Strategic Management Journal Part 3

Review the Strategic Management Project Background document.

Review the following terms and concepts discussed this week to prepare for this assignment:

organizational structure
organizational culture
inertia
Holacracy
PESTEL model

Create a Word doc and title it Strategic Management Research Journal Part 3. (Be sure to download and follow the template that I provided for you in your welcome message. Use a Title page and a References page with at least three references. No running head is required, but do use headings to separate portions of your paper, and remember to cite your sources in the main body of your paper). Please no abbreviated bullet or numbered lists, express yourself in full paragraphs that are 3-5 sentences in length. (Be sure to address Holacracy.)

Write a 525- to 700-word response to the following prompts in your journal entry:

1. Assess whether Caterpillar Inc. is using the appropriate measures to verify its strategic effectiveness.
2. Summarize Caterpillar Inc.’s organizational structure.
3. Determine whether Caterpillar Inc.’s organizational structure is considered a traditional organizational structure or a Holacracy.
4. Justify why it’s important for Caterpillar Inc.’s leadership team to study and understand the company’s internal and external environments.
5. Evaluate Caterpillar Inc.’s competitive position and how they have responded to shifts in the external and internal environments.
6. Recommend strategies in operational changes to support Caterpillar’s strategic plan, future business decisions, and improvement in business performance.
Note: You will use information from this entry in your presentation due in Wk 5

Submit your assignment.

Resources

Center for Writing Excellence
Reference and Citation Generator
Grammar and Writing Guides

ANSWER

Strategic Management Research Journal Part 3

Measures Caterpillar Inc uses to verify its strategic effectiveness

Caterpillar Inc is using the appropriate measures to verify its strategic effectiveness. Caterpillar Inc is a leading construction and mining equipment manufacturer, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. The company has been driving sustainable progress around the globe since 1925 (Caterpillar, 2019). Caterpillar Inc adopts the operating and execution model to make strategic choices to create profitable growth for the future. The use of the operating and execution model has been effective in enabling the company to improve customers’ lives worldwide. The company’s customers use the products to construct basic infrastructure, making it easy to access basic facilities such as water, electricity, roads, bridges, hospitals, and schools. Together with its partners, Caterpillar is providing solutions to its clients globally, enabling higher living standards.

Summary of Caterpillar Inc.’s organizational structure

Caterpillar Inc has adopted a simple decentralized organizational structure that enables it to meet customer and dealer needs. Rather than relying on management levels for direction, the company has adopted a short chain of command, ensuring an easy flow of ideas. Further, the decentralized organizational structure is less complex; hence, customers’ needs are easy to identify and meet. The company has the best dealers in the industry who identify and serve customers to their satisfaction. Caterpillar’s increased accountability through its organizational structure makes it stand out among competitors.

Caterpillar Inc.’s organizational structure

Caterpillar’s organizational structure is a Holacracy, a system of management that comprises no assigned roles; as such, employees have the freedom and flexibility to perform different tasks. Caterpillar’s decentralized system of governance distinguishes its organizational structure from traditional to holarchy. Decisions in the company are made across a holarchy of managed groups rather than the management hierarchy. Additionally, the company has an independent board of directors. Holacracy’s system of governance gives all persons within an organization an opportunity to participate in decision-making (Krasulja et al., 2016). Incorporating every person’s opinion eases the decision-making process and ensures customers’ needs are easily met.

Importance of Caterpillar Inc’s leadership to understand the company’s internal and external environments

Understanding a company’s internal and external environment is crucial for its success. Studying a business’s environment ensures that the managers can predict challenges and identify solutions early enough. Further, understanding the environment within which an enterprise operates puts the management in a better position to control the business and quickly provide solutions in case of any shortcomings (Shatilo, 2019). When Caterpillar Inc’s leadership understands their internal environment, they will be able to manage their employees. Part of knowing employees can identify each individual with their strengths, weaknesses, and capabilities.

Additionally, the leadership will understand their financial status, such that they will quickly identify when the business makes the slightest loss, hence put measures to improve. Although it is difficult to control the external environment, understanding the same goes a long way in contributing to its success. The external environment includes competitors, the economy, suppliers, and customers. Understanding competitors’ strategies will enable a company to make decisions and changes to be unique and counter the competition. The company will also have to make changes depending on how well or bad the economy is doing to meet the customers’ needs.

Caterpillar Inc.’s competitive position

Since its formation, Caterpillar has managed to drive sustainable progress globally. The company remains a leading manufacturer in the construction industry due to the production of quality products compared to its competitors. CAT has skillfully created a product portfolio, making it a company to reckon with in the mining and construction industry. CAT’s strategy of investing in optimal product design and a strong brand development places it in a better position than its competitors. Caterpillar has expanded its operations globally due to prioritizing customers’ needs above anything else (Caterpillar, 2019). Additionally, the company has created a virtuous cycle by manufacturing quality products that result in quality by-products that clients sell at a lower price, hence developing economies of scale.

Recommendations for Caterpillar Inc’s future

Caterpillar Inc has done well in the mining and construction industry. The company is currently operating globally and has managed to beat its competition. Through its organizational structure, CAT has prioritized its customers’ needs and included all its employees in decision-making. For the company to remain at the top and continue meeting its consumers’ needs, it needs to adopt innovative and technological methods in its operations. We live in a highly technological age where better ways of problem-solving are arising; if Caterpillar Inc continues operating in the traditional ways, the competitors will catch up. Further, the company should consider opening up its communication channels to customers, such as social media platforms, to absorb feedback.

References

Caterpillar. (2019). About Caterpillar.

https://www.caterpillar.com/en/company.html

Krasulja, N., Radojevic, I., & Janjusic, D. (2016). Holacracy- The New Management            System. International Scientific Conference, Njs, Serbia.

http://isc2016.ekonomskifakultet.rs/article-19.html

Shatilo, O. (2019). The Impact of External and Internal Factors on Strategic Management of        Innovation Processes at Company Leve. Ekonomika (Economics), 98(2), 85-96

DOI:10.15388/Ekon.2019.2.6