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Corporative strategy in a global industry joy global faces Caterpillar's acquisition of bucyrus

Universidad de Chile

Título Corporative strategy in a global industry joy global faces Caterpillar's acquisition of bucyrus
Autor Fonseca, Carlos E.
Colaborador Oliva Becerra, Ismael
Escuela de Postgrado, Economía y Negocios
Tema Caterpillar Tractor Company (Estados Unidos)
Estrategia del desarrollo
Administración industrial
Caso de estudios
Descripción Tesis para optar al grado de Magíster en Administración
Autor no autoriza el acceso a texto completo de su tesis en el
Portal de Tesis Electrónicas de la U. de Chile.
Mike Sutherlin, CEO of Joy Global Inc. (“JOY”), a global mining equipment manufacturer,
was having lunch, in downtown Milwaukee, Wisconsin, with his wife, in November of 2010 when his
cell phone began ringing. He hesitated answering, but recognizing the name, picked up to hear
surprising news. It was a courtesy call from a friend at Caterpillar Inc. (“CAT”), the $85 Billion USD
juggernaut, letting him know that CAT had just purchased JOY’s cross town rival, Bucyrus
International, Inc. (“BI”), for $8.8B USD.
JOY and BI were 2 Milwaukee, Wisconsin based mining equipment manufacturers who
competed head to head on a worldwide stage. Evenly matched, with a market cap around $7B USD
each, these two companies had spared in the surface and underground mining equipment market for
heavy duty extraction mining equipment for over a hundred years since their founding in 1888 and
1889, respectively. All of a sudden, with this acquisition, what had always been a cross town rivalry
would take on new proportions. CAT was the undisputed world wide heavy machinery giant with a
market cap 10 times the size of JOY. Regarding the acquisition, Sutherlin comments, “Instead of a
smaller competition across town all of a sudden this changed the world for us.” CAT brought to the
table revenues which were 12 times larger than JOY, a global brand that stood for reliable heavy
machinery, exceptional service through its army of worldwide distributors, and the ability to win deals
by financing equipment through CAT financial.
Sutherlin´s team had just put the finishing touches on their strategic plan for 2010. The
exercise had reaffirmed some of JOY´s strategies, such as a continued commitment to focus solely in
the mining equipment industry (versus including construction and farming equipment markets like
CAT), a direct sales and service go to market model (versus third party distributors like CAT), and a
focus on premium products with premium pricing (versus wining deals on price like BI). The plan also
called for some changes such as moving beyond the dependence on a single product for their surface
mining division and a move beyond coal specific products for its underground division. Would this
strategy need to be revised? Would the plan withstand this new challenge? Sutherlin knew it was time to get his leadership team together, circle the wagons, and figure out, what, if anything, JOY could do to respond to this new competitive threat from CAT.
Fecha 2014-11-20T14:05:05Z
Tipo Tesis
Identificador (URI) http://repositorio.uchile.cl/handle/2250/117498
Idioma en
Publicador Universidad de Chile