Strategic management is intended to manage organizational resources to achieve the organization’s goals. With the help of strategic management, organizations can gain a competitive advantage and adjust their goals to changing market realities. One tool used in strategic management is vision and mission statements that define the organization’s strategic direction. Further, some elements of Caterpillar Inc.’s strategic management, such as vision and mission statements and competitive advantages and disadvantages, will be evaluated.
Vision, Mission, and Core Values
Vision and mission statements are a powerful strategic management tool that provides a sense of direction to employees in an organization. A vision statement is a big picture of what an organization wants to achieve (Hofstrand, 2016). A mission statement explains how an organization is going to fulfill its vision and usually begins with the word to (Hofstrand, 2016). Along with vision and mission statements, an organization can develop a core values statement, which outlines how employees will behave when accomplishing organizational vision and mission (Hofstrand, 2016). The guiding principle for preparing effective statements is to keep these statements simple, concise, and reflecting exactly what the organization is doing and what goals it is trying to achieve (Hofstrand, 2016). These statements should be easy to remember because they will guide employees’ everyday work. As for the mission statement, it should include customer needs, customer groups, and the company’s activities and competencies (HigherStudy, 2018). Effective statements are not developed once and for all; instead, they should be revisited to align with changing organizational goals and market realities.
Caterpillar Inc.’s Statements
Caterpillar Inc.’s statements conform to the guiding principles identified above and support organizational strategic planning principles. The company’s vision is “a world in which all people’s basic needs … are fulfilled in an environmentally sustainable way and a company that improves the quality of the environment and the communities where we live and work” (“Vision, mission, strategy,” n.d., para. 1). This vision statement is simple and concise; it reflects organizational goals and provides a big picture of what the organization plans to achieve. Caterpillar Inc.’s mission statement is “to enable economic growth through infrastructure and energy development, and to provide solutions that support communities and protect the planet” (“Vision, mission, strategy,” n.d., para. 2). It explains how the organization plans to achieve its vision and contains information about the company’s competencies and customer needs. Caterpillar Inc.’s core values are integrity, excellence, teamwork, commitment, sustainability (“Caterpillar strategy,” n.d.). These values support the company’s vision and mission and outline behaviors required for achieving organizational goals.
Caterpillar Inc.’s Competitive Advantages and Disadvantages
An analysis of an organization’s competitive advantage and performance is part of AFI (Analyse, Formulate, Implement) strategy framework that helps firms to develop a strategy resulting in increased performance and competitive advantage. Caterpillar Inc. operates in a highly competitive environment and competes with other manufacturers in terms of price, customer service, quality, and product performance (Caterpillar, 2019). The company’s competitive advantages are high quality, excellent product performance, and a wide range of products (Caterpillar, 2019). Customer service also distinguishes the company from competitors since it provides customer-focused solutions at each stage of the product life cycle (“Caterpillar strategy,” n.d.). Caterpillar Inc. implements the Operating & Execution Model, according to which it allocates more resources to the most profitable areas of its business, which results in competitive advantage (“Caterpillar strategy,” n.d.). The company partners with dealers worldwide and improves dealers’ service quality (Caterpillar, 2019). Yet, the company’s focus on quality leads to a competitive disadvantage in terms of pricing, especially in regions other than the US (Caterpillar, 2019). Furthermore, Caterpillar Inc.’s extended product lines may make it lag behind its more narrowly-focused competitors in terms of quality and innovative technologies.
Conclusion
The guiding principles required for preparing effective vision and mission statements include simplicity, conciseness, and alignment with organizational goals and competencies. Caterpillar Inc.’s statements conform to these guiding principles. The company’s evaluation revealed that its competitive advantages were high quality, excellent product performance, and a wide range of products. The competitive disadvantages included uncompetitive prices in the price-sensitive market environment and threats from narrowly-focused competitors.
References
Caterpillar. (2019). 2019 annual report: Executing our strategy. Web.
Caterpillar strategy. (n.d.). Caterpillar. Web.
HigherStudy. (2018). Strategic management mission statement. Web.
Hofstrand, D. (2016). Vision and mission statements – A roadmap of where you want to go and how to get there. Iowa State University. Web.
Vision, mission, strategy, & principles. (n.d.). Caterpillar. Web.