Caterpillar Inc.’s Analysis and Strategy

Introduction

Caterpillar Inc. is among the companies that offer transparency of services and leadership. The organization’s mission is not merely to expand the company. The company strategy for sustained profitability entails investing in areas with the greatest value-creation opportunities and using appropriate measures to verify its strategic effectiveness. Among such measures, the organization employs is the Operating & Execution (O&E) Model (Caterpillar, n.d.-a). It assists them in determining if specific aspects of the firm produce or absorb value (Caterpillar, n.d.-a). The measure helps to analyze facts and statistics to determine which sectors are most appealing and what it takes to prevail (Caterpillar, n.d.-a). Finally, the management develops strategies to increase their competitiveness and devote resources to sectors with the most future growth potential.

Discussion

As for Caterpillar’s organizational structure, its approach is appropriate as well. It guarantees that the company serves the interests of shareholders and other interested parties with the utmost responsibility, honesty, and adherence to all applicable laws (Caterpillar, n.d.-b). The board of directors is composed of 11 independent directors who set the guidelines for the enterprise (Caterpillar, n.d.-b). In turn, a worldwide leadership team strives to supervise the company’s activities, productivity, and governance mechanism (Caterpillar, n.d.-b). In this sense, it is rational to claim that the organizational structure of Caterpillar is a holacracy. The holacratic companies are recognized as governance systems in which power is distributed between self-organizing units (Mosamim & Ningrum, 2020). Thus, Caterpillar’s hierarchical system indicates the holacratic approach and focuses on the stakeholders.

Furthermore, it is noteworthy that studying and understanding internal and external environments is essential for the leadership team, which is surely not omitted in the organization. The strategic management model displays the critical input parameters, internal and external surroundings, and critical output components. Strategic management’s highly valued merits are a better awareness of a company’s strategic goal, a stronger emphasis on what is essential, and a better knowledge of a quickly changing environment (Wheelen et al., 2017). Information on both the internal and external surroundings may assist a company in forecasting potential possibilities and risks. Long-term strategies can be developed with these considerations in mind.

Considering the advantages of Caterpillar, it proceeds to engage in a fiercely competitive environment while improving its products and making them cost-effective. In terms of the internal culture, the firm leverages its assets and fundamental skills to improve service quality and invests in research and innovation to build new goods to suit increasing customer requirements (Caterpillar, n.d.-a). As for the external environmental issues, Caterpillar manages to find solutions. The company’s services make them highly competitive by helping them to give valuable insights and customer-focused options across their products’ lifecycles (Caterpillar, n.d.-a). They can turn conventional offers into services that help their clients succeed by leveraging the vast user capacity of linked equipment, outstanding field technologies, and years of products, support, and application knowledge.

Conclusion

Hence, Caterpillar Inc. is a company with an effective organizational structure that employs a holacratic approach and Operating & Execution (O&E) Model to gauge its effectiveness. Due to such methods, it manages to stay highly competitive while adapting and analyzing external and internal environments. Still, some recommendations could support the company’s strategic plan, future business decisions, and improvement in business performance. These recommendations involve concentrating mainly on producing new goods to expand its product range and providing innovative solutions to its clients’ issues that are superior in terms of quality and simplicity to rivals’ alternatives.

References

Caterpillar. (n.d.-a). Caterpillar’s Strategy. Web.

Caterpillar. (n.d.-b). Governance. Web.

Mosamim, P., & Ningrum, S. (2020). Holacracy and Hierarchy Concepts: Which One is More Effective in an Organizational Leadership and Management System? Malaysian Journal of Social Sciences and Humanities (MJSSH), 5(12), 257-271.

Wheelen, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2017). Strategic management and business policy. Pearson.