Introduction: This individual assignment will be assessed by means of a 3,000 word report. The assignment has been designed to allow you to develop and use your knowledge and skills in understanding...

Case
Case study
Strategic Management
Case
Introduction and background
The given case focuses on the various changes that Caterpillar went through and its
change strategy. As there is higher levels of competition that have set in, it becomes essential for
Caterpillar to be able to create higher levels of competency and competitiveness. Outsourcing,
restructuring, better levels of leadership and employee involvement are some of the major steps
taken by Caterpillar in order to sustain its position as a market player in the construction
equipment business (Cohen, I. cited in De Wit, B. and Meyer, R., 2004).
The major internal and external factors forcing Caterpillar to renew its strategy in the
period 1985-2001
The major internal and external factors forcing Caterpillar to renew its strategy include
competition (Cohen, I. cited in De Wit, B. and Meyer, R., 2004). As competition is high in this
industry in the global domain, the fact that Caterpilar had to face maximum competition from
foreign firms was one of the major external factors that led to change and adoption of strategies
like outsourcing. As the global environment was growing in terms of outsourcing and this was
become a trend as a strategy that could help firms reduce their costs and overheads, thus leading
to better efficiency, Caterpillar also had to adopt this in order to remain competitive. As the
external environment was becoming competitive even in terms of cost and value and customers
expected higher levels of value for money, Caterpillar had to revise its strategy in order to suit
the external environment. In case of the international environment, in this period, there happened
to be several changes as players from Japan and other developing countries, with several cost
advantages came into operations in the global markets. The business strategy has now been
narrowed down based on outsourcing in order to increase the profitability of the business. This
has been achieved through reorganization.
Moreover the internal environment was such that change became essential. As the
internal environment was not strong enough to implement adaptation, change became essential.
Standardization, in case of international or multi-national businesses, broadly refers to the
process of using the same strategies throughout the business operations in all of the markets.
Adaptation, on the other hand, refers to the strategy of fine tuning the brand methods of a
business and customizing them to suit each of the markets. In this way adaptation and
standardization form two broad business strategies that have to be pondered upon and chosen by
the management of a firm based upon the nature of the industry, the needs of the market and the
nature of the goods and services being offered. As Caterpillar required to become an
international and global player, such capabilities and magnitude in terms of business became
essential. So, there had to be revamping of several of the strategies, processes and procedures in
Caterpillar so that the firm could suit the market and be able to compete globally.
The goal of outsourcing in this case is that it helps ensure appropriate levels of
performance and efficiency in the organization. The performance measures depend on the
organization as a whole, and not on the specific operating unit. In case of dealing with external
and internal market environments, restructuring, involving employees and several such measures
Case
become crucial in order to make change effective and substantial as well as implement it with
minimum resistance from employees.
The measures the company took to solve its problems during this time period
The company took several measures to solve its problems during this period.
Outsourcing, restructuring, employee involvement and improving leadership in the firm are some
of the steps that firms going global and dealing with global competition are essential (De Wit, B.
and Meyer, R, 2004). As Caterpillar also faced the same issues and required to take up these
measures it combined all of it into a change strategy. This helped Caterpillar implement these
changes effectively and reducing resistance from employees to minimum based on employee
involvement.
Change Management is defined as a combination of various processes which are
employed to facilitate implementation of important changes in an orderly controlled and
symmetric way to bring in a larger change in an organization and this makes it extremely
important for present day organizations to understand the concepts and fundamentals of change
management in order to appropriately implement change in the organization. Organizational
change is not an easy exercise and managements encounter number of issues or problems for
facilitating smooth changeover but an understanding about the organizational change can help
gain several insights and also create effective change management strategies which is appropriate
since the nature of change is understood and the strategy formulated is in synch or aligned to the
type and nature of change. It becomes essential to involve employees and achieve better levels of
leadership which were rightly done by the firm.
The major sources of resistance against change can be identified at Caterpillar during the
reign of CEO’s Schaefer and Fites
The major sources of resistance against change can be identified at Caterpillar during the
reign of CEO’s Schaefer and Fites based on employee insecurities and difficulties in
implementation of change. Psychological difficulties were high. There were adaptation and
training issues. All of these had to be resolved through effective leadership and involvement of
employees in the change process...