Business Model and Strategic Planning Outline as a guide, combine Parts 1, 2, and 3 of your completed business model strategic plan with your Final Business Plan Model assignment and Executive Summary. This includes the Business Model, Vision, Mission, Va
Running head: STRATEGIC OBJECTIVES CASE OF CATERPILLAR INC.
Strategic Objectives Case of Caterpillar Inc.
Helen Jackson
BUS/475
Daniel Magnole
April 10, 2017
Strategic Objectives Case of Caterpillar Inc.
For any operation of a business, there are few things that top management need to put into consideration to ensure that there is smooth running of a business. The aim of every business is to make profits. This means that the management must be concerned with both the internal and external environments. Strategic objectives in a business are developed to ensure that the firm is in good health and that it remains relevant in the market. It ensures that a company maintains its financial health, profits increased, shareholders value improved and caring of the surrounding environment.
Balanced Scorecard
The balanced scorecard below helps in representing the short-term and long-term goals that are set by Caterpillar Inc. It’s in line with the mission, vision, values of the organization and SWOT analysis. In finance, the aim is to increase the profits earned. For the customer care area, the aim is to ensure that the clients are satisfied with the services that are offered to them. This helps the company in maintaining them. For the process area, it focuses on all the process that the company is undertaking. The other area is on growth; here the company has to consider the training and the rate of employee’s turnover.
| Areas for Measures | Strategic Objective | Measure | Metric | Target Year 1 | Target Year 2 | Target Year 3 |
| Financial | Increase Profitability | Market Value | % in Market Share | 5% | 7% | 10% |
| Increase Revenue | Costs and Expenses | Operating Expense Ratio | 70% | 60% | 55% | |
| Competitive Advantage | Economic Value | Value, Price, and Cost | 15% | 25% | 60% | |
| Customer | Customer Turnover | Home Sales | % of homes sold to homes available | 12% | 10% | 8% |
| Customer Satisfaction | Customer Satisfaction Feedback | Customer Surveys | 85% | 90% | 100% | |
| Customer Safety | Customer Injury on Property | % of Customers Injured as Fault of Property | 3% | 2% | 1% | |
| Process | Performance | Ability to perform up to par | % of Specialized Services Completed | 90% | 95% | 100% |
| Communication | Effective Communication with Staff and Customers | Staff and Customer Feedback | 95% | 98% | 100% | |
| Reliability | Reliability of Customer Services on Schedule | % of Specialized Services Completed on Schedule | 95% | 98% | 100% | |
| Learning and Growth | Employee Turnover | Employ employees with high morale | Employees quit or fired in compared to all employees | 15% | 12% | 10% |
| Employee Satisfaction | Employee Customer Service Skills | Employee Surveys | 90% | 95% | 100% | |
| Employee Training | Improve Employee Training | Employee Performance | 95% | 98% | 100% |
In this case of Caterpillar Inc., we will consider the four perspectives; these includes the financial perspective, this will include the market share of the company, the revenue earned by the firm as compared to the costs incurred. The levels of the profits attained and the level and the competition position. The second perspective includes the customer value. In this perspective, we will cover the ability of the company to retain the customers and the rate of turnovers. We will also include the customer satisfaction and the customer value. We will also include the process or the internal operations perspective. In this area, we will measure the process performance, the improvements made in productivity, the operations metrics and the impacts that could occur in the organization as a result of a change. The last perspective will be the learning and growth perspective; this will include perspectives in different areas including in employee satisfaction, this will give reasons if the employees are satisfied which will directly affect their turnover or retention. Organizational capabilities will also be included in this area. The culture of the organization is also contained in this section and also the technological innovations (Mba, 2013).
The company have shown some great improvements in different in financial sector. Caterpillar Inc. has aimed at increasing the value of the stakeholders by maintain a good performance despite the challenges faced as a result of the stiff competition. It’s in this perspective that we understand the investment potential and the funding needs of the company. From the fourth quarter 2016 of the Caterpillar Inc., there are various things observed. The company reported a revenue decrease by -13.2%. This however, was not critical since that of its competitors fell by -15.71%. By the next quarter, the company should aim at increasing the sales which will lead to a rise in revenues. For the cases of the engine segment market share, it improved the market position while that of the competitors reduced by 42.97%. On the financing and insurance segment market share, it recorded a growth of 7.59%. This was an improvement of 5.14%. It maintained its market share on the machinery segment while the sales of its competitors dropped in the same year. The sales were stagnant which led to loss in market share in the resource industry machinery section. This risk can be mitigated by establishing new designs of the products and encouraging of marketing of the company’s products (McNair, 2013).
On the customer value perspective, the company have made great strides in ensuring that it retain its customers through satisfying them and maintaining the value of the products. The company sought to better determine the client demand by leveraging the internet. It created an online dealer storefront that was made accessible for both the customers and dealers. The company had a modified chain, where it could order the materials in line with the demand of the customers. The dealer network provided the highest level of services to the end. The company have been promoting some particular product line; this is done by the use of dealers and the internet. All the dealers, as well as the site, is made visible. This makes the customers to be satisfied by the services, and in turn, they remain loyal to the company. Products are also distributed to the customers within their designated time frames (Reidenbach, Goeke, & McClung, 2002).
For the internal process perspective, Caterpillar Inc. focuses on the activities and some major processes that are required for the company to make provisions of value products as per the demand of the customers. There are significant operations process that are employed by Caterpillar Inc. Some of these processes include product design. The company have been able to dominate over the rivals by ensuring that it remain active in product design. It innovates to meet customer’s needs and ensures that the client’s needs are fully satisfied. Demand management is the other process in which the company concentrates on. The company have been making forecast on the requirements and thus request raw materials in advance that are enough to cater for the all the need of the clients. Caterpillar Inc. is also concerned on the quality management where products are made defect free this helps in attracting and retaining high number of customers. The supply chain systems are made to be consistent. There is material management that ensures that there is consistent delivery of finished products to the customers. Goods are delivered at the right place, time, quantity, quality and the right costs all the time. The other operational process is the capacity building. Caterpillar Inc. aims at improving the workplace values. The company is concerned with the rights of the employees. It offers the right environment for them to grow their careers (Mathaisel, 2008).
The last perspective is on learning and growth perspective. This involves the employees training and the company cultural attitude that have been connected to the individual and company self-improvement. There has been an increased technological growth in the market. This have made the company to conduct training on continuous basis. This is done to help them to be line with what the competitor companies are offering. New designs of the products are required in the markets. This means that there is requirement of new skills to enable the production of new design demanded in the market. The new technology has also allowed the production to be efficient and more goods can be produced within a short time. Training have also ensured that the products offered to the clients are defect free. As a result, Caterpillar Inc. have been able to retain the highest number of customers. For the cases of the employees, they also feel appreciated and thus work hard to achieve their targets, this have had an overall effect in the performance of the whole company (Mukerjee, 2008).
There are various ways in which the communication plan will be implemented. It will be utilized throughout the communication of the strategic plan, and the business model. The information will be gathered from different sources and then linked to the company’s mission, and vision. For any information that is confidential, it will be encrypted. Communication to the staff will involve use of meetings thus face-to-face method. To the customers, the distribution of the information will be through written materials and for those that are close, face-to-face communication will be used.
With the above strategies being implemented, Caterpillar Inc is assured that its performance in the market will continue to improve and this will attract a significant market share. Sales made by the company will be high revenues recorded over the years will always be positive.
ReferencesMathaisel, D. F. (2008). Sustaining the military enterprise : an architecture for a lean transformation. Boca Raton: Auerbach Publications.
Mba, A. A. (2013). Balanced scorecard. Raleigh: Lulu Com.
McNair, C. J. (2013). Value creation in management accounting : using information to capture customer value. New York: Business Expert Press.
Mukerjee, H. S. (2008). Industrial marketing. New Delhi: Excel Books.
Reidenbach, R. E., Goeke, R. W., & McClung, G. W. (2002). Dominating markets with value : advances in customer value management. Morgantown WV: Rhumb Line Pub.
