ABB - CAT
Managing Business Markets
Monika Singh
EPGP-15B-052
Product Manager
Reliance Jio | Platforms & Services
CASE C5: ABB - CAT
1. Why was Caterpillar planning to discontinue relationship with ABB?
Caterpillar was planning to discontinue its relationship with ABB due to various reasons that
strained their partnership:
1. Perception of Being Held Hostage: Caterpillar felt that ABB was holding them hostage by
dictating terms related to product delivery and pricing. There was a sense that ABB was not
genuinely interested in Caterpillar's business needs, which created a negative perception 3.
2. Disconnect in Customer and Management Alignment: A significant disconnect existed
between ABB and Caterpillar in terms of customer and management alignment. This
misalignment led to challenges in understanding each other's perspectives and working
together effectively.
3. Conflicts in Service Approaches: ABB and Caterpillar had conflicting service approaches,
particularly in the development of turbocharger designs. Caterpillar had its own air systems
group working on turbocharger designs, which created conflicts and hindered collaboration
between the two companies.
4. Intellectual Property Concerns: Intellectual property matters with competitors supplying
Caterpillar also contributed to the strained relationship. These concerns added complexity to
the partnership and raised issues related to proprietary information and technology.
5. Lack of Mutual Understanding: There was a lack of mutual understanding between ABB
and Caterpillar regarding business operations and decision-making processes. This lack of
clarity and alignment led to misunderstandings and challenges in working together effectively.
Overall, these factors collectively led Caterpillar to consider discontinuing its relationship
with ABB, highlighting the importance of addressing communication, alignment, and
collaboration issues in key account management to maintain successful partnerships.
2. What changes are required in both procurement and selling to rebuild the ABB- CAT relationship?
To rebuild the relationship between ABB and Caterpillar, several changes are required in both
procurement and selling processes:
Procurement Changes:
Enhanced Communication: Improving communication channels between ABB and Caterpillar's
procurement teams is essential. Regular meetings, updates on product availability, and pricing
discussions can help align expectations and foster transparency.
Flexibility in Terms: ABB should demonstrate flexibility in terms of product delivery and pricing
to address Caterpillar's concerns about feeling "held hostage." Collaborative negotiations and
finding mutually beneficial solutions can help rebuild trust.
Intellectual Property Management: Addressing intellectual property concerns is crucial. ABB
should ensure that all intellectual property matters are handled transparently and in compliance
with Caterpillar's requirements to alleviate any apprehensions.
Selling Changes:
Customer-Centric Approach: ABB needs to adopt a more customer-centric approach in its selling
process. Understanding Caterpillar's specific needs, preferences, and challenges can help tailor
solutions that add value and meet their expectations.
Technical Synergy: ABB should focus on providing strong technical synergy with Caterpillar,
showcasing expertise and knowledge that align with Caterpillar's requirements. Demonstrating
technical excellence can enhance the perceived value of ABB's offerings.
Collaborative Partnership: Moving from a supplier to a partner relationship requires ABB to
collaborate closely with Caterpillar. Identifying win-win opportunities, respecting Caterpillar's
business model, and working together on joint initiatives can strengthen the partnership.
By implementing these changes in procurement and selling processes, ABB can rebuild the
relationship with Caterpillar, foster better collaboration, and create a more mutually beneficial
partnership based on trust, transparency, and shared value.
