Strategic Management: Caterpillar Inc

Strategic Management Research Journal Part 3
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Strategic Management Research Journal Part 3
The business model at Caterpillar involves manufacturing and selling industrial gas turbines, diesel-electric locomotives, and construction and mining equipment. Since 2010, the company adopted the Operating and Execution Business Model that has helped to remain competitive in the industry. Within the model, the company builds a competitive advantage by allocating more resources to the enterprise's good parts. The purpose of the model is to create value for customers, employees, and shareholders. In the 2019 financial report, the key highlights included a solid operational performance with an operating profit margin of 15.4%, a return of $6.2 billion to shareholders, and a focus on services that led to a 2% increase towards the company's double machinery objective (Caterpillar, 2020). These key highlights are the elements the company is using to evaluate its strategic effectiveness. The figures indicate that the company is on the right path to meeting its 2030 financial and sustainability objectives.
One of the key strengths of the company is its organizational structure. The company has a corporate governance program that serves the interests of stakeholders. Corporate governance consists of the board of directors and the company leadership, besides the global management teams. It consists of 11 board of directors who guide the standards of responsibility, integrity, and compliance. Under the board of directors is a team of executives led by a chairman (CEO), president of different core departments, and the vice-presidents (Caterpillar, Governance, 2021). This is a functional organizational structure because it groups vice-presidents and department or business line presidents according to the specific functions performed (Vinceri, Jackson, Zodda, & Tamarkin, 2015). It also shows hierarchical characteristics because of the layers of management that have different l...