A New Caterpillar Emerges
Caterpillar was a low-cost manufacturer in the construction equipment industry until the beginning of 1980’s, but in 1982, competition from the Japanese biggest construction equipment manufacture i.e Komatsu, Kubota, and Hitachi, threatened its position. Caterpillar’s functional approach was outdated, and structural changes were needed to remain globally competitive. To this end Caterpillar quickly moved to change its organizational structure. The prime mover of this restructuring was Donald V. Fites, who become chairman of caterpillar by 1990. The Chairman Donald V. Fites, noticed while at Japan that Japanese manufacture success resulted from the combination of updated manufacturing technology, empowered cross-functional teams (decentralized decision making) and decentralize control which had been the ultimate source of the competitive advantage. On the other side, Caterpillar had slow decision-making, high costs, and a long production time. Once, Fites in control at Caterpillar, he quickly moved to introduce Japanese style of organizational practice in so far as he had spent much time in Japan and saw two major characteristic of Japanese companies organizational structures that did not exist in his company. Hence first, he adapted these characteristics and introduced, cross functional teams into Caterpillar’s product development process. Each product development team was given its own marketing staff, product designers, and manufacturing engineers, all whom worked together to integrate their functional specialties. Next, he decentralized control over marketing from corporate headquarters to the regional level. The company spent a billion dollar modernization program and plant modernized manufacturing systems was seen by 1990. Finally, Fites changed organizational structure from functional base to product divisions. As a result, 14 product divisions and 4 support divisions were created, making managers...
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