JOURNAL 2
2
Journal 3
Sierra Munoz
University of Phoenix
08/27/2021
Assess whether Caterpillar Inc. is using the appropriate measures to verify its strategic effectiveness.
McKinsey’s strategic Horizons provide the perfect tools for vetting whether a firm uses appropriate measures to deliver upon the pledged strategies. According to Markopoulos et al. (2020), the framework assets strategic accomplishment across three levels of the core business, emerging opportunities, and the blue sky. The core business horizon describes the most common business activities that describe the firm and how they generate revenues or profitability (Markopoulos et al., 2020). The next horizon on the emerging opportunities evaluates whether a business has been using its immediate excellence to grow its activities further (Markopoulos et al.,2020). Blue Sky horizon is the final benchmark of McKinsey’s strategic framework, which evaluates the capability of a business to explore new lines of business if the previous ones are proven unprofitable (Markopoulos et al., 2020).
Thus, vetting Caterpillar’s strategic effectiveness via the core business horizon, the firm has tremendously delivered its immediate income-generating needs. The Covid-19 pandemic has not been a bother for the firm since its financials illustrate attainment of $ 41.7 billion in sales and revenue from the operations of the same financial year. The extensive sales and high revenue attainment during a problematic year prove that Caterpillar has been using appropriate productivity measures to validate their strategic plan.
However, the emerging opportunities horizon validates that Caterpillar is using appropriate measures to verify its strategic effectiveness. For example, according to reports by the firm, a focus strategy formulated in 2016 is anticipated to propel the company to generate over $28 billion in sales by 2026 (Caterpillar, 2021). Such a plan of expansion in service provision and revenue generation proves that the firm uses the appropriate measures like planning to verify its strategy for growth.
Identify and Summarize Caterpillar Inc.’s organizational structure
Caterpillar has a hierarchical organizational structure whereby workers at different levels of authority interact with running the firm’s affairs. For instance, the Board of Directors, made up of 11 members, formulate policy, mission, and vision (Caterpillar, 2021). The management committee is the next in rank with departments like the Audit section, Compensation Human Resources, and public policy and governance divisions. The rest of the workforce members operate as the subordinate workers in each of the highlighted departments and answer their division heads.
Determine whether Caterpillar Inc.’s organizational structure is considered a traditional organizational structure or a Holacracy
The organizational structure at Caterpillar is holacratic. Holacracy is a system of corporate structure in which diverse teams work to accomplish different tasks while all the tasks are aggregated to facilitate the organization’s success (Kamp, 2014). Caterpillar is endowed with divisions such as the HRM, manufacture section, marketing department, and others like the Board of Directors, all entrusted to handle different roles (Caterpillar, 2021). However, all the team members are demanded to act within the firm’s values, mission, and vision to ensure its success (Caterpillar, 2021). Such determinations validate that, indeed, the firm deploys a Holacratic structural system.
Justify why the Caterpillar Inc leadership team needs to study and understand the company’s internal and external environments
Caterpillar’sllar’sdership needs to study and understand its internal and external environments. Studying some of the internal elements of the organization, as the strengths, helps them determine how to leverage such strengths to accrue competitive advantages. For example, learning the firm’s strengths aligns the leaders” thoughts with the opportunities that could arise from such strengths. For that reason, learning of the internal strengths is vital since it would help Caterpillar accrue competitive advantages.
Moreover, learning the distinctive elements of the external environment like the political, economic, Socio-cultural, Technological, ecological, and legal elements and how they would affect Caterpillar would be vital for the leaders to orchestrate plans for the company’s adaptation in the future. Taking, for instance, the ecological or environmental issues, Caterpillar should realize the need for eco-friendly energy. If leaders could learn such issues, they would start formulating electrical and solar machinery models that reduce the release of greenhouse gases. Such a scenario proves that leaders should learn of the impacts of the external factors to start planning and orchestrating plans to adapt to such demands in the future.
Evaluate CaterpillarInc.’s competitive position and how they have responded to shifts in the external and internal environments
Caterpillar has established competitive dominance over other players in the market with its diversified products. For instance, the firm creates and sells construction and mining equipment equipped with diesel engines, gas turbines, and hybrid diesel-electric models (Caterpillar, 2021). The product diversification has helped the firm tap the commercial market extensively and succeed as a machinery manufacturer.
External competitiveness factors like abrupt changes in technology have necessitated adaptation by the firm, especially by demanding the injection of technology in the innovation of the products by the company. Caterpillar (2021) explains how the firm introduced cutting-edge technology in creating machinery and offerings services to their consumers. For instance, the electric-diesel hybrid is a perfect specimen for technological adaptation by the firm (Caterpillar, 2021). Thus, adjusting the internal operations like innovativeness to balance the demand created by the consumers reveals an efficient way in which the firm has responded to such environmental shifts.
Recommend strategies in operational changes to support caterpillars strategic plan, future business decisions, and improvement in business performance
Caterpillar should combine with other motor-creating firms to create machinery powered exclusively by eco-friendly techniques. Such innovative changes would prove strategically prudent in the future since human beings are becoming more environmentally conscious and are only going to partner with firms that balance the interests of the environment.
Moreover, the firm should also expand its operations through marketing its products worldwide. That way, they will develop their familiarity with the worldwide environment and attract more consumers in the future.
Finally, creating consumer-centered goods will help improve the performance of the business in the future. Caterpillar is a firm that deals with valuable sales that may not be extensive in unit terms. Thus, since one piece of machinery is worth substantial revenue, it would be economical for the company to produce consumer-centered products that would attract even better returns rather than concentrating on mass production. Such an approach would improve the financial returns for the firm.
Reference
Caterpillar. (2021). About Caterpillar. Retrieved from: https://www.caterpillar.com/en/company.html
Caterpillar. (2021a). Governance. Retrieved from: https://www.caterpillar.com/en/company/governance.html
Caterpillar. (2021b). Strategy. Retrieved from: https://www.caterpillar.com/en/company/strategy-purpose/strategy.html
Caterpillar. (2021c). Sustainability Vision and Mission. Retrieved from: https://www.caterpillar.com/en/company/sustainability/vision-mission-strategy.html
Kamp, P. (2014). Holacracy -A Radical Approach to Organizational Design. pp. 1-14.
Markopoulos, E., Aggarwal, V & Vanharanta, H. (2020). Democratization of Intrapreneurship and Corporate Entrepreneurship Within theMcKinsey’s Three Horizons Innovation Space. 1007-1020.
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