Caterpillar in Qatar

Caterpillar is a multinational corporation that deals with manufacturing heavy machinery
for construction, mining, railway maintenance, and parts sale. The organization operates
primarily in the United States but has expanded rapidly over the years globally. The country
chosen for this purpose is Qatar. Qatar is a country in the Middle East classified as an emerging
economy. This paper performs a SWOT analysis on the organization, PESTEL analysis and
evaluates an entry strategy, the cost pressure and how the organization can utilize the POLC
framework.

SWOT Analysis

A SWOT analysis evaluates the organizations internal strengths, weaknesses, opportunities and
threats (Phadermrod et al., 2019).
Strengths
International business. Caterpillar has become a global operation giant by spreading operations
across many countries. Through such expansion, it has gained valuable experience in
international trade that it can use to expand operations into Qatar.
Brand image. Caterpillar has invested in its brand by offering quality products. Caterpillar
stands out from its competitors for providing quality and long-lasting heavy commercial and
personal equipment. Caterpillar also provides cutting-edge railway maintenance technologies.
Financial capabilities. Caterpillar has been a stand-out performer, providing year after year of
profits. For this reason, the organization’s value and net worth have increased, and the financial
reserves have helped it continue investing in marketing and creating value through its products.

Weaknesses
Safety concerns. There have been safety concerns about Caterpillar’s equipment. The
organization has been committed to reducing the injuries reported through its equipment. The
complex nature of operating some of the equipment increase the safety concerns.
Reduced revenues
Caterpillar has had to deal with reduced revenues in the 2020 and 2021 financial years. This has
been due to reduced activity in the wake of the COVID-19 pandemic that disrupted the economic
activity that Caterpillar benefits from.
Opportunities
Acquisitions. Caterpillar has strengthened its position among its competitors by investing in
acquisitions of strategic interests. The most notable is the acquisition of ECM Spa, which
provides technologies for maintaining and managing railway infrastructure.
Emerging markets. Caterpillar is strategically placed to benefit from emerging markets. The
Middle East is one of the countries that have economies with the potential to provide strategic
locations that Caterpillar can benefit from (Apaydi, 2009).
Data-driven solutions. Caterpillar can take advantage of new technologies in Qatar’s data-
driven solutions to predict changes in demand and forecast industrial activity. Qatar is a
technologically receptive country, and the synergy of technologies can be instrumental for
Caterpillar’s success.
Threats

Competition. Caterpillar faces stiff competition from several established firms like Hitachi, John
Deere, Komatsu, JCB, Sany, and Volvo. All these have global business acumen and have
products and services similar to Caterpillar.
Uncertainty. There has been uncertainty in the global economic space regarding how long the
world takes to recover from the adverse effects of the COVID-19 pandemic. This uncertainty has
affected the purchasing power of households and corporates in Qatar. The shocks experienced in
the global oil market are also a threat to Qatar’s economy and may affect the success with which
Caterpillar expands there.

PESTEL Analysis

A PESTEL analysis is the analysis of the political, economic, social, technological,
environmental, and legal environment of the new host country
Political- Qatar is a monarch that an Emir heads as the head of state. It is a politically stable
state. The country is a member of the WTO and has comfortable cooperation with other members
of WTO and the Gulf Cooperation Council. Such cooperation can help Caterpillar establish a
presence in Qatar.
Economic- Qatar’s economy thrives on the exploration of oil and gas. The country has been on
an upward trajectory in recovering from the COVID-19 pandemic. The global oil market has
experienced some shocks but remains a profitable economic activity for Qatar. Caterpillar is
strategically placed to support Qatar’s major economic activity by providing high-quality
equipment.
Social – The Qatari people are predominantly Islamic in language and culture. The nation has
adopted Arabic culture and practices. The country has reduced social inequalities through

programs such as free education, free healthcare, subsidized housing, and utilities. Caterpillar
will have to conform to the Islamic cultural practices among its human resources to establish
itself successfully.
Technological – Qatar’s economic status has placed it in a pole position to benefit from and adapt
to the new technologies. The country has been receptive to new technologies such as the Internet
of Things, which is expected to highlight the Qatar Smart Nation program by 2030. Qatar’s
receptiveness to technology will greatly benefit Caterpillar’s activities.
Environmental – The country’s core activity in oil and gas has had a significant impact on the
environment. Approximately 75% of its carbon emissions have been directly linked to its energy
exploration activities. Caterpillar is an environmentally conscious organization and will seek to
provide the nation with environmentally friendly equipment.
Legal- The predominantly Islamic country follows Islamic law (Sharia). The country has fairly
welcoming conditions for new businesses. For example, foreign countries are not required to
have a Qatari partner or backing to establish a business there.
Entry strategy
The entry strategy that Caterpillar should use is the exporting strategy. Under this strategy,
businesses export their products or services directly to the host nation and sell them directly to
the customers. The advantage of this strategy is that it has reduced risk and allows businesses to
maintain control of the organization. The other entry mode requires Caterpillar to cede some
control when setting up the business. For example, a joint venture would require Caterpillar to
give some control to the other party involved in the venture. A franchise would also require the
organization to provide operational rights to a franchisee, which is an additional risk because

Caterpillar cannot fully control the franchisee’s activities (Stevens & Makarius, 2015).
Caterpillar has used this method in many of its other global expansion activities and is well
experienced in this field. Under this strategy, Caterpillar will be able to set its prices and control
its marketing activities to ensure success.
Cost Pressures
Cost pressures are affected by several aspects, such as the demands of the host government,
differences in infrastructure, differences in distribution channels, and differences in consumer
tastes and preferences. The Qatari government’s demands are expected to be manageable because
the organization is a member of the WTO, just like the United States, where Caterpillar
originates.
Consumer tastes and preferences are not expected to change because the country’s main
economic activities support Caterpillar’s major product line. The oil demand has increased
significantly, and the supply from Russia has been affected by the conflict between Russia and
Ukraine. The infrastructural development in Qatar is an essential determinant of the successful
implementation of Caterpillar’s expansion strategy. The distribution network is also elaborate,
and Qatar has access to a port that can be essential for the transport of bulky equipment.
POLC Framework
Caterpillar can use the POLC framework concerned with the management functions of Planning,
Organizing, Leading, and Controlling. Caterpillar needs to perform these functions effectively to
implement its expansion strategy into Qatar successfully. The planning stage is the first where
the organization conducts its research to identify how best to employ the resources, strategies for
cultural adaptation, legal requirements, possible risks, and financial resources (Contractor et al.,

2014). The organizing function needs to be following the set plan. After the organization
identifies the resources required in the planning stage, organizing is knowing how the resources
will be distributed among the departments, how much local staff will be employed, how they will
be distributed, and how the licenses required will be obtained. The next stage is leading, where
the management will provide leadership to ensure that the employees are properly motivated and
that the resources are availed in the quantity and standards they were planned for. Efficient
leadership will ensure that the plan is implemented in the timelines set by the organization.
Controlling is ensuring that the organization implements its strategy effectively. Caterpillar can
exercise control areas are controlling costs and expenses, evaluating the strategy for deviations,
and taking corrective measures from the deviation.

References

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Middle East. International Journal of Emerging Markets, 4(1), 72–97.
https://doi.org/10.1108/17468800910931689
Contractor, F. J., Lahiri, S., Elango, B., & Kundu, S. K. (2014). Institutional, cultural and
industry related determinants of ownership choices in emerging market FDI acquisitions.
International Business Review, 23(5), 931–941.
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Phadermrod, B., Crowder, R. M., & Wills, G. B. (2019). Importance-Performance Analysis
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https://doi.org/10.1016/j.ijinfomgt.2016.03.009