ABB and Caterpillar (A): Key Account Management

Group 14:
Jyotsna Gautam Preetinder Verma Nayanika Sahil Katyal Thomas Poignet - PGP/16/26 - PGP/16/66 - PGP/16/327 - PGP/16/338 - IE/16/007

Prevailing situation
ABB was the world leader in power and automation technologies ABB supplied to Caterpillar which was the world leading manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines Around $40 million revenue of ABB from sale of turbochargers to Caterpillar Caterpillar was not satisfied with ABBs service and felt choked in the contract as they were being charged a premium The turbocharger BU wanted Dan to leave the ABBCaterpillar matter alone

Problem at ABB
Internal power struggle between the BU management at ABB and the Group Account Manager (GAMs)
Worsening of relationship between ABB and Caterpillar as a consequence of that

Probable action plans (1/3)

ABB could choose to leave the issue as it was

As the revenue share of this part of the business was very small, it would not affect much in the short run However, in the long run, the prospects of expanding business with a giant client like Caterpillar would be entirely lost

Probable action plans (2/3)

Understand the importance of such a big client and communicate this to all important decision makers at ABB

This might usher in good business from Caterpillar for ABB in the future

Client may term this as a higher bargaining power and become more demanding in the future

Probable action plans (3/3)

ABB can approach Caterpillar with an offer of providing more flexibility provided they take in more business with ABB This would help maintain the balance of power between the two partners Overall relationship improvement with the client would usher in better business opportunities in the future A win-win situation for all concerned entities

Way ahead
ABB should provide better transparency to Caterpillar which would help remove all doubts Caterpillar being a leader in its domain can be a huge source of business in the future and thus relationship with it needs to be improved

Turbochargers amount to very small fraction of overall revenue and hence other product offerings should also be introduced to Caterpillar

Addressing conflict between BU management and GAMs. This can be taken forward by working in the steering committee together

Thank You