The objective of this essay is to measure the extent to which mature and cyclical market can drive corporate restructuring. It will be argued that indeed market maturity played a main role in restructuring, as the competition increased and lacked innovation brought up the need to come up with an effective action plan. However it will also be argued that how Caterpillar enjoyed the profits and ignored all the flaws in the in the organization, and the information about the external environment decreased, resulting in growing out of the market realities. Therefore Caterpillar’s flawed structure was not able to respond to the external environment and became vulnerable to the competitors. Implication of Product Life Cycle (PLC) and market maturity will be assessed; secondly, limits of Caterpillar’s original structure will deliberated to gain insight into the internal problems; thirdly, the restructuring process will be discussed, and how it improved the overall performance of the company; finally, by …show more content…
According to the Porter’s five forces analysis (2004), the threats of new entrants had been low, with the growth of Komatsu sales volume. Kotmatsu had gained market share by offering low cost, high quality choices in multiple range of product lines. At the same time Caterpillar lacked innovation and kept increasing the price of their product by an average of 10% every year. In order to recover from the cost war and to attain real growth, Caterpillar had to consider new products lines and new market to expand in, due to the maturation of the market. Also, Caterpillar considered restructuring due to the direct threat of Komatsu invading Caterpillar’s markets. Yet, concentrating just on the external elements looks like restricting when pondering the downturn of Caterpillar’s production. Caterpillar was loosing a million dollar a day, seven days a week in 1983 and 1984(Neilson &