Non substitutable Resources and Capabilities: The dealer and supplier network, expertise in

research and development, Engineering and technology are the few capabilities which are pushing
CAT to forward. Non substitutable capabilities include reduction in operating cost, improvement in
productivity, enhancement of safety environment, and reduction in greenhouse gas emissions and
water consumption. The CAT has record declining curve for green house gas emission and water
consumption in 2014 compare to 2006. [1]

Resources and capabilities are the sources of core competencies:

The four attributes of resource and capabilities above are the source to create the core competency of
Caterpillar. The core competencies are the basis of the firms competitive advantage, value creation
and ability to earn the above average returns. The core values for the sustainability are Integrity,
Excellence, Teamwork, Commitment and sustainability are the driver to get the resources and
capability to convert into core competency. The capability of system integration, system

configuration, commitment to the quality, productive efficiency, development of global supply

network, lean manufacturing, customer service, value chain creation etc are few of CATs the core
competencies. The relationship between resources (tangible and non tangible), capabilities and
competencies for gaining and sustaining competitive advantage is shown here in the figure.

Tangible resources: These can be categories in four different categories.

Financial resources: These are the resources basically form the part of balance sheet of CAT.
Caterpillar has financial resources available worth of $84,681 as on Dec 31, 2014. [1] This not only
shows CATs capability to borrow from the market but also shows its ability to generate the internal
funds.
Organizational resources: The basic resource of this kind is the formal reporting structure of CAT.
CAT has big human resource available with itself to fit into the reporting structure. They have 1,
14,233 employees working with them as on December 31, 2014.[1] This includes the formal planning,
controlling and coordination systems to perform the daily production and nonproduction activities.

Physical resources: This includes the plant, machinery and equipment, infrastructure facility
available with CAT and its inventory (Raw material, WIP and finished products which are not sold).

This also includes the location of the offices, plants in the world. Caterpillar at present is operating in
more than 180 countries.[1]

Technological resources: This is the category where all the resources related to skill, experiences,
engineering and technological intelligence, process and technological patents/copyrights/trade secrets
are counted.