Caterpillar Inc.: Strategic Management

Topic: Strategic Management
Words: 666 Pages: 2

Caterpillar is managed by a decentralized organizational structure, which primarily focuses on the need to improve the firm’s performance. The system gives the employees more clarity, provides better decision-making and ensures that the company’s threats are addressed. The internal and external environments determine the business’s competitiveness. In this paper, there are different analyses that summarizes the firm’s strategic management showing that the appropriate measures are exercised by the company.

One can argue that the company is using appropriate measures to verify its strategic effectiveness. For instance, the organization is based on ensuring that customer needs are met. In this case, customer feedback is used by the organization to determine areas that should be improved. The design adopts the decentralized network, which has helped the employees to reach the customers directly but not through brands. Therefore, one can argue that Caterpillar Inc. is using the appropriate measures to verify its strategic effectiveness.

An organization’s structure is an essential aspect since it can largely impact its performance. In this case, Caterpillar Inc.’s organizational structure is considered holacracy, as its managerial staff is free and independent. This structure is vital because workers are involved in various decision-making processes. Furthermore, the company is decentralized, and employees prefer working through established small groups rather than hierarchical management. Teamwork is encouraged in the holacracy to guarantee that all workers have their responsibilities and can improve their skills. Therefore, a holacracy structure is used in the company to ensure more ideas are presented by workers, ensure decision-making processes involve all individuals and improve the skills of the employees to meet customer demands.

The company guarantees better execution since the managers are aware of their organization’s internal and external factors that can impact its performance. Leaders can focus on internal aspects such as employee satisfaction and leadership styles since they can influence the firm’s productivity. Moreover, the leaders can analyze its strengths and weaknesses since they are internal factors. External factors such as political impacts, policies, competitors, and market trends should also be analyzed by the leaders. Moreover, with the knowledge of the interior and exterior settings, the company is aware of the opportunities, areas of improvement and plan to enhance its performance. Using SWOT analysis, Caterpillar can develop the ways to increase its competitive advantage. Thus, it is vital for Caterpillar’s leadership team to study and understand the company’s internal and external environments.

Caterpillar Inc.’s reason for its survival in the competitive market is its high-quality products. This has made the company face its competitors despite facing challenges, such as increased innovation. Moreover, companies have improved their products through research, training their employees to enhance skilled workforce, and the use of modern technology. Equally, the company has ensured better customer service due to its large market size. Caterpillar has focused on its internal and external environments since competitiveness is based on performance, cost, quality, and clients’ treatments (Sheth et al., 2020). However, one can recommend some approaches to help the company become more competitive.

Some of the operational strategies that I would recommend to the business include the use of cross-functional interactions. Correspondingly, the company should impose a customer-driven system that will adapt to the changing environments. When considering the strategy, the company should be aware of the market trends to take advantage of opportunities and limit its threats. Another strategy is developing competitive environments by providing products at fair prices and meeting customer needs. Lastly, through innovation, product and service development can be exercised whereby the company can develop new products bridging the gap between its rival competitors.

In conclusion, Caterpillar Inc. has thrived due to its effort to provide quality products and good relations with its clients. The company has a decentralized structure that has helped it to run well. To enhance competitiveness, the company has focused on its external and internal environments. A SWOT analysis has helped Caterpillar Inc. identify its various aspects that impact its performance. Also, the company should focus on the value of products rather than profitability.


Sheth, J., Jain, V., & Ambika, A. (2020). Repositioning the customer support services: The next frontier of competitive advantage. European Journal of Marketing, 54(7) 1787-1804. Web.

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