Strategic Management Research Journal Part 1

Prompt 1

A mission statement discloses the firm’s purpose for existence, and how it seeks to handle its major stakeholders such as customers, investors, employees, government and communities (Lumenlearning.com, n.d.). It explains how the firm differs from others within its industry. It is more specific hence actionable and often helps in development of strategic goals. The mission statement enables organizational leaders to determine its rational objectives which align with its existence and desired outcome (University of Minnesota, n.d.). The guiding principles in preparing an effective mission statement include engagement of employees in the development process, it should be culturally appropriate, it should show the order of priorities in service delivery, and concise.

A vision statement is a forward-looking declaration of a firm’s aspirations and purposes. It does not outline specific goals but broadly describes the value provided by a firm (Lumenlearning.com, n.d.). It gives a word roadmap of what a firm is attempting to become or produce. A vision statement adds to the mission statement values such as openness, integrity, and transparency (University of Minnesota, n.d.). The main guiding principle in preparation of a vision statement is that it should vividly describe the function and state of a firm while being idealistically phrased to inspire and motivate.

A value statement highlights what a firm believes in and acts as a moral compass to guide decision processes and sets the standards for evaluating actions (Lumenlearning.com, n.d.). For a value statement to be effective, it must be supported across the organization, directing attitudes and actions.

The vision, mission and value statements help develop measurable objectives and goals for evaluating the success of the firm’s strategy.

Prompt 2

Caterpillar Inc.’s mission, vision and value statements do not entirely conform to the guiding principles above. They are summarized into their strategy and purpose. They are not concise but detailed explanations of where Caterpillar Inc. aims to be. The company’s strategy reflects its legacy and ongoing commitment to meet the needs of its clients and the communities they work and live in (Caterpillar.com, 2022).

The company highlights that its goal is attaining profitable growth through investing in businesses that can create more value using its Operation and Execution Framework. The framework helps determine whether different areas of business consume or create value (Caterpillar.com, 2022). Caterpillar Inc. notes that it utilizes data and facts to examine the most profitable sectors to invest in and the requirements to succeed within those sectors.

The company’s value statement conforms to the strategic planning guiding principles of effectiveness. They summarize their values as integrity, excellence, teamwork, commitment, and sustainability.

Prompt 3

According to Caterpillar Inc.’s 2021 Annual Report, its goods and services are sold globally into various extremely competitive markets. The company competes in these markets on the premises of product price, quality, performance, and customer service. Occasionally, the ferocity of competition leads to price discounting in certain regions or sectors which squeezes the margins and consequently adversely affects the operating profits (Caterpillar.com, 2022). In other jurisdictions outside the United States, some competitors have competitive advantages associated with operating in their home country, thereby disadvantaging Caterpillar Inc.

Caterpillar Inc. enjoys several competitive advantages. First, the company uses various supplier contracts to safeguard it processes and intellectual property as well as control and regulate supply base risks which could disrupt the business. Further, the company monitors risks such as vendor financial stability, business continuity, production scalability, delivery, and quality (Caterpillar.com, 2022). Second, Caterpillar Inc. owns several trademarks and patents relating to their products and services.

References

Caterpillar.com. (2022). Caterpillar’s Strategy. Retrieved from https://www.caterpillar.com/en/company/strategy-purpose/strategy.html

Caterpillar.com. (2022). 2021 Annual Report. Retrieved from https://www.caterpillar.com/en/investors/financial-information/proxy-materials/annual-report-to-shareholders.html

Lumenlearning.com. (n.d.). Principles of Management: Planning and Mission. Retrieved from https://courses.lumenlearning.com/wm-principlesofmanagement/chapter/reading-mission-vision-and-values/

University of Minnesota. (n.d.). Principles of Management: The roles of mission, vision, and values. Retrieved from https://open.lib.umn.edu/principlesmanagement/chapter/4-3-the-roles-of-mission-vision-and-values/