Organizational structure of Caterpillar Inc
Caterpillar Inc. refers to an American Fortune 1000 organization that engineers design, develop and manufacture machinery, financial products, engines as well as insurance to consumers via a worldwide recognized dealer network. The management of the organization has the ability of setting the right goals along with constantly achieving them. However, it has been found that since the last 5 years, the organization is facing stock going down due to ineffective strategic management (Williams, 2018). The investment cost of the company is getting increased while the consumer base is getting decreased.
Caterpillar organization poses a simple organizational structure that ensures the organization corporately manufactures designs, manufactures, equipments, mining along with construction machines. The organization does not rely on the direction of management levels and instead aims at adapting a highly short chain of command.
The organizational structure of Caterpillar is considered to be Holocratic since it has decentralized management system. The company has improved its organizational structure on a continuous basis with the help of technological advancement. The company has independent boards of director (Lysak, Marmon & Schoen, 2020). The organization has 5 managers who supervise 25 vise managers who are supervised by CEO. As per researchers the structure of holocracy allows the distribution of decision making while providing every individual in organization for participating in management (Ridley et al., 2019). The organization has been divided into small division that are meant for ensuring there is easy, faster decision making and efficiency.
Given the fact that environmental analysis helps the management of an organization to develop effective understanding of the market as well as strengths and weakness of the company to deal with internal and external issues, external and internal market analysis is highly crucial. Given the fact that the company is now loosing consumers, management should assess the external environment through PESTLE and Porters 5 Forces analyzing tools, in order to understand the factor that are beyond the control of the management of the company, but can be handled through strategic management (Sandifar, 2021).
The key source of competitive advantage of the organization is the high quality of products delivered by it. The organization is well-known across the consumers for producing some of the highest quality machineries and this in turn has provided them with sharp advantages since years. However, due to higher cost of the raw materials along with costly workforce, the organization is failing to maintain the quality at the same pricing strategy (4). On the other hand, with time, the number of competitors of the Caterpillar Inc, has got increased to a significant level. Organizations like Volvo CE, SANY, XCNG and Komatsu are its major competitors.
The first recommendation for the management is to conduct a through PESTLE. Porters 5 and SWOT analysis to understand the areas where strategic planning is required. Secondly, given the high competition, the company should focus on maintain its quality while reducing the price range than its competitors (2). This will not only ensure competitive advantage, but will help the company to enhance its consumer base in near future.
Reference List
Lysak, A., Marmon, R., & Schoen, E. J. (2020). Whistleblowing and Caterpillar Inc.’s Swiss Tax Strategy. Journal of Business Ethics Education, 17, 237-250.
Ridley, S. J., Ijomah, W. L., & Corney, J. R. (2019). Improving the efficiency of remanufacture through enhanced pre-processing inspection–a comprehensive study of over 2000 engines at Caterpillar remanufacturing, UK. Production Planning & Control, 30(4), 259-270.
Sandifar, S. K. (2021). Anatomy of a Project: Influential Factors on a Greenfield Power Generation Project at Caterpillar’s Seguin, Texas Facility (Doctoral dissertation, Purdue University Graduate School).
Williams, K. B. (2018). The Caterpillar Way: Lessons in Leadership, Growth and Shareholder Value and Demographics and the Demand for Higher Education. College and University, 93(3), 55-58.
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