Motivations for International Strategy

Caterpillar, Inc. has a presence on 7 continents throughout the world.  This enables them to reach a much larger consumer base then if they just operated in the United States.  There are two main motivations for Caterpillar, Inc. deciding to go international.  The first one is to increase their market size.  When Caterpillar, Inc. first started, they were operating in just the United States.  It was very costly to ship their products overseas.  Now they have production facilities throughout the world that allow them to reach a much larger consumer base.  They are able to send earth-moving machines and forestry products to the mining and logging operations in Asia.  They are able to more easily reach their consumers worldwide by have a global presence.  The second motivation for going international is the reduction of costs.  These costs include shipping the products, as well as producing them.  By using offshoring, Caterpillar has been able to reduce the costs associated with producing their various products.  There is cheaper labor in Asia and other world markets, and Caterpillar has been able to utilize that by offshoring their production facilities.  These two motivations go hand-in-hand because by offshoring to try and reduce costs associated with producing the products they have been able to increase their market size by having these production facilities close to the global markets that would utilize their products.  Going international has been a major source of growth and a key part of why Caterpillar is as successful as they are today.