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Introduction
Caterpillar Inc. is a large multidivisional organization that performs in the market of machinery, financial, and insurance services. According to the organizations official statement, its strategic goals include meeting the needs of our customers and the communities in which we live and work and creating profitable growth for tomorrow ( Caterpillars strategy, 2022, para. 1). The achievement of the strategic goals of the company is supported by the reported data in the annual financial statement. Indeed, the companys sales and revenues in 2017 were $45.462 billion, up 18 percent from 2016 ( Form 10-K, 2017, p. 26). The company measures its strategic accomplishments using its operating and execution model, which entails the use of quantitative (accounting calculations) and qualitative (surveying and observation) methods of estimating resource allocation to its divisions ( Caterpillars strategy, 2022). Such a measurement approach is effective since it allows for incorporating multiple factors within a large corporation.
Organizational Structure
The companys organizational structure is complex due to the different segments of operations. In particular, the company contains two major categories of operation, including machinery, energy, transportation, and financial products. The first segment entails construction industries, resource industries, energy and transportation, and others. The second segment includes Caterpillar Financial Services Corporation (Cat Financial) and Caterpillar Insurance Holdings Inc. ( Form 10-K, 2017). Each segment has its management and structural independence within the larger organizational structure.
When determining whether Caterpillars organizational structure is traditional or holacratic, one should state that traditional structure implies a linear vertical hierarchy of relations between the head of the company and its subdivisions. On the contrary, Caterpillars structure might be labeled as holacratic, since it contains governance structures where the distribution of power among self-organizing groups instead of the top-down authority in the typical hierarchical corporate culture (Mosamim & Ningrum, 2020, p. 257). Since the company has independent governance of each segment within the larger structure, such a model allows for the distribution of power evenly and effectively.
Internal and External Environments Importance
Both internal and external environments predetermine the overall capability of a company to achieve its strategic goals due to its operations and the forces that impact company outcomes. For example, the company reports facing significant financial risks associated with macroeconomic processes, such as economic crises, COVID-19 pandemics, and other external issues. In particular, Caterpillars results of operations are materially affected by economic conditions globally and regionally and in the particular industries ( Form 10-K, 2017, p. 9). Internally, structural, operational, and workforce changes might lead to performance alterations, which is why the company leadership should study and address internal and external environments.
Competitive Position and Response to Environment Shifts
The level of competitive advantage indicates a companys success in overcoming its rivals in the industry. Caterpillar competes with strong rivals based on product performance, customer service, quality, and price ( Form 10-K, 2017, p. 6). However, due to the high competition in home markets, the company loses to its rivals outside the USA ( Form 10-K, 2017). To respond to environmental shifts, the company reviews available resources and stakeholder relations to accommodate business processes. For example, to address the increase in raw material prices, Caterpillar engages with suppliers that provide secure materials ( Form 10-K, 2017). Thus, the company effectively manages its competitive position and environmental risks.
Conclusion
Based on the conducted evaluation, one might recommend Caterpillar Inc.s enhancement of its competitive advantage through the diversification of product lines to enter new markets globally. Indeed, since the company faces fierce competition outside the USA in its primary segments, namely machinery, and finances, it is essential to expand its operations to reach a larger pool of customers ( Form 10-K, 2017). Thus, the strategic goals of effectively serving customers and pursuing profitable growth will be achieved.
References
Caterpillars strategy. (2022). Web.
Form 10-K. (2017). 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, 5(12), 257-271.
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