Information Technology for Managers - Term Paper Example

Caterpillar Inc. Caterpillar is a technology leader and the worlds leading manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. For more than 80 years, Caterpillar Inc. has been building the worlds infrastructure and, in partnership with its worldwide dealer network, is driving positive and sustainable change on every continent. With 2005 sales and revenues of $36.34 billion, it is one of the greatest revenue generating company. Mission Statement Caterpillar will be the leader in providing the best value in machines, engines and support services for customers dedicated to building the worlds infrastructure and developing and transporting its resources. We provide the best value to customers. [1] Caterpillar will provide its workforce with an environment that stimulates diversity, innovation, teamwork, continuous learning and improvement and rewards individual performance. We develop and reward people. Caterpillar is dedicated to improving the quality of life while sustaining the quality of our earth. We encourage social responsibility. Analysis of the Mission Statement For the sake of their enormous image, Caterpillar strives really hard to ensure that our success as a corporation contributes to the quality of life of all people touched by our business and to the prosperity of all communities where we work and live. [2] Caterpillar’s vision of their employees is to get recognized, along with their products and services, as key enterprise strength. Their goal is empower our engaged employees and their leaders to create a positive culture in which safety, diversity, integrity, and performance are highly valued by all. Historical Background In 1925, the Holt Manufacturing Company and the C. L. Best Tractor Company merged to form Caterpillar Tractor Company. The Caterpillar product line included motor graders, blade graders, elevating graders, terraces and electrical generating sets. That was happened in 1940. In 1950, Caterpillar Tractor Company Limited in Great Britain is established; the first of many overseas operations created to help manage foreign exchange shortages, tariffs, import controls and better serve customers around the world. In 1931, the company created a separate engine sales group to market diesel engines to other equipment manufacturers. This group was replaced in 1953 with a separate sales and marketing division to better serve the needs of a broad range of engine customers. [3] Caterpillar Mitsubishi Limited started production in 1965, has been renamed Shin Caterpillar Mitsubishi Ltd., and is now the No. 2 maker of construction and mining equipment in Japan. In 1986, The Caterpillar Tractor Company changes its name to Caterpillar Inc. a more accurate reflection of the enterprises growing diversity. The company decentralized its structure, reorganizing into business units responsible for return on assets and customer satisfaction during 1990. In 1999, Caterpillar unveils new line of compact construction equipment at CONEXPO, worlds largest construction show, in response to changing customer needs for smaller, more versatile construction equipment. In 2000, Caterpillar celebrates its 75th anniversary. Caterpillar is the first company to globally launch 6 Sigma and deliver first-year benefits in excess of implementation costs and this was happened in the year 2001. In 2003, Caterpillar becomes the first engine manufacturer to offer a complete line of 2004 model year clean diesel engines fully compliant and certified by the U.S. Environmental Protection Agency (EPA). Caterpillars breakthrough emissions control technology, known as ACERT, is designed to comply with EPA standards without sacrificing performance, reliability or fuel efficiency. [4] Caterpillar Inc: Business Description Caterpillar Inc.’s principal activity is to design, manufacture and market construction machinery and engines. The Groups operations are conducted through three business segments: Machinery, Engines and Financial Products. Machinery segment designs, manufactures and markets construction, mining and forestry machinery and related parts. Engines segment designs, manufactures and markets electric power generation systems, on-highway vehicles and locomotives, marine, petroleum, industrial, agricultural and related parts. Financial Products segment provides financing to customers and dealers for the purchase and lease of equipment, offers operating and finance leases, installment sale contracts, wholesale financing plans and insurance services. The Groups products are sold under the brand names Caterpillar, Cat, Solar Turbines, MaK, Perkins, FG Wilson and Olympian. It operates in the United States, Europe, Africa, Middle East, Asia Pacific, Latin America and North America. [5] Caterpillar’s Product Range Caterpillar designs and manufactures 10 models of skid steer loaders and five models of multi-terrain loaders, which feature rubber tracks. Several of the machines feature vertical lift, and several have high-flow hydraulics systems for powering high-demand tools. A diverse line of Cat Work Tools equips the machines for a wide range of jobs — buckets for every application, forks, blades, landscape rakes, tillers, augers, trenchers, backhoe attachments, hammers, stump grinders, brush cutters, mulchers and brooms. Six models of mini-excavators can handle trenching and digging tasks in tight spaces. The newest models feature variable displacement hydraulic pumps for unmatched ability to dig through tough conditions. A variety of work tools equips these machines to do more than digging. For jobs requiring high mobility, three models of Caterpillar compact wheel loaders are up to the task. Long reach and dump height make them ideal for truck loading. Several models of Caterpillar tele handlers are designed for both lifting and digging. [6] The long reach of a tele handler suits it to placing materials on slopes. For site preparation work, Caterpillar offers three models of small track-type tractors that are well suited to tough dozing on a smaller scale than the big tractors for which Caterpillar is so well known. Caterpillar Inc.: Services Financing solutions that fit customer’s needs. Keep your CAT equipment running like new. Transform your supply chain. Protection of the investments. Improve the return of your investment by continuous training programs for employees. Get the equipment you want from car rental stores. Organization’s dealing with Social, Environmental and Economic Factors Caterpillar is striving to meet the requirements of the Global Citizenship. [7] Dealing with the social, environmental and economic conditions of each and every society accordingly. Social Factors As a global company, Caterpillar seeks to become actively involved in all of the communities where we work and live.  We encourage our employees to become engaged in their communities as well, supporting organizations throughout the United States and the world.  Organizations such as the United Way, Salvation Army and Habitat for Humanity provide great volunteer opportunities for employees and help solve local problems by contributing to their communities welfare and prosperity. Environmental Factors Their products are designed in such a way to minimize the harmful effects on the natural environment. They believe in the efficient use of the world’s resources as their inputs and this can easily be seen in their designs, and manufacturing processes. For the sake of natural environment sustainability Caterpillar is involved with organizations ranging from the nature conservancy to the global mining initiatives. Economic Factors Caterpillar effectively responded to unprecedented customer demand in 2005 and reported full-year sales and revenues of $36.339 billion and profit per share of $4.04. Sales and revenues rose 20 percent from 2004, and profit per share was up 40 percent. Fourth-quarter sales and revenues of $9.663 billion and profit per share of $1.20 were both all-time records for any quarter in Caterpillar history. As part of a long-term commitment to maximize stockholder value, Caterpillar announced a two-for-one stock split in 2005 and increased the dividend rate for the eleventh time in the last twelve years. On a split-adjusted basis, the quarterly dividend increase of 4.5 cents per share, during the third quarter, was the largest increase in the companys history. [8] Threats and Opportunities Business Pressures There are certain kinds of pressures, which the company must have to undergo with. They include Market pressures, Technological Pressures and social pressures. Market Pressure Globalization has shrunk the whole world business to a great extent. These days every organization is facing more competition than before. [9] In order to sustain themselves in the world market, it is very important to adopt the new technological methods and also to adopt these methods promptly. Now these days an organization does not only face the domestic competitors but competitors from all over the world. The nature of the work has become more complex due to the increasing competitive rate. Technological Pressure As the world is growing faster, technological advancement has become a world wide phenomenon. Companies are more towards adopting effective advanced techniques to increase their sales and also to the quality of manufacturing in order to step ahead from their competitors in this fast growing global world. There is a huge problem in this regard, which is the continuous advancement in technology and it makes the task of the managers very difficult in terms of prompt adoption of all the latest advancements. Social Pressure Societies are pretty much aware of the fact that how well they should be treated and what kind of services and benefits can be attainable to them from any organization. Urbanization has played an important role in creating the awareness among the people. Nowadays people are more investigative for the sake of their natural environment as well as the other benefits. It is the responsibility of every organization to safeguard the natural environment around and also to facilitate the people associated to those particular surroundings. Different techniques to overcome the Business Pressures It can be taken as the blessing of today’s advanced world that this has become easier to identify, analyze and solve a particular problem in effective manner. There are certain techniques which are describes below, Strategic Systems  These are special programmes, designed especially to increase market share, allow better negotiation with the suppliers and most importantly to prevent customers to enter into the territory for some time. [10] By adopting these programmes, an organization can overcome the market pressure of increasing competitors and also the demands of suppliers. Continuous Improvement Efforts – Support It includes a number of techniques which are very effective to solve different organizational issues. Improved Productivity This is for increasing output, reducing costs, increasing output faster than costs which ultimately strengthen the economic position of the company. [11] Just in time (JIT) This technique is to ensure that the materials and parts arrive at a workstation exactly when they are needed so as to prevent from delay. Total Quality Management (TQM) It is a recent advancement in order to perform the task of data monitoring, collection, summarization, analysis and reporting, inspection. Large number of alternative choices and constraints, far reaching and difficult to forecast decision impacts can easily be controlled through this technique. Managing information This is to manage information overload as that of marketing database in a manner which ensures its efficient use. Business Process Reengineering (BPR) This is a technique in which several jobs are combined into one. In this way unnecessary steps are removed and business processes are performed in a natural order. [12] Employees make decisions. Making decision becomes part of their jobs. This technique helps to radically redesign a particular business process to improve performance (of core processes). Multiple versions of this technique enables the economies of scale that result from mass production, yet allows customization of products and services to fit the need of customers. Work is performed at a site where it makes most sense, which includes the customers and suppliers sites. Thus the work is shifted, if necessary, across organizational and even international boundaries (business alliances). It helps to controls and checks and other non-value-added work are minimized. Benefits of BPR Reducing cycle time and  time to market Empowerment of employees and collaborative work Management delegates authority to teams to obtain faster execution and fewer delays Customer focused approach reengineer to meet customer demands, change processing from mass production to mass customization Restructuring and team based structure Networked organization: many teams, each responsible for a complete business process Business Alliances - Turnaround This focuses toward the sharing of resources, permanent supplier-company relationship, joint research effort, temporary joint venture and virtual corporation, special company for a specific, time-limited, mission. [13] Emergence of Information Technology and its Competitive Advantages Operational Effectiveness It leads to the induction of better and advanced technologies with the superior and improved input with highly trained expertise to achieve the target of more effective management. Cost Reduction - Cost Leadership Save by posting manuals and customer support documents online. Another aspect is Self service which is customers can support each other in discussion forums This helps to solve the problems of every sort through brain storming and also through merging the ideas and technologies of the global world. [14] Strategic Positioning Strategic positioning research is conducted to determine who the customers of your product/service are and what should be told about the product or service to get them to buy from you. Finding the right target and message to build your marketing plan can be crucial in the success of your product. Both qualitative and quantitative research techniques are used to determine a product’s positioning. Factors of Strategic Positioning are described as under Delivering value-added advice, products and services to clients with unmatched levels of quality and integrity. [15] Investing in opportunities for growth and diversification that leverage the firm’s strengths and global client franchise Operating with discipline and focus throughout the firm to ensure that the appropriate resources are committed to each business opportunity Managing risk and capital to ensure preservation of, and appropriate returns on, stockholders’ equity Enhancing the culture of excellence that enables the firm to achieve superior results Technical Programmes for Caterpillar Inc. to enhance their Performance Material Requirements Planning (MRP) Instead of using an approach of inventory management based on individual items, the interdependence of the items (all piece needed to build a product) is taken into account for planning the material requirements. This would make the input allocation more efficient and in this way there would be no waste of resources. Manufacturing Resource Planning (MRPII) It connects MRP with other functional areas, e.g. determines the cost of parts and the cash flow needed to pay for parts and estimates cost of labor, tools, equipment and energy. It provides a detailed, computerized budget Just in Time (JIT) Systems It prevents the work from delay and save the time of both , the suppliers as well as the customers. This technique can bring drastic changes in the progress of any organization. Project Management They are tools such as PERT: program evaluation and review technique, and CPM: critical path method. Their function is to pick flaws from any program and to make positive criticism. Computer-Aided Design CAD This is for the industrial drawings which are constructed on a computer screen, and subsequently stored, manipulated, and updated electronically. [16] Computer-Aided Engineering CAE Its function is to analyze the design of CAD and determine whether it will work the way the designer thought it would. Computer-Aided Manufacturing CAM Computer-aided process planning, robotics programming, computer-work generated standards, shop-floor control, and everything regarding computer aid and assistance. Report of Caterpillar Earnings 1. Consolidating Adjustments - Eliminations of transactions between Machinery and Engines and Financial Products. 2. Core Operating Costs - Machinery and Engines variable manufacturing cost change adjusted for volume and change in period costs. Excludes the impact of currency and retirement benefits for periods comparing 2005 to 2004. For periods comparing 2006 to 2005, excludes the impact of currency and stock based compensation. 3. Currency With respect to sales and revenues, currency represents the translation impact on sales resulting from changes in foreign currency exchange rates versus the U.S. dollar. With respect to operating profit, currency represents the net translation impact on sales and operating costs resulting from changes in foreign currency exchange rates versus the U.S. dollar. Currency includes the impacts on sales and operating profit for the Machinery and Engines lines of business only; currency impacts on Financial Products revenues and operating profit are included in the Financial Products portions of the respective analyses. [17] With respect to other income / expense, currency represents the effects of forward and option contracts entered into by the company to reduce the risk of fluctuations in exchange rates and the net effect of changes in foreign currency exchange rates on our foreign currency assets and liabilities for consolidated results. 4. EAME - Geographic region including Europe, Africa, the Middle East and the Commonwealth of Independent States (CIS). 5. Earning Assets - These assets consist primarily of total finance receivables net of unearned income, plus retained interests in securitized trade receivables, plus equipment on operating leases, less accumulated depreciation at Cat Financial. 6. Engines - A principal line of business including the design, manufacture, marketing and sales of engines for Caterpillar machinery, electric power generation systems; on-highway vehicles and locomotives; marine, petroleum, construction, industrial, agricultural and other applications; and related parts. Reciprocating engines meet power needs ranging from 5 to over 22,000 horsepower (4 to over 16 200 kilowatts). Turbines range from 1,200 to 20,500 horsepower (900 to 15 000 kilowatts). 7. Financial Products - A principal line of business consisting primarily of Caterpillar Financial Services Corporation. Caterpillar Power Ventures Corporation (Cat Power Ventures) and their respective subsidiaries. Cat Financial provides a wide range of financing alternatives to customers and dealers for Caterpillar machinery and engines, solar gas turbines, as well as other equipment and marine vessels. Cat Financial also extends loans to customer and dealers. Cat Insurance provides various forms of insurance to customers and dealers to help support the purchase and lease of our equipment. Cat Power Ventures is an active investor in independent power projects using Caterpillar power generation equipment and services. 8. Latin America - Geographic region including the Central and South American countries and Mexico. 9. Machinery - A principal line of business which includes the design manufacture, marketing and sales of construction, mining and forestry machinery -- track and wheel tractors, track and wheel loaders, pipe layers, motor graders, wheel tractor-scrapers, track and wheel excavators, backhoe loaders, log skidders, log loaders, off-highway trucks, articulated trucks, paving products, tele handlers, skid steer loaders and related parts. Also includes logistics services for other companies. [18] 10. Machinery and Engines - Due to the highly integrated nature of operations, represents the aggregate total of the Machinery and Engines lines of business and includes primarily our manufacturing, marketing and parts distribution operations. 11. Managed Distribution - The process to provide a fair and equitable allocation of available machine and engine production positions to worldwide dealers on models where demand exceeds factory supply. 12. Manufacturing Costs - Manufacturing costs represent the volume adjusted change for variable costs and the absolute dollar change for period manufacturing costs. Variable manufacturing costs are defined as having a direct relationship with the volume of production. This includes material costs, direct labor and other costs that vary directly with production volume such as freight, power to operate machines, and supplies that are consumed in the manufacturing process. Period manufacturing costs support production but are defined as generally not having a direct relationship to short-term changes in volume. Examples include machine and equipment repair, depreciation on manufacturing assets, facility support, procurement, factory scheduling, manufacturing planning and operations management. For 2005, manufacturing costs exclude the impact of currency and retirement benefits for periods comparing 2005 to 2004. For periods comparing 2006 to 2005, excludes the impact of currency and stock based compensation. 13. Period Costs - Comprised of Machinery and Engines period manufacturing costs, SG&A expense, R&D expense and other operating costs. Excludes the impact of currency and retirement benefits for periods comparing 2005 to 2004. For periods comparing 2006 to 2005, excludes the impact of currency and stock based compensation. 14. Price Realization - The impact of net price changes excluding currency. Includes the impact of changes in the relative weighting of sales between geographic regions. 15. Retirement Benefits - Cost of defined benefit pension plans, defined contribution plans and retirement healthcare and life insurance. 16. Sales Volume - With respect to sales and revenues, sales volume represents the impact of changes in the quantities sold for machines, engines and parts. With respect to operating profit, sales volume represents the impact of changes in the quantities sold for machines, engines and parts combined with the net operating profit impact of changes in the relative weighting of machines, engines and parts sales with respect to total sales. 17. Stock-Based Compensation - As required by Statement of Financial Accounting Standard 123R, we will begin expensing stock-based compensation awards in 2006. [19] Compensation cost is based on the fair value of the award on the date of grant. 18. 6 Sigma - On a technical level, 6 Sigma represents a measure of variation that achieves 3.4 defects per million opportunities. At Caterpillar, 6 Sigma represents a much broader cultural philosophy to drive continuous improvement throughout the value chain. It is a fact-based, data-driven methodology that we are using to improve processes, enhance quality, cut costs, grow our business and deliver greater value to our customers through Black Belt-led project teams. At Caterpillar, 6 Sigma goes beyond mere process improvement it has become the way we work as teams to process business information, solve problems and manage our business successfully. 19. 2010 Goals - The Companys 2010 goals are a part of its enterprise strategy to achieve its "Vision 2020," which was made public on October 31, 2005. The 2010 goals are grouped under the "3Ps" of people, performance, and profitable growth. The people goals include a highly engaged workforce and world-class safety. The performance goals are related to quality and market leadership and product and service parts availability. Profitable growth goals include the 2010 sales and revenues target and a goal for earnings per share growth. . Caterpillar inc.: Vision 2020 WE ARE RECOGNIZED AS THE LEADER EVERYWHERE WE DO BUSINESS In construction, mining equipment, reciprocating engines, industrial gas turbines and more, we lead. OUR PRODUCTS AND SERVICES HELP OUR CUSTOMERS SUCCEED Customer satisfaction will always be the highest priority for all of Team Caterpillar. We deliver innovative products and highly integrated solutions that provide the best return on investment to customers. [20] OUR DISTRIBUTION SYSTEM IS A COMPETITIVE ADVANTAGE Our relationship with each and every independent dealer works to enhance the value of our products and services. OUR SUPPLY CHAIN IS RECOGNIZED AS WORLD CLASS We have the lowest total channel costs and the best asset utilization in our industries. OUR BUSINESS MODEL DRIVES ENTREPRENEURIAL ZEAL, GROWTH AND GLOBAL SCALE Following a matrix business model that is recognized as the benchmark for large corporations because it preserves business unit autonomy and entrepreneurial zeal while leveraging select common processes, technologies and core competencies, we see growth as a necessity - not a choice - for the future of the global marketplace. OUR PEOPLE ARE TALENTED AND ENGAGED We are global in scope, diverse in our endeavors and people and safe in our places of work. It is that simple. OUR WORK TODAY MAKES THE WORLD OF TOMORROW POSSIBLE We are dedicated to Making Progress Possible. OUR FINANCIAL PERFORMANCE CONSISTENTLY REWARDS OUR STOCKHOLDERS We move forward in search of consistent growth, improved productivity and innovation through technology and manufacturing. Realizing our Vision 2020 has made Caterpillar a great company to work for, a great company to invest in and a truly admired global leader that makes progress possible around the globe. At the end of the day, for the people of Team Caterpillar, it is all about our work today enabling the world of tomorrow. Conclusion Detailed and comprehensive overview on overall activities of the Caterpillar Inc. helped a lot to arrange the techniques which are required to enhance the performance graph and to accomplish the Vision 2020 of the organization. Emergence of Information Technology is a great help for the managers to improve their work quality by using the programmes and techniques like Total Quality Management, Business Process Reengineering and a host of many others. Their induction in different areas would lead toward the steady growth and also to maintain the organization’s position in this highly competitive global environment. Sources 1. 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