different types of trainings conducted are:
a) Orientation training
b) On the job training
c) Off the job training
Training is conducted for employees at all levels in the organization. After training the
effectiveness of training analysis is also conducted to know if any changes required in the
training imparted to the employees.
Induction training:
A 12 or it may vary for each job, orientation program is conducted for the newly joined
employees. The training is conducted by the HR and team executives who will explain about
the policies, rules and regulations, plant overview and job overview of the organization to the

17
employees. In 12 days’ program 6 days will be class room training and other 6 days will be on
the job training. The induction training will help the employees to know about the operations
carried out in the organization and its working procedure
ON THE JOB TRAINING METHODS
➢ Job Rotation:
In this method, Catterpillar.inc employees are put on different jobs turn by turn where
they learn all sorts of jobs of various departments which gives basics knowledge of each
jobs to the employees
➢ Job Coaching:
A proficient employee can give a verbal presentation to juniors regarding job how to
perform the task and duties
➢ Apprenticeships:
As the new employee are put under the experienced Employee to learn the functions of
job so that to gain more insights on job and perform the job effectively

Off the Job Training Methods

1. Classroom Lectures: It is a verbal lecture presentation by an instructor to a employees where
there roles and responsibility will be discussed. It is One-way communication.
2. Audio-Visual: It will be done by using Films, Televisions, Video, and Presentations etc.
3.ROLE PLAY
4.BRAIN STORMING
3.3 STYLE
Caterpillar.inc has a very open culture with respect to its management style. At Catterpillar.inc
they follow Democratic leadership style. It is also known as participative leadership where
the employees are allowed to take part in decision making process.
In Catterpillar.inc they work on building inter- personal communication among employees and
employers through group lunches, team building exercises to create a mutual understanding
with the organization they are part of.
The roles of each employee are clearly specified during the induction program so that there is
no chaos in decisions related to reporting to the higher authority. The responsibilities to
individuals are distributed and ask for equal participation from the employees. The
Catterpillar.inc aims at empowering the employees by providing necessary training and
education to accomplish the tasks delegated to them in an efficient manner.
It encourages group decision making process where the manager acts as a mediator and
facilitator between the group members and ensures that a healthy and respectful environment
is maintained in the process of making decision.

18
Caterpillar beliefs that, higher the employee participation in decision making it leads to greater
innovation and creative solutions to problems that will serve the organization in a better way.
The flow of communication is a two-way process which reduces the grapevine in the
organization to a great extent and employees are free to suggest their opinions and beliefs
pertaining to any issues faced by them while working in the organization

Strategy
In recent years, the testing techniques and models for calculating and forecasting component
behavior have grown in numbers and improved in reliability. Nevertheless, power stations
repeatedly suffer failures and defects, sometimes of major proportions.

One of the leading causes is inadequate maintenance. Buzzwords and acronyms are no solution
in these cases; only strategies tailored to the special features of the plants will be able to balance
safety, costs, and benefits.

Whether leakage, cracks, wear, or operation and design errors, early identification of weak
points in plants and systems and appropriate assessment can prevent many defects and
unscheduled downtime and thus unnecessary costs. A requirement for this is the right
maintenance strategy.

However, as the operating performance of each plant is unique, and particularly as complexity
increases, there is no "one-size-fits-all" in maintenance strategies. What is important is that the
strategy is customised to fit the plant and that the maintenance experts ask the right questions.
Which maintenance strategies fit the company, the plant, and the maintenance organization?
And which strategy is suitable at what times and for which service parameters?

Future-oriented...

Maintenance has long evolved from purely reactive failure recovery and remediation into a
future-oriented service. Maintenance objectives include a high level of plant availability and
operational safety while ensuring profitability. Obstacles to these objectives are increasing cost
pressure and a lack of future strategies. Fundamental approaches are preventive, condition-
based, predictive, and risk-based maintenance.

Preventive maintenance refers to anticipatory servicing without a conceptual framework, in

which scheduled and standardized maintenance activities are carried out at fixed intervals. This
form of maintenance reduces unexpected shutdowns but also replaces many components before
they actually reach the wear limit. Preventive maintenance thus results in "excessive
maintenance," which drives maintenance costs.

... and condition-based...

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Condition-based maintenance monitors component condition to ensure timely identification of
potential defects. This approach allows for timely planning of the necessary maintenance work.
However, monitoring causes higher efforts and costs.

Predictive maintenance is a proactive form of maintenance which includes a conceptual

framework. Possible defects are localised at an early stage and corrected as soon as possible.
However, the strategy and its implementation are time-intensive and make high demands on
the maintenance team.

...or risk-based?

Risk-based strategies, such as risk-based maintenance (RBM) or reliability-centered

maintenance (RCM), focus on failure probabilities. Risk-based maintenance identifies the
potential risks that may lead to plant breakdown and ranks them in order. Plant units or
components that involve the highest risk of failure are addressed with priority. As complex
technical structures, plants require systematic and practice-focused analysis.

For reliability-centered maintenance, all plant components must be analyzed for potential
malfunctions and the consequences of these malfunctions defined. This approach enables the
experts to select and implement the necessary maintenance measures and thus allows the best
possible use to be made of different strategies while reducing costs.

Continuous improvement

Total productive maintenance (TPM) makes sensible use of production personnel. By carrying
out routine maintenance and servicing of "their" equipment, they can identify possible wear or
other weak points at an early stage. Preventive maintenance measures then avoid breakdowns
and quality losses. This results in a continual improvement process and eases the workload of
the maintenance team.

Deterministic or probabilistic?

The question of whether deterministic or probabilistic approaches are better is one of the
fundamental questions in maintenance. Deterministic approaches focus on the cause and follow
the "if-then principle": If x happens, y will result. Maintenance following this principle has
proved effective from the point of safety technology, and deterministic methods form the basis
of Germany's technology laws. On the downside, these approaches result time and again in
excessive maintenance measures because of the safety factors that must be observed in design.

Probabilistic strategies, by contrast, are based on probabilities. They quantify potential risks
according to their frequencies of occurrence and the severity of their consequences to prioritise
maintenance measures. This reduces the costs of maintenance. However, the input data
determined may be fraught with lack of precision, and in case of complex events, the
approaches involve high efforts and fault-tree analyses.

20
Systematic and practice-oriented...

When choosing the overall maintenance strategy, the responsible parties must take into
consideration the special features of the company and of the plant in question. The maintenance
professionals should be aware of the conditions of operations and of the plant and include them
in all their decisions. Practice in general engineering, experience, and in-depth knowledge of
plants and systems are therefore important. The role of a maintenance professional today is that
of a system analyst who keeps an eye on the full picture.

A carefully coordinated combination of individual strategies and tools creates the basis for
practice-focused hazard assessment. This also means that "defects" need not be repaired in
every case. In homogeneities in materials or incipient cracking that are detected with the help
of non-destructive testing may not necessarily have to be repaired if fracture mechanics and
risk assessments show such findings to be tolerable under the defined service parameters.
Within the scope of high-quality analysis of the total system, the principle of "living with
defects" is quite acceptable. Likewise, safe operation of plants of an advanced age can be
continued with the help of a dedicated asset analysis and customized refurbishment and
maintenance measures. This also applies to process control systems and, in particular, process
control systems that are no longer produced. As long as these are functioning and their use can
be continued with the help of repair strategies, these systems do not have to be replaced.

To deliver maximum benefits for the company and ensuring profitability, qualified
maintenance needs to find creative solutions on any given day. Recruitment of committed and
highly qualified maintenance personnel is therefore of crucial importance.

Management needs to be able to motivate their personnel. This is only possible in an

organization based on division of labor, which leaves staff scope for action and for taking on
an appropriate level of responsibility. Acceptance of tolerable risks is also part of the deal.
Given this, the working atmosphere should be based on clarity, consistency, trust, and
appreciation.

In the future, maintenance will increasingly focus on the prevention of failure and continual
improvement of plants and systems. Systematic knowledge and practice-focused approaches
will come together to ensure the best possible plant management, offering long-term
operational safety and reliability as well as maximum availability.

System

In caterpillar.inc they follow both Autocratic and Democratic Leadership styles. It means
though the. Decision is made by the leader but the Inputs are taken for the staff even by the
lower employees. The employee’s views are considered here for the major decisions leader is
the one who initiates, but the inputs by the staff is considered strongly.

21
Staff
As of December 31, 2009, Caterpillar employed 93,813 persons of whom 50,562 are located
outside the United States. Current employment figures represent a decline of 17,900 employees
compared the third quarter of 2008. Due to the restructuring of business operations which
began in the 1990s, there are 20,000 fewer union jobs in the Peoria, Illinois area while
employment outside the U.S. has increased

The staff – supervisors and line employees are also recruited through interview
/consultancy/reference considering jobs description and specification experience may vary for
each job at time of recruitment. Plant / Machine operators are selected from the local
environment where for first they work as trainees and based on their performance they are
promoted as permanent employees. The employees are strictly recruited based on technical
know-how, work experience, educational qualification and age.
Responsibilities
• Designing Technical strategies, procedures and methods
• Carrying out routine scheduled maintenance work and responding to equipment faults
• Diagnosing breakdown problems
• By fitting new parts making guaranteed that equipment is operating correctly
• Carrying out quality inspections on jobs
• Liaising with client departments, customers and other engineering and production
colleagues
• Controlling maintenance tools, stores and equipment
• Monitoring and controlling maintenance costs
• Dealing with emergencies, unexpected problems and repairs
• Improving health and safety policies and procedures
• Uninterrupted cover of the machinery and equipment in case of breakdowns
Shared Values
Shared values are the organizational values that are developed by the organization and then
shared by the members of the organization, also referred to as core values of the organization.
The core values of the company
➢ Customer driven,
➢ Result oriented with professional work culture.
➢ Growth balanced with environmental protection and enrichment

22
 Part C
SWOT Analysis of Caterpillar.Inc
SWOT analysis is a vital strategic planning tool that can be used by Caterpillar Inc. managers
to do a situational analysis of the firm. It is a useful technique to map out the present Strengths
(S), Weakness (W), Opportunities (O) & Threats (T) the company is facing in its current
business environment.
SWOT analysis a highly interactive process and requires effective coordination among various
departments within the company such as – marketing, finance, operations, management
information systems and strategic planning.

Strength
• Strong Free Cash Flow
• Superb Performance in New Markets
• Good Returns on Capital Expenditure
• Highly successful at Go To Market strategies for its products.
• Reliable suppliers
• Successful track record of developing new products – product innovation.
• Automation of activities brought consistency of quality to Caterpillar Inc. products and
has enabled the company to scale up and scale down based on the demand conditions
in the market.
• High level of customer satisfaction

23
Weakness
• High attrition rate in work force
• Investment in Research and Development is below the fastest growing players in the
industry
• Days inventory is high compare to the competitors
• There are gaps in the product range sold by the company.
• Limited success outside core business.

Opportunities
• The new technology provides an opportunity to Caterpillar Inc. to practices
differentiated pricing strategy in the new market.
• Lower inflation rate.
• New customers from online channel.
• Decreasing cost of transportation because of lower shipping prices can also bring down
the cost of Caterpillar Inc.’s products.
• Economic uptick and increase in customer spending,
• New trends in the consumer behavior can open up new market for the Caterpillar Inc.
• The market development will lead to dilution of competitor’s advantage and enable
Caterpillar Inc. to increase its competitiveness compare to the other competitors.
• Government green drive also opens an opportunity for procurement of Caterpillar Inc.
products by the state as well as federal government contractors.

Threats
• Growing strengths of local distributors also presents a threat in some markets as the
competition is paying higher margins to the local distributors.
• As the company is operating in numerous countries it is exposed to currency
fluctuations especially given the volatile political climate in number of markets across
the world.
• Rising pay level especially movements such as $15 an hour and increasing prices in the
China can lead to serious pressure on profitability of Caterpillar Inc.
• Liability laws in different countries are different and Caterpillar Inc. may be exposed
to various liability claims given change in policies in those markets.
• The demand of the highly profitable products is seasonal in nature and any unlikely
event during the peak season may impact the profitability of the company in short to
medium term.
• Imitation of the counterfeit and low quality product is also a threat to Caterpillar Inc.’s
product especially in the emerging markets and low income markets.
• New environment regulations under Paris agreement (2016) could be a threat to certain
existing product categories.
• Shortage of skilled workforce in certain global market represents a threat to steady
growth of profits for Caterpillar Inc.

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 Part D
Financial statement
Balance sheet

Fiscal year is January-December. All values

USD Millions. 2019 2018 2017

Cash & Short Term Investments 8,292 7,890 8,455

Cash Only 8,292 7,890 8,455

Cash & Short Term Investments Growth 5.10% -6.68% 17.45%

Cash & ST Investments / Total Assets 10.57% 10.05% 10.99%

Total Accounts Receivable 17,904 17,452 16,193

Accounts Receivables, Net 17,904 17,452 16,193

Accounts Receivables, Gross 17,904 17,452 16,193

Accounts Receivable Growth 2.59% 7.77% 11.65%

Accounts Receivable Turnover 3.00 3.14 2.81

Inventories 11,266 11,529 10,018

Finished Goods 5,598 5,241 4,761

Work in Progress 1,147 2,674 2,254

Raw Materials 4,521 3,614 3,003

Other Current Assets 1,731 1,732 1,578

Miscellaneous Current Assets 1,731 1,732 1,578

Total Current Assets 39,193 38,603 36,244

Net Property, Plant & Equipment 13,528 13,574 14,155

Property, Plant & Equipment - Gross 29,841 29,781 31,538

Buildings 6,710 6,977 7,515

Land & Improvements 664 671 664

Machinery & Equipment 13,287 13,604 14,792

Construction in Progress 620 682 688

Leases - 129 96

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Fiscal year is January-December. All values
USD Millions. 2019 2018 2017

Computer Software and Equipment 1,728 1,703 1,745

Leased Property 6,208 6,015 6,038

Accumulated Depreciation 16,313 16,207 17,383

Total Investments and Advances 1,756 1,605 1,478

LT Investment - Affiliate Companies 416 29 39

Other Long-Term Investments 1,340 1,576 1,439

Long-Term Note Receivable 13,844 14,447 14,532

Intangible Assets 7,761 8,114 8,311

Net Goodwill 6,196 6,217 6,200

Net Other Intangibles 1,565 1,897 2,111

Other Assets 960 727 549

Tangible Other Assets 960 727 549

Total Assets 78,453 78,509 76,962

Assets - Total - Growth -0.07% 2.01% 3.02%

Asset Turnover 0.69 - -

Return On Average Assets 7.76% - -

All values USD Millions. 2019 2018 2017

ST Debt & Current Portion LT Debt 11,549 11,553 11,031

Short Term Debt 5,339 5,723 4,837

Current Portion of Long Term Debt 6,210 5,830 6,194

Accounts Payable 5,957 7,051 6,487

Accounts Payable Growth -15.52% 8.69% 40.59%

Other Current Liabilities 9,115 9,614 9,413

Dividends Payable 567 495 466

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All values USD Millions. 2019 2018 2017

Accrued Payroll 1,629 2,384 2,559

Miscellaneous Current Liabilities 6,919 6,735 6,388

Total Current Liabilities 26,621 28,218 26,931

Current Ratio 1.47 1.37 1.35

Quick Ratio 1.05 0.96 0.97

Cash Ratio 0.31 0.28 0.31

Long-Term Debt 26,742 25,000 23,847

Long-Term Debt excl. Capitalized Leases 26,281 24,544 23,410

Non-Convertible Debt 26,281 24,544 23,410

Capitalized Lease Obligations - 456 437

Provision for Risks & Charges 6,599 7,455 8,365

Deferred Taxes (997) (1,108) (1,412)

Deferred Taxes - Credit 414 331 281

Deferred Taxes - Debit 1,411 1,439 1,693

Other Liabilities 3,448 3,425 3,772

Other Liabilities (excl. Deferred Income) 3,448 3,425 3,772

Total Liabilities 63,824 64,429 63,196

Total Liabilities / Total Assets 81.35% 82.07% 82.11%

Common Equity (Total) 14,588 14,039 13,697

Common Stock Par/Carry Value 5,935 5,827 5,593

Retained Earnings 34,437 30,427 26,301

Cumulative Translation Adjustment/Unrealized For.

(1,487) (1,601) (1,205)
Exch. Gain

Unrealized Gain/Loss Marketable Securities 20 (15) 8

Other Appropriated Reserves (100) (68) 5

Treasury Stock (24,217) (20,531) (17,005)

Common Equity / Total Assets 18.59% 17.88% 17.80%

27
All values USD Millions. 2019 2018 2017

Total Shareholders' Equity 14,588 14,039 13,697

Total Shareholders' Equity / Total Assets 18.59% 17.88% 17.80%

Accumulated Minority Interest 41 41 69

Total Equity 14,629 14,080 13,766

Liabilities & Shareholders' Equity 78,453 78,509 76,962

Cash flow statement

Operating activities

Fiscal year is January-December. All values

USD Millions. 2019 2018 2017

Net Income before Extraordinaries 6,094 6,148 759

Net Income Growth -0.88% 710.01% 1386.44%

Depreciation, Depletion & Amortization 2,577 2,766 2,877

Depreciation and Depletion 2,253 2,435 2,555

Amortization of Intangible Assets 324 331 322

Deferred Taxes & Investment Tax Credit 28 220 1,213

Deferred Taxes 28 220 1,213

Other Funds 1,143 1,501 1,051

Funds from Operations 9,842 10,635 5,900

Changes in Working Capital (2,930) (4,077) (194)

Receivables 171 (1,619) (1,151)

Inventories 274 (1,579) (1,295)

28
Fiscal year is January-December. All values
USD Millions. 2019 2018 2017

Accounts Payable (1,025) 709 1,478

Other Accruals (585) (61) 1,362

Other Assets/Liabilities (1,765) (1,527) (588)

Net Operating Cash Flow 6,912 6,558 5,706

Net Operating Cash Flow Growth 5.40% 14.93% 1.75%

Net Operating Cash Flow / Sales 12.85% 11.98% 12.55%

Investing Activities

All values USD Millions. 2019 2018 2017

Capital Expenditures (2,669) (2,916) (2,336)

Capital Expenditures (Fixed Assets) (2,669) (2,916) (2,336)

Capital Expenditures Growth 8.47% -24.83% 20.22%

Capital Expenditures / Sales -4.96% -5.33% -5.14%

Net Assets from Acquisitions (47) (392) (59)

Sale of Fixed Assets & Businesses 1,194 952 1,264

Purchase/Sale of Investments (23) (64) (116)

Purchase of Investments (552) (506) (1,048)

Sale/Maturity of Investments 529 442 932

Other Uses (12,801) (12,183) (11,953)

29
All values USD Millions. 2019 2018 2017

Other Sources 12,418 11,391 12,234

Net Investing Cash Flow (1,928) (3,212) (966)

Net Investing Cash Flow Growth 39.98% -232.51% 45.11%

Net Investing Cash Flow / Sales -3.58% -5.87% -2.12%

Financing Activities

All values USD Millions. 2019 2018 2017

Cash Dividends Paid - Total (2,132) (1,951) (1,831)

Common Dividends (2,132) (1,951) (1,831)

Change in Capital Stock (3,809) (3,485) 566

Repurchase of Common & Preferred Stk. (4,047) (3,798) -

Sale of Common & Preferred Stock 238 313 566

Proceeds from Stock Options 238 313 566

Issuance/Reduction of Debt, Net 1,406 1,840 (2,383)

Change in Current Debt (138) 762 (3,058)

Change in Long-Term Debt 1,544 1,078 675

Issuance of Long-Term Debt 9,841 8,907 9,063

Reduction in Long-Term Debt (8,297) (7,829) (8,388)

Other Funds (3) (54) (9)

30
All values USD Millions. 2019 2018 2017

Other Uses (3) (54) (9)

Other Sources - - -

Net Financing Cash Flow (4,538) (3,650) (3,657)

Net Financing Cash Flow Growth -24.33% 0.19% -17.51%

Net Financing Cash Flow / Sales -8.44% -6.67% -8.04%

Exchange Rate Effect (44) (126) 38

Net Change in Cash 402 (430) 1,121

Free Cash Flow 4,243 3,642 3,370

Free Cash Flow Growth 16.50% 8.07% 25.75%

Free Cash Flow Yield 2.52% - -

Income statement

Fiscal year is January-December. All values

USD Millions. 2019 2018 2017

Sales/Revenue 53,789 54,722 45,462

Sales Growth -1.70% 20.37% 17.97%

Cost of Goods Sold (COGS) incl. D&A 38,097 38,375 32,552

COGS excluding D&A 35,520 35,609 29,674

Depreciation & Amortization Expense 2,577 2,766 2,878

Depreciation 2,253 2,435 2,555

Amortization of Intangibles 324 331 323

COGS Growth -0.72% 17.89% 10.42%

Gross Income 15,692 16,347 12,910

31
Fiscal year is January-December. All values
USD Millions. 2019 2018 2017

Gross Income Growth -4.01% 26.62% 42.56%

Gross Profit Margin 29.17% - -

SG&A Expense 6,855 7,328 6,841

Research & Development 1,693 1,850 1,842

Other SG&A 5,162 5,478 4,999

SGA Growth -6.45% 7.12% 3.07%

Other Operating Expense 344 351 391

EBIT 8,493 8,668 -

Unusual Expense 242 460 1,145

Non Operating Income/Expense (224) (180) (51)

Non-Operating Interest Income 202 195 122

Interest Expense 417 401 522

Interest Expense Growth 3.99% -23.18% 4.61%

Gross Interest Expense 417 401 522

Interest Capitalized - - -

Pretax Income 7,812 7,822 4,082

Pretax Income Growth -0.13% 91.62% 2836.69%

Pretax Margin 14.52% - -

Income Tax 1,746 1,698 3,339

Income Tax - Current Domestic 457 187 1,002

Income Tax - Current Foreign 1,261 1,291 1,124

Income Tax - Deferred Domestic 35 216 1,230

Income Tax - Deferred Foreign (7) 4 (17)

Equity in Affiliates 28 24 16

Consolidated Net Income 6,094 6,148 759

Minority Interest Expense 1 1 5

32
Fiscal year is January-December. All values
USD Millions. 2019 2018 2017

Net Income 6,093 6,147 754

Net Income Growth -0.88% 715.25% 1225.37%

Net Margin 11.33% - -

Net Income After Extraordinaries 6,093 6,147 754

Net Income Available to Common 6,093 6,147 754

EPS (Basic) 10.74 10.26 1.26

EPS (Basic) Growth 4.65% 714.29% 1245.45%

Basic Shares Outstanding 562 591 592

EPS (Diluted) 10.74 10.26 1.26

EPS (Diluted) Growth 4.69% 715.12% 1197.21%

Diluted Shares Outstanding 568 599 599

EBITDA 11,070 11,434 8,556

EBITDA Growth -3.18% 33.64% 66.20%

EBITDA Margin 20.58% - -

EBIT 8,493 8,668 -

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 Ratio analysis
Current ratio
The current ratio that measures the company’s ability to pay short term and long term
obligations. It takes considerations that the current total assets of a company relevant to that of
company’ current total liabilities. Ideally, the value to measure the current ratio is 2:1.
Current Ratio = Current Assets / Current Liability

Year Current assets Current liability Ratio

2017 36244 26931 1.35
2018 38603 28218 1.37
2019 39193 26621 1.47

Interpretation
In the above ratio, we can notice that there is a increase in values yearly. This shows that the
company is in profit. The ratio of 2017 is 1.35, the ratio of 2018 is 1.37 and the ratio of 2019
is 1.47.

Quick ratio
The quick ratio is an indication of the company’s short term liquidity. It measures the
company’s ability to meet its short-term obligations with its most liquid assets. The ratio
excludes inventories from current assets. Ideally, quick should be 1:1.

Quick ratio = Quick assets / Current Liabilities

year Quick assets Current liabilities Ratio

2017 28742 26931 0.97
2018 27089 28218 0.96
2019 27952 26621 1.05

Interpretation
From 2017, 2018 and 2019 the value is above the standard ratio. By this it indicates that the
company has relies too much on inventory or other assets to pay its short-term liabilities. Some
measures are to be taken to increases the liquidity position.

34
Cash ratio
The cash ratio is a measurement of a company's liquidity, specifically the ratio of a company's
total cash and cash equivalents to its current liabilities. The metric calculates a company's
ability to repay its short-term debt with cash or near-cash resources, such as easily marketable
securities. This information is useful to creditors when they decide how much money, if any
they would be willing to loan a company.

Cash ratio= cash+equivalent cash / total current liabilities

Year Cash+equivalent cash Current liabilities Ratio

2017 8349 26931 0.31
2018 7901 28218 0.28
2019 8253 26621 0.31

Interpretation
By the above analysis we can say that the company can pay current liabilities with the cash
and cash equivalent.

35
 PART E
LEARNING EXPERIENCE
Organization study on “Caterpillar” provided me a good opportunity to know about the
organization structure that how the company works. As I collected the source from the
secondary data where I gained the knowledge of theories concepts and about the various kinds
of products of the company. This organization study has helped me to make study of the
company activities in each section to acquire knowledge in this field. This study has given me
a great benefit for the future career. I came to know that how the organization structure works
in the company and what and all employee duties are done and about the industry and how the
strategies are made and how the swot is analyzed and more about the 7s model. I learned that
how the organization goals are achieved.
I had a great experience to conclude this study with a good note on learning the management
concepts, strategies, detailed organization structure study.

BIBLIOGRAPHY
• https://www.caterpillar.com/
• Google
• Browser
• Wiki- Caterpilla.Inc
• Company book
• https://www.wsj.com/market-data/quotes/CAT/financials/annual/balance-sheet

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