Fluent Essays

Review the Strategic Management Project Background and your strategic management research journal entries from Weeks 1–4.Create a 10-slide presentation for Caterpillar Inc. leadership in which you summarize your key findings, propose recommendations, and provide rationale for your recommendations. Respond to the following prompts: Summarize your evaluation of the alignment between what Caterpillar Inc. is currently doing and their mission, vision, or values statement. Would you propose any changes to Caterpillar Inc.s mission, vision or values statements? Why or why not? (Refer to Wk 1, Bullet #4.)Summarize your assessment of whether Caterpillar Inc. is leveraging the appropriate value and cost drivers for their business strategy. Would you propose any changes? Why or why not? (Refer to Wk 2, Bullet #3.)Summarize your analysis of the strengths and weaknesses of Caterpillar Inc’s competitive advantages. Based on your analysis would you propose any changes? Why or why not? (Refer to Wk 2, Bullet #4.)Summarize your assessment of whether Caterpillar Inc. is using the appropriate measures to verify its strategic effectiveness. Based on your analysis would you propose any changes? Why or why not? (Refer to Wk 3, Bullet #1.)Summarize your evaluation of Caterpillar Inc.’s competitive position and how they have responded to shifts in the external and internal environments. Would you propose any changes in how Caterpillar Inc. responds to shifts in the external and internal environments? Why or why not? (Refer to Wk 3, Bullet #5.)Summarize your evaluation of how mergers and acquisitions in the past 5 years have contributed to Caterpillar Inc.’s performance. Would you propose that Caterpillar Inc. pursue mergers and acquisitions in the future? Why or why not? (Wk 4, Bullet #2.)Summarize your assessment of Caterpillar Inc.’s global strategy. Based on your assessment would you propose any changes? Why or why not? (Refer to Wk 4, Bullet #3.) business_strategic__part_1.docx catapillar_inc_part_3.docx part_4_mgt498_cat.docx strategy_part_2_caterpillar_inc..docx Unformatted Attachment Preview Running Head: BUSINESS STRATEGY FORMATION BUSINESS STRATEGIC MANAGEMENT By (Name) Course) Professor Institutional Affiliation Date 1 BUSINESS STRATEGY FORMATION 2 Introduction Strategic Management is a management concept that is applicable in every organization or business corporate that has a management structure. It is a way of developing a plan by identifying the need, understanding the challenges, and setting out methods of fulfilling the identified need. Strategic Management aims at stabilizing the company, increasing revenues, dominating the market, and also ensuring that the company stays in the market. It focuses on achieving the mission, vision, and objective of the company by integrating the needs, resources, and professional knowledge from different departments within the company. Freeman et al. (2010) note that information from departments of finance, marketing, accounting, operations, and human resources mostly is used in a particular way to solve certain business issues. The aim of considering every discipline in an organization when developing strategies is to bring together values from each subject. This helps in coming up with a collective objective to achieve the companys goal. This paper aims at discussing the strategic management plan at Catapillar Inc. and how it can be improved for business success. AFI Strategy Framework AFI (Analyze, Formulate, and Implement) is an approach that facilitates strategy making by focusing and analyzing the internal and external environment of a business, assists in formulating policy, and executing the implementation of the formulated strategy. It is an integrated approach in such ways that it involves various and several analyses within and outside the company to develop and implement a plan. AFI aims at getting information from the majority of the stakeholders in a concept called south-south cooperation and coming up with viable business strategies. Hannig et al., (2015), narrates that, South-South peer learning approach AFI, has attracted financial inclusion policymakers from around the globe since it was invented. It is BUSINESS STRATEGY FORMATION 3 an approach that is gaining relevance and being embraced by many business leaders across the world to counter-attack competition and rivalry. According to Jurevicius, (2013), for a company to have the required market strength over the other, institutions employ various methods to examine the environment through (Porters Five Forces and PEST Analysis), VRIO (Value, Rare, Costly to Imitate, Organize to capture value). Concept of using several analysis tools to formulate a strategy is basically from AFI which uses PESTEL (Political, Economic, Social, Technological, Environmental, Legal),Porters Five forces,(power of competitors, power of suppliers, Buyers ability, Threat of substitutes, Threat of new Entries) to analyze external environment, RBV(Resource Based View) and VRIO in analyzing the internal situation of the business. Based on the analysis internally and externally, a strategy is formulated. When formulating a plan, AFI considers the type of leadership in an organization. Different approaches work well in various business organizations based on the style of leadership. Lastly is the implementation of the strategy. The structure of Management is much considered in the implementation of the formulated strategy. AFI network serves as a sustainable platform for members to continually re-engage and locate the information, expertise, or support they need, Hannig, et al., (2015). The use of numerous concepts and applications such as analyzing the internal and external environment of the business, analyzing the structure and cost of leadership, putting into consideration the political and legal framework, makes AFI the most integrative approach in the strategic management plan. Principles in Developing Mission, Vision and Core values What business wants to achieve, where it wants to be, and what it believes in are rated as the backbone of a business organization. They are the driving force that motivates employees and business leaders to develop strategies. These three, since they are such paramount statements of any business organization, should be developed keenly, possibly with the cooperation of every BUSINESS STRATEGY FORMATION 4 member in an organization. Franz, (2017), reiterates that to test the value of one’s mission statement, one ought to pause, reflect and tell if the same statement can fit in any business; and is someone can notice the organization by just hearing the statement. The mission describes what one does, the vision is where one wants to be in the future, and the values are what people believe in an institution. In developing the mission, vision, and core values, one should be guided by what the business wants to venture in, the dream, and the belief of the organization which should be cooperatively designed. Catapillar Inc.s Mission, Vision and Core Values Catapillar Inc., just like any success-oriented business company, it has a guiding mission, vision, and core values. Catapillar Inc,(2019) the companys values include integrity, excellence, team-work, commitment, and sustainability, working towards satisfying their customer through integrated solutions, building on the competency of operational excellence and describes itself as a large business institution specializing constructing and excavating minerals by the use of diesel and natural gas engines. The mission, vision, and values of Catapillar Inc, as a company, conforms substantially with the description in the above paragraph. The company states what they believe in as core values, what they are doing, and what they are struggling to achieve for their customers. This conformity is because the vision, mission, and core values were not just drafted for the sake of existing but represents the real picture and resonates well with what the company is doing. Having a mission, vision, and values that resonate well with what is being done gives the company a competitive advantage over the rest. News Release, Marketing, and Financial Reports According to the company information, Catapillar, (2019), so far close to 30 press releases have been done in 2019 and above 40 press releases were done in 2018, sales and revenues for the 3rd quarter in 2019 was $12.8 Billion and their shares are selling at $145.69 at BUSINESS STRATEGY FORMATION 5 the New York Security Exchange, profit loss per share was $2.66. Financial report at the 1st quarter2019, revenue was $736 million, a rise of 7\% from the 1st quarter of 2018. Financial report 2019 1st quarter recorded a profit of $98 million, an 8\% increase from the first quarter of 2018. Financial report 3rd quarter 2019 revenue $748 million was recorded, an increase of $13 million or 2\% compared with the 3rd quarter of 2018. Based on the high number of press releases, one can conclude that Catapillar Inc has quite committed to informing the public and their customers about any crucial changes within the organization which fulfills customer satisfaction. Employed strategies of competency-based and customer satisfaction have contributed significantly to the growth of revenues. They demonstrate through press releases that provide information to their customers is quite crucial for a custom-centered company. Improving on Strategy Catapillar Inc. The company is not making losses but making tiny profit margins. There is a need to employ the use of AFI fully to come up with a strategy that will lead to an improvement in their profit margin. The use of several analysis techniques will help Catapillar to gain a competitive advantage over other companies. Jurevicius (2013) states that a business with valuable, rare, and Costly to imitate products can easily succeed. A strategy to make Catapillar Inc have a competitive advantage over others will, therefore, involve checking on what Catapillar is producing if it is highly valuable and Costly for other companies to imitate or duplicate. Duplicating products from Catapillar by other companies could be the reason Catapillar Inc is not fully reaping out of its massive investment business empire. When AFI is used in formulating and implementing the strategies, every aspect will be considered. The Strategic Management of Caterpillar does not put into consideration all elements that could affect the outcome of the business plan. Their strategy circulates on customer satisfaction, BUSINESS STRATEGY FORMATION 6 competency, and values yet, we have an external environment that could affect the business, such as political issues and internal such as producing products that can be easily duplicated. The success of a business depends on business strategies that are created by business leaders. Strategic Management is an act of creating a good business concept and be able to maintain or change it when necessary to ensure the success of the business. Competition among business competitors is day by day, proving to be tough, and different organizations get out of their comfort zone to find information that can help in gaining a competitive advantage over their competitors. AFI is a model that helps in creating a sound business strategy. It involves analysis from different aspects within and out of business to formulate a good strategic plan that can yield the necessary results. Catapillar Inc. being one of the largest companies specializing in the diesel-electronic locomotive, natural gas engines, and other works, has been making reasonably good strategies. These fairly good strategies have been yielding revenues in the company with a tiny margin. Using an integrative approach of AFI in developing strategies could be just the best initiative that Catapillar Inc. can embrace in boosting revenues and profits in its organization. BUSINESS STRATEGY FORMATION Reference Catapillar Inc. (2019). Retrieved from https://www.caterpillar.com/en/company/strategy.html Dr.Hannig. A Lee .S, Dr. Leiheit.M, et al.,(2015).The AFI Approach: A New Model for International Cooperation. Retrieved from https://www.afiglobal.org/sites/default/files/publications/afigizpaperfinal.pdf Franz.A (2017).Mission, Vision, Values, and Guiding Principles. Retrieved from https://www.iris.xyz/grow/development/two-words-have-astounding-impact-health Freeman E.R. Fairchild .G, Venkataraman .S & et al,(2010).What is Strategic Management? Retrieved from https://www.researchgate.net/publication/228145712_What_is_Strategic_Management Jurevicius .O, (2013).Strategic Management Insight: VRIO Framework. Retrieved fromhttps://strategicmanagementinsight.com/tools/vrio.html 7 BUSINESS STRATEGY FORMATION Abbreviations AFI = Analyze, Formulate, Implement PESTEL = Political, Economic, Social, Technological, Environment, Legal RBV = Resource Base View VRIO = Value, Rare, Costly to Imitate, Organized to Capture value 8 Running Head: CATAPILLAR INC. STRATEGIC MANAGEMENT CATAPILLAR INC. STRATEGIC MANAGEMENT Leydis Fuste MGT/498 12/12/19 1 2 CATAPILLAR INC. STRATEGIC MANAGEMENT Strategic management is a plan that helps a company to overcome competition and be able to achieve goals and objectives. It is a decision that is taken after an evaluation of the business or the industry’s environment to make rational decisions that are in line with the current business environment. Kenton (2019), states that strategic planning comprises identifying of targets, studying the business external and internal environment of the company, relooking at the plans and making sure that the leadership of the organization implements the plans. The objective of this papers is to assess, and evaluate Catapillar Inc.’s strategic management as well as determining and summarizing it’s leadership structure. 1. Verifying Strategic Effectiveness It is important for an organization to routinely assess and verify the effectiveness of the strategies used and know whether they are contributing to success or not. Different companies have different ways or methods of verifying their strategies. Catapillar has outlined its measures that are used in verifying their strategies. According to Catapillar Inc. (2019), the strategic plan of the company prioritizes on assisting customers in establishing a better environment to live and enable the organization to achieve its goals. To effectively verify the strategy, Catapillar Inc. will assess the satisfaction of customers as well as their financial reports. The financial reports 3rd quarter 2019 indicates that Catapillar Inc made revenues of $748 million rising by $13million or 2\% compared to the 3rd quarter 2018 financial report. Catapillar Inc. (2019) the presence of the company is across the globe. Another way to assess the effectiveness of the strategies is to analyze and see if the company is growing or not. The company has greatly grown by establishing stations in American countries such as the USA, Brazil and Mexico. They are also located in many countries in the Asian Pacific and Europe. Having a strategy that focuses on profits and customer satisfaction, the company can 3 CATAPILLAR INC. STRATEGIC MANAGEMENT proudly say they are doing fine. The company’s revenues and profit increase as well as establishing itself all over the world mean customers are satisfied with their services. Assessing customer satisfaction through demand which makes Catapillar open stations all over the world, and the releasing of financial reports are appropriate measures in verifying the effectiveness of their strategies. 2. Catapillar Inc.’s Organization Structure Organization structure is the flow of accountability within an organization. Different employees account to different people within an organization, depending on the span of control. Devaney (2019) defines an organization structure a clear reflection of the company, outlining the duties of workers, whom they account to, and how rules and policies are made in the organization. According to Catapillar Inc. (2019), the company has a board of directors made up of 12 members. The 12 member board of directors comprise; Ayotte. A Kelly, Calhoun L. David, Dickinson M. Daniel, Gallardo Juan, Muilenburg .A. Dennis, Osborn A. William, Reed-Klages L. Debra, Rust Jr B. Edward, Schwab .C Susan, Umpleby .D James, White .D. Miles and Wilkins Jr.Rayford. All directors are expected to attend every annual meeting of stockholders. 3. Holacracy Organizational structure Catapillar Inc. company is led by Holacracy type of organizational structure. It has 12 directors, of which all of them are equal and can all participate in the decision-making process. There is no one among the 12 directors that is above the other. Holacracy is a flat or horizontal organization structure where no one is answerable to anyone, but all leaders are equal. The structure does not designate answerable positions; rather, all people work together, with each one of them coming in with different experiences. It is a modern organization structure that is gaining momentum across many organizations. Holacracy model of organization structure ensures that 4 CATAPILLAR INC. STRATEGIC MANAGEMENT everyone contributes effectively and freely to the goals and objectives of the organization. According to Radojevic et al. (2016), Holacracy provides one of the alternative models of an organization structure that is aimed at helping businesses achieve their objectives successfully. It is the new management system that is so effective in managing an organization since everyone feels part of the business. 4. Importance of Studying Business Environment For every business organization, it is important that they study the external and internal environment of the business for effective decision-making. PEST (Political, Economic, Social and Technological) analysis is the strategic model used to analyze the external business environment. The business leaders should always analyze the political, economic, social and technological environment for better decision-making. Bhasin (2019) notes that as a business manager, one should understand that the business environment is changing very first, and there is a need to study it routinely. Tools used to study internal environment include SWOT ( Strengths, Weaknesses, Opportunities and Threats), a model that is used to analyze an internal business organization. For better decision-making in Catapillar Inc, the leaders should be able to study the business environment. Studying the environment of the business helps the company to compete in the industry actively. The business is also able to develop strategies based on the current information in the industry. It helps the company to adjust to new technologies and adhere to the rules and regulations affected by political and legal policies. 5. Catapillar Inc.’s Competitive Position Studying the environment of the business helps the business to adjust to the changes in the environment. The expansion of other stations across the world indicates that Catapillar Inc. 5 CATAPILLAR INC. STRATEGIC MANAGEMENT is effectively reacting to the shifts in the external business environment. Catapillar Inc. has adjusted its leadership to the new system of Holacracy, which is the current and new system for an organization that wants to achieve maximum business success. Catapillar Inc.’s study of the external and internal environment has assisted in developing technology within the company, and attend to customer needs. According to Catapillar (2019), the company opened up power plants in Utah valley in the United States and Mexico. Coming up with all these transformations, the company is competently reacting to the study of the environment of the business. Developing viable strategies is demonstrated in how the company is reacting to the environment around the business. 6 CATAPILLAR INC. STRATEGIC MANAGEMENT Reference Bhasin .H (2019). What is Business Environment? Understanding the Business Environment. Retrieved from https://www.marketing91.com/business-environment/ Devaney .E, (2019). Nine Types of Organizational Structure Every Company should Consider. https://blog.hubspot.com/marketing/team-structure-diagrams Kenton .W (2019). Strategic Management. https://www.investopedia.com/terms/s/strategicmanagement.asp Radojevic .I , Janjusic .D & Krasulja .N 2016). Holacracy – The New Management System. https://www.researchgate.net/publication/325050175_HOLACRACY__THE_NEW_MANAGEMENT_SYSTEM 1 Running head: CATERPILLAR INC. STRATEGY Caterpillar Inc. Strategy Leydis Fuste MGT/498 2 CATERPILLAR INC. STRATEGY Caterpillar Inc. Strategy Introduction Commonly abbreviated to CAT, Caterpillar Inc. is an American company that manufactures mining and construction equipment, natural gas and diesel engines, diesel-electric locomotives and industrial gas turbines. The company operates globally with a presence of at least 193 countries. The company was founded 94 years ago, in 1925 and it’s headquarter is located in Deerfield, Illinois in the US. Through its operations, CAT designs develop, engineers, manufactures and markets and sells engines, machinery and insurance and financial products to customers globally. In 2018, the company was ranked #65 in the fortune 500 list while it was ranked #238 globally (All in a Days Work, n.d). The compared has appeared in the fortune 500 list for 18 consecutive years. The following is an in-depth analysis of the company strategies plan. Caterpillars Inc.’s short term and long term goals CAT’s short-term goal focus on the operations of the company from day to day activities to achieve specific goals in at least 12 months. Mainly, the short term goals of the company for 2020 are strategies that will help to enhance business sustainability through improved interaction with the environment. In the short term, the company aims at reducing its energy demands by at least 50\%. The company as well aims at ... Purchase answer to see full attachment