Caterpillar organizational structure

Running Head: CATERPILLAR’S STRATEGIC MANAGEMENT 1

CATERPILLAR’S STRATEGIC MANAGEMENT 6

Strategic Management Research Journal: Caterpillar Inc.

Shawn Cyr

MGT 498

10 December 2019

Mr. Sell

Caterpillar Inc.’s measures of verifying its strategic effectiveness

From my point of view, caterpillar is using the right measures. This company is the world leader in the production of development and mining hardware, diesel. Petroleum, gas turbines, and sophisticated gas motors. The operations of caterpillar are centered around finding answers that can make a superior world for their clients and attract investors through developments.

Being a company with value, Caterpillar adopts a technique driven by date called the operating and execution model. The company uses this methodology to ensure its leadership processes are under control and that the company achieves maximum development. The main strategy that caterpillar has also applied successfully is the understanding of the needs of the client. According to caterpillar (2019), their customers rely on their products to improve their lives and their living standards. The company in partnership with its stakeholders are working hard to drive the company into greatness by working on;

· Company greatness in operations. The company is working hard to expand its operations. This includes ensuring there is security, quality, discipline in prices, and obtain a favorable position in the market.

· Empowering the client – the company is striving to empower its client through various arrangements that are aimed at building reliability with the client and fortifying associations with its clients.

Summarize Caterpillar Inc.’s organizational structure.

Caterpillar has a simple organizational structure which ensures the company corporately designs, manufactures, and sells mining, equipment, gas engines, and construction machines. The company adopts a decentralized structure of management. This structure was the appropriate one in the quest to get near to the customers and satisfy their needs easily. The company does not rely on management levels for direction, instead, they adopt a very short chain of command which ensures ideas can flow easily from directors, to line, and to production managers and vice versa. The structure of Caterpillar gives a clear picture on how the company keeps evolving in its industry. The management understands how important it is to engage with employees at all levels.

Caterpillar Inc.’s organizational structure

Caterpillar’s organization structure is considered Holacratic because of its decentralized system of management. Caterpillar has been making constant improvements to its organizational structure utilizing the evolving technology. Its decisions are made across a holarchy of managed groups and not management hierarchy. The board of directors of the company are independent. Caterpillar has five group managers supervised by the company chief executive officer. The five managers/presidents play the role of supervising twenty-five vice managers/presidents who have to carry out various duties in the sectors of geographical regions, various facilities, service centers, and marketing regions.

As Morgan (2015) describes holacracy, this structure allows for the distribution of decision making while giving everyone in organization the chance to participate in management. The company does not rely on the levels on management and therefore its decisions flow very fast. According to Caterpillar (2015), the support part of the company is also restructured and the mining sector combined with the global mining business divisions to unite sales, products, marketing, and operations. The company is divided into small divisions which are meant to ensure there is efficiency, easy, and faster decision-making, thus reducing complexity. Its organization structure enables the company to achieve its goals easily.

Why Caterpillar Inc. leadership should study and understand the company’s internal and external environments.

According to Rothaermel (2017), it is important for any enterprise to understand their external and internal environment. Caterpillar is not operating on a vacuum, but rather it carries out business in a dynamic environment with ups and downs. The ups and downs (challenges) have an effect on how caterpillar operates and determines a lot whether they will achieve their objectives. It is important for Caterpillar’s leadership to understand the internal environment so that they can have a great deal of control over the business internally which will guide decisions that are made day in day out. By understanding the internal environment, they will easily be able to chose the products they can buy, chose employees hey can recruit, the kind of products they can distribute, and the places to distribute them.

The external business environment can be difficulty for Caterpillar to control and beyond the company’s management. This is why its leadership needs to do a continuous study of the external surrounding and adapt their operations accordingly. For instance, global competition is not something Caterpillar can change or control, but its leadership can learn and then adopt the necessary strategies that can help them deal with the competition. Factors such as inflation and interest rates need serious assessments so that the company can prepare. This very crucial for an enterprise like Caterpillar.

Caterpillar Inc.’s competitive position

The main source of caterpillar’s competitive advantage is the high quality of its items. In its industry, Caterpillar produces high quality machines and this has given them a sharp advantage over their competitors. It has also been able to gain a competitive advantage through its economies of scale and its strong inventory network that the company has built over the years. Since it has given its customers a priority and worked on its inventory system, Caterpillar has had the opportunity to expand tremendously. The clients depend a lot on the items of Caterpillar due to their economies of scale which enable them to produce top-notch quality items which they sell at a lower cost. According to United States Securities and Exchange (2015), the products and support services of Caterpillar are sold worldwide. Lower prices have also managed to attract a lot of clients who have helped the company shape their position in the market. The company has shaped both its internal and external environment because it competes on the basis of performance, quality, price, and the type of service to customers.

References

Caterpillar (2019). About Caterpillar. https://www.caterpillar.com/en/company.html

Caterpillar Inc. (2015). Caterpillar Announces New Organizational Structure for Mining and Customer and Dealer-Facing Divisions; Focus on Innovation and Data Analytics Remains a Key Priority. Retrieved from https://www.prnewswire.com/news-releases/caterpillar-announces-new-organizational-structure-for-mining-and-customer-and-dealer-facing-divisions-focus-on-innovation-and-data-analytics-remains-a-key-priority-300148348.html

Morgan J. (2015). The 5 Types Of Organizational Structures: Part 5, Holacratic Organizations. Retrieved from https://www.forbes.com/sites/jacobmorgan/2015/07/20/the-5-types-of-organizational-structures-part-5-holacratic-organizations/#5f6c872048a2

Rothaermel, F. T. (2017). Strategic management. New York, NY: McGraw-Hill Education.

Statements, F. L. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K.

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