MEMORANDUM
Subject: The current global manufacturing positon of the Caterpillar Corporation
To: Board of Directors of the Caterpillar Corporation
From: Jordan Hyatt, Corporate International Business Development Manager
Date: November 28, 2016
________________________________________
Executive Summary: There have been several questions from the Board of Directors of the Caterpillar Corporation regarding our current global manufacturing position. As you know we have had much success over the past two decades with expanding our network of foreign manufacturing operations. Our globalization strategy has allowed for the reduction of the impact of fluctuations in the value of the dollar on its profits. There are many potential opportunities …show more content…
In regards to country factors we are looking for those that have a free market economy, a stable democratic government and low trade barriers. When considering technological factors we are looking at the fixed costs, minimum efficient scale and if flexible manufacturing technology is available. With respect to product factors, CAT’s products do not need to accommodate national differences since we produce and export the same products around the world thus the requirement for local responsiveness is reduced. These factors allow us to make decisions such as what countries to enter or not enter and what countries to either increase or reduce our investment …show more content…
Some new political risks CAT might face are a change in political regime that results in the enactment of laws that are less favorable to the business or social unrest that results in abrupt changes in government policy. This is most likely to occur in countries where there are competing ideologies battling for political control or where economic mismanagement has created high inflation and falling living standards. With production in so many countries political risk is something CAT may face. Because there is high chance for political risks to occur, it is important to build relationships with local governments. We do not want any surprises so being connected to the government will allow us to better predict or influence changes or decisions. Future political problems can be prevented if we learn from mistakes in the past and develop an internal connection within the countries we are
Subject: The current global manufacturing positon of the Caterpillar Corporation
To: Board of Directors of the Caterpillar Corporation
From: Jordan Hyatt, Corporate International Business Development Manager
Date: November 28, 2016
________________________________________
Executive Summary: There have been several questions from the Board of Directors of the Caterpillar Corporation regarding our current global manufacturing position. As you know we have had much success over the past two decades with expanding our network of foreign manufacturing operations. Our globalization strategy has allowed for the reduction of the impact of fluctuations in the value of the dollar on its profits. There are many potential opportunities …show more content…
In regards to country factors we are looking for those that have a free market economy, a stable democratic government and low trade barriers. When considering technological factors we are looking at the fixed costs, minimum efficient scale and if flexible manufacturing technology is available. With respect to product factors, CAT’s products do not need to accommodate national differences since we produce and export the same products around the world thus the requirement for local responsiveness is reduced. These factors allow us to make decisions such as what countries to enter or not enter and what countries to either increase or reduce our investment …show more content…
Some new political risks CAT might face are a change in political regime that results in the enactment of laws that are less favorable to the business or social unrest that results in abrupt changes in government policy. This is most likely to occur in countries where there are competing ideologies battling for political control or where economic mismanagement has created high inflation and falling living standards. With production in so many countries political risk is something CAT may face. Because there is high chance for political risks to occur, it is important to build relationships with local governments. We do not want any surprises so being connected to the government will allow us to better predict or influence changes or decisions. Future political problems can be prevented if we learn from mistakes in the past and develop an internal connection within the countries we are