Phoenix MGT 498 Strategic Management Research Project PowerPoint

Create a PowerPoint presentation with speaker notes for Caterpillar Inc. leadership in which you summarize your key findings, propose recommendations, and provide rationale for your recommendations. Use enough slides to address all of the assignment.

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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.)

Week 2, 3, and 4 assignments are attached for references to the questions on this assignment. All answers are in these papers.

Strategic Management Research Journal

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Describe the role of strategic planning in achieving a competitive advantage.

Strategic planning is an organisational process of defining direction or strategy and making vital decisions on resources allocation to pursue the strategy. Strategic planning can also extend to the control measures for guiding and controlling the implementation of the strategy. Strategic planning could be a perplexing process. With perseverance, persistence, and a resilient team efforts, strategic planning can be the start of a predictable and improved results for an organization. Sometimes when business practices get off track, strategic planning can help in directing the recovery process (David & David, 2019). When an organisation treat strategic planning as a continuous process, it will help the organisation in attaining a competitive advantage. Strategic planning will act as an aggressive assurance of a better and improved day-to-say implementation of business activities and practices.

Assess Caterpillar Inc. to determine whether their top focus is accounting profitability, shareholder value creation, or economic value creation.

Caterpillar Inc. is an American corporation that designs, engineers, develops, manufactures and sells engines, machinery, insurance and financial products to consumers through an international dealer network. Caterpillar Inc. is the largest building equipment manufacturer in the world (Caterpillar.com). The company’s top focus is shareholder value creation. The company intends to create shareholder value by investing more in the company’s strengths, and offering better value for its customers, to make sure they are more effectively using the company’s products and services. Caterpillar’s employees are also key to the customers’ success. The company always focuses on empowering its global team and promoting an inclusive and positive environment.

Assess whether Caterpillar Inc. leverages the appropriate value and cost drivers for their business strategy.

We can define a value driver as a capability or an activity that adds value/worth to a product/service or a company. In other words, they are activities that increase profitability, promote growth, and reduce risk, according to strategic goals. A cost driver, on the contrary, is an activity that results in changes in the activity’s cost. Caterpillar Inc. leverages appropriate cost and value drivers. The company leverages an information-driven approach to guide the company’s decision-making process. This usually positions the company on sustained profitable growth. The company is always devoted to understanding the customers’ needs, hence delivering the leading products/services in the industry.

Analyse the strengths and weaknesses of Caterpillar Inc’s competitive advantages.

There are several aspects and factors that add to the corporation’s competitive advantage. These factors make the corporation noticeable irrespective of the endless competition in the industry. Caterpillar’s competitive advantage includes its strong and sound brand image and its strong world-wide distribution network, to name a few. The corporation’s strong and sound brand image has enabled the company to increase its customer base. It has also allowed the company to introduce new products/services easily and has enhanced customer loyalty. Strong world-wide distribution network has ensured that the company’s products/services reach all customers, hence increasing its profitability. However, the company is less innovative (Paugam et al., 2016). This weakness makes the corporation vulnerable to opponents that invest in the technology aggressively. The company also has limited connections in emergent markets. This weakness prevents the company from maximizing profits and revenues.

Evaluate the influence of ethics, social responsibility, and legal considerations on strategic planning.

Setting an organisational vision, values, and strategies is the starting point of any business. Building the strategies with a strong sense of ethics, aligning the strategies with all the legal requirement, and arranging them in line with the well-being of every stakeholders and the society at large is an essential part of strategic planning. Integrating ethical consideration on strategic planning means relying on society’s norms and standard of what institutes right or wrong as the basis of the organization’s policies and plans. Ethics will shape the actions and decisions of every individual in a company. On the other hand, strategic decisions of companies have the potential to affect many people across the universe. Therefore, failure to consider the social issues in strategic planning may lead to negative effects for the surrounding communities, the environment, and the shareholders. Legal consideration, on the contrary, ensures that the company is in line with all the rules and regulations.

Discuss the value of corporate social responsibility (CSR), and determine if Caterpillar Inc.’s CSR meets those values.

Corporate social responsibility is how organizations manage their practices to produce a general positive effect on society at large. It covers social impact, ethics, and sustainability. The five pillars/values that make up CSR include: community, marketplace, environment, governance and communication, and workplace. Different organizations can decide to focus on different areas. Caterpillar Inc’s CSR meets those values. Caterpillar Inc has adopted several philanthropic practices to show its dedication to the community. One of the practices is the development of the Caterpillar Foundation. The company normally uses the foundation to aid, direct money, and resources to the community. The company is also involved with the United Way, a collaboration of charitable organizations in America.

Analyse the role of ethics and social responsibility in developing Caterpillar Inc.’s strategic plan while considering stakeholder needs and agenda.

Social responsibility and ethics play a significant part in developing a strategic plan for a company. Ethics governs the action of Caterpillar’s employees (Ferrell & Fraedrich, 2015). Considering social issues in developing the company’s strategic plan ensures that the company’s strategic decisions do not have a negative impact on the community. Caterpillar has many responsibilities to its stakeholders. The organisation must consider the needs and agendas of the stakeholders to make possible and appropriate decisions. This means that the company should not take an unethical decision that is risky to the company and affects its reputation in society. The company performs ethical responsibilities that satisfy the agendas and needs of the stakeholders.

References

Caterpillar.com. Who we are. Retrieved from: https://www.caterpillar.com/en/company/who-we-are.html

David, F. R., & David, F. R. (2019). Strategic management: A competitive advantage approach, concepts and cases. Pearson.

Ferrell, O. C., & Fraedrich, J. (2015). Business ethics: Ethical decision making & cases. Nelson Education.

Paugam, L., André, P., Philippe, H., & Harfouche, R. (2016). Brand valuation. Routledge.

Caterpillar Inc.’s measures of verifying its strategic effectiveness

From my point of view, caterpillar is using the right measures. This company is the world leader in the production of development and mining hardware, diesel. Petroleum, gas turbines, and sophisticated gas motors. The operations of caterpillar are centered around finding answers that can make a superior world for their clients and attract investors through developments.

Being a company with value, Caterpillar adopts a technique driven by date called the operating and execution model. The company uses this methodology to ensure its leadership processes are under control and that the company achieves maximum development. The main strategy that caterpillar has also applied successfully is the understanding of the needs of the client. According to caterpillar (2019), their customers rely on their products to improve their lives and their living standards. The company in partnership with its stakeholders are working hard to drive the company into greatness by working on;

• Company greatness in operations. The company is working hard to expand its operations. This includes ensuring there is security, quality, discipline in prices, and obtain a favorable position in the market.
• Empowering the client – the company is striving to empower its client through various arrangements that are aimed at building reliability with the client and fortifying associations with its clients.

 

Summarize Caterpillar Inc.’s organizational structure.

Caterpillar has a simple organizational structure which ensures the company corporately designs, manufactures, and sells mining, equipment, gas engines, and construction machines. The company adopts a decentralized structure of management. This structure was the appropriate one in the quest to get near to the customers and satisfy their needs easily. The company does not rely on management levels for direction, instead, they adopt a very short chain of command which ensures ideas can flow easily from directors, to line, and to production managers and vice versa. The structure of Caterpillar gives a clear picture on how the company keeps evolving in its industry. The management understands how important it is to engage with employees at all levels.

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Caterpillar Inc.’s organizational structure

Caterpillar’s organization structure is considered Holacratic because of its decentralized system of management. Caterpillar has been making constant improvements to its organizational structure utilizing the evolving technology. Its decisions are made across a holarchy of managed groups and not management hierarchy. The board of directors of the company are independent. Caterpillar has five group managers supervised by the company chief executive officer. The five managers/presidents play the role of supervising twenty-five vice managers/presidents who have to carry out various duties in the sectors of geographical regions, various facilities, service centers, and marketing regions.

As Morgan (2015) describes holacracy, this structure allows for the distribution of decision making while giving everyone in organization the chance to participate in management. The company does not rely on the levels on management and therefore its decisions flow very fast. According to Caterpillar (2015), the support part of the company is also restructured and the mining sector combined with the global mining business divisions to unite sales, products, marketing, and operations. The company is divided into small divisions which are meant to ensure there is efficiency, easy, and faster decision-making, thus reducing complexity. Its organization structure enables the company to achieve its goals easily.

 

Why Caterpillar Inc. leadership should study and understand the company’s internal and external environments.

According to Rothaermel (2017), it is important for any enterprise to understand their external and internal environment. Caterpillar is not operating on a vacuum, but rather it carries out business in a dynamic environment with ups and downs. The ups and downs (challenges) have an effect on how caterpillar operates and determines a lot whether they will achieve their objectives. It is important for Caterpillar’s leadership to understand the internal environment so that they can have a great deal of control over the business internally which will guide decisions that are made day in day out. By understanding the internal environment, they will easily be able to chose the products they can buy, chose employees hey can recruit, the kind of products they can distribute, and the places to distribute them.

The external business environment can be difficulty for Caterpillar to control and beyond the company’s management. This is why its leadership needs to do a continuous study of the external surrounding and adapt their operations accordingly. For instance, global competition is not something Caterpillar can change or control, but its leadership can learn and then adopt the necessary strategies that can help them deal with the competition. Factors such as inflation and interest rates need serious assessments so that the company can prepare. This very crucial for an enterprise like Caterpillar.

 

Caterpillar Inc.’s competitive position

The main source of caterpillar’s competitive advantage is the high quality of its items. In its industry, Caterpillar produces high quality machines and this has given them a sharp advantage over their competitors. It has also been able to gain a competitive advantage through its economies of scale and its strong inventory network that the company has built over the years. Since it has given its customers a priority and worked on its inventory system, Caterpillar has had the opportunity to expand tremendously. The clients depend a lot on the items of Caterpillar due to their economies of scale which enable them to produce top-notch quality items which they sell at a lower cost. According to United States Securities and Exchange (2015), the products and support services of Caterpillar are sold worldwide.  Lower prices have also managed to attract a lot of clients who have helped the company shape their position in the market. The company has shaped both its internal and external environment because it competes on the basis of performance, quality, price, and the type of service to customers.

 

References

Caterpillar (2019). About Caterpillar. https://www.caterpillar.com/en/company.html

Caterpillar Inc. (2015). Caterpillar Announces New Organizational Structure for Mining and Customer and Dealer-Facing Divisions; Focus on Innovation and Data Analytics Remains a Key Priority. Retrieved from https://www.prnewswire.com/news-releases/caterpillar-announces-new-organizational-structure-for-mining-and-customer-and-dealer-facing-divisions-focus-on-innovation-and-data-analytics-remains-a-key-priority-300148348.html

Morgan J. (2015). The 5 Types Of Organizational Structures: Part 5, Holacratic Organizations. Retrieved from https://www.forbes.com/sites/jacobmorgan/2015/07/20/the-5-types-of-organizational-structures-part-5-holacratic-organizations/#5f6c872048a2

Rothaermel, F. T. (2017). Strategic management. New York, NY: McGraw-Hill Education.

 

Statements, F. L. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K.

Identify Caterpillar Inc.’s short-term versus long-term goals.

For over eighty-five years, Caterpillar Company has been making possible progress and steering sustainable and productive change on all continents. With 2018 revenue and sales of approximately $54.7 billion, an increase from 2017 sales and revenue of approximately $45.5 billion, the Company is among the world’s leading producer of mining and construction equipment, natural gas and diesel, and industrial gas turbines (Caterpillar.com). Caterpillar is also a prominent services provider through Caterpillar Logistics, Caterpillar Financial Services, Progress Rail Services, and Caterpillar Re-manufacturing Services.

The Company has established aspirational short-term and long-term goals for its product and operations stewardship. These goals will enable the company to lead the industry to a more sustainable and brighter future. The company’s short-term goal is to concentrate on efficiency improvements (Souder et al., 2017). These efforts will contribute to the company’s year-over-year performance improvements. On the other hand, the company’s long-term goals include: delivering greater results, developing and nurturing the best team, and becoming the universal leader in all places it conducts its business

Evaluate how mergers and acquisitions in the past 5 years have contributed to Caterpillar Inc.’s performance.

In today’s world, companies are bound to compete to stay on top. However, there are certain companies that are more successful and prosperous than others. These companies grab any opportunity that comes their way to stay ahead of others. These opportunities include merging with or acquiring other companies (Riepina et al., 2018). Just like other companies, Caterpillar has acquired several companies. Caterpillar Inc. has acquired approximately 35 entities, including 3 in the past five years.  In 2015, CAT announced its acquisition of ESRG Technologies Group, a data analytics developer and vessel monitoring within the marine industry. ESRG has offered remote monitoring and data analysis technology for assets in the naval defence and marine sectors since its initiation in 2000. Similarly, in 2016, Caterpillar Oil and Gas division acquired Kemper Valve and Fittings Corp. Kemper Valve & Fittings Corp has been producing low and high pressure pipe unions and other related products. In 2017, CAT acquired Yard Club, a corporation created to make more effective use of construction and other heavy machines.

All these acquisitions have contributed largely to CAT’s performance. The acquisitions have enabled the entity to enjoy economies of scale, hence decreasing its operational costs. Acquisitions have also enabled the corporation to have an easy entry in international markets. It has also enabled the corporation to have a competitive advantage over its competitors since the company has a larger market share. The increased market share has contributed a lot to the company’s revenue and sales. As stated earlier, in 2018, the company’s sales and revenue were approximately $54.7 billion, an increase from 2017 sales and revenue of approximately $45.5 billion.

Assess Caterpillar Inc.’s global strategy (international, multi-domestic, global-standardization, or transnational).

One essential thing that companies should do for them to grow is to pursue global customers. By pursuing global customers, companies will get access to a larger customer base, hence, enjoy increased profits and revenue. Going global also allows companies to diversify their market, hence, revenue sources will be more stable. Going global also improves a company’s reputation. Companies that can successfully pursue and attract global customers may enjoy the prestige of referring themselves as international companies. However, the process of pursuing global customers can be tricky.

Caterpillar Inc. decided to compete as a local entity in a foreign market. These have been the company’s success ever since. In 2018, external sales accounted for approximately 58.5% of the company’s total revenue. The company serves approximately 193 countries over its dealer network.. Additionally, CAT has employed thousands of individuals all over the world.  According to the 2018’s annual report, CAT hired around 104,000 full-time employees of whom around 59,400 are outside the U. S.

When we take a closer look at what Caterpillar is doing right domestically and globally, the most essential criterion relates to financial matters. The company usually allocates money to the best and highest use (Goffin, 2017). Even though this has been a problem with any companies, CAT has been able always focus on that. The other thing is the quality of their products and services. Although the company faces competition from companies such as Komatsu, John Deere, Kobe Steel, Volvo Construction Equipment, and Kubota, to name a few, quality products and services have enabled the company to enjoy the prosperity its enjoys currently and will continue to enjoy in the future.

The types of innovation Caterpillar Inc.’s uses, such as radical incremental, disruptive, and architectural innovation. Identify types of innovation Caterpillar Inc. has used over time.

Caterpillar Inc. has a very long history of innovation, from the very first commercial popular tractor to electric-drive technology, and many more. The company continue to build on these legacies with the formation of ground-breaking results/solutions-results that will influence the company’s competitors, allow customers to build a better life, and to change the future.

In the past, the company used incremental innovation. Incremental innovation is among the most popular innovations. This type of innovation normally uses the company’s existing technology (Un & Asakawa, 2015). Examples entail adding new features or elements to an existing product/service or removing certain features. Later on, the company changed to disruptive innovation, which involves the introduction of new processes or technology in the current market. However, it was difficult to change the company’s culture of improving the company’s existing product/service.

References

Goffin, K. (2017). Caterpillar: a service brand for customer peace of mind. The Business & Management Collection.

https://www.caterpillar.com/en/company/who-we-are.html

Riepina, I., Vostriakova, V., Chukhraieva, N., & Bril, M. (2018). M&A financial levers in management of business value.

Souder, D., Bromiley, P., Mitchell, S., & Reilly, G. (2017). Does Investing in the Long Term Pay Off for Firms?. Rutgers Business Review, 2(2).

Un, C. A., & Asakawa, K. (2015). Types of R&D collaborations and process innovation: The benefit of collaborating upstream in the knowledge chain. Journal of Product Innovation Management, 32(1), 138-153.

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