StrategicManagementJournalPart1.docx

Running head: STRATEGIC MANAGEMENT JOURNAL 1

STRATEGIC MANAGEMENT JOURNAL 5

Strategic Management Journal Part 1

The Guiding Principles for Preparing Effective Mission Statement, Vision Statement, and Core Values of Organizations

The mission statement, vision statement, and core values of an organization aim to communicate the firm’s goals and objectives. A mission statement relays the company’s purpose for being and how it uses strategic management to serve its key stakeholders (Gattorna, 2017). The core values present the beliefs that govern the organization. Caterpillar Inc. has six guiding principles that can communicate its vision statement, mission statement, and core values. First, the company provides a realistic environment that enables its employees to work with dignity and respect. Second, it embraces diversity as a crucial element in strategic business management. Third, the firm applies the highest standard of superiority to acquire its raw materials for production processes. Fourth, it establishes motivation among its customers. Fifth, it positively contributes to environmental sustainability in its strategic management. Finally, it identifies the significance of profitability for future business success.

Comparison Whether Caterpillar Inc.’s Mission, Vision, and Core Values Conform to the Guiding Principles in Organizational Strategic Planning Principles

Caterpillar Inc.’s Mission Statement

Caterpillar Inc.’s mission statement combines four operations that inform the organizational decisions and strategies. The firm’s mission statement is to provide practical value to customers, establish a social responsibility among the employees, develop a profitable business, and reward people. This mission statement conforms to the guiding principles in four different ways (Lysak, 2020). For instance, it focuses on providing the best value to its customers to increase customer satisfaction and loyalty. Second, growing a profitable business will enable Caterpillar Inc. to increase its stakeholder value by pursuing profitability. Third, it adheres to the guiding principle of rewarding people by providing an international workforce and a conducive environment for business operations. Finally, it adheres to the principle of social responsibility by improving life quality.

Caterpillar Inc.’s Vision Statement

Caterpillar Inc.’s vision statement focuses on becoming an international leader in developing a positive customer value. The company’s purpose of becoming a global leader in manufacturing and producing high-quality products that can meet their customers’ expectations. This vision statement conforms to the principles of strategic business management as it is based on the conventional guidelines for establishing vision statements. It is short and concise, making it easier to understand. The same concept applies to the company’s core values.

Caterpillar Inc.’s Current Competitive Advantages and Disadvantages

Advantages

The company experiences a low threat of new entrants in the market. This fact happens due to the extreme capital requirements to start a unique establishment that produces heavy equipment. This gives Caterpillar Inc. a substantial competitive edge against the other small companies that could penetrate the industry. Second, Caterpillar doesn’t face any threat of new substitutes in equipment manufacturing (Demir, 2017). This factor is because the existing processes that could substitute its manufacturing process cannot operate without automation and mechanization. This makes customers divert to heavy equipment offered at Caterpillar. Finally, Caterpillar has a low bargaining power of suppliers. It is connected to different suppliers for its manufacturing processes around the world. This fact makes the bargaining power of suppliers to be low and increases the company’s competitive edge.

Disadvantages

The firm experiences high competition from rival companies within the industry. This happens due to the many companies in equipment manufacturing from different companies (Omsa, 2017). Second, the company faces a vast er’s bargaining power. This forces the firm to lower its prices, potentially leading to losses instead of profits.

References

Demir, F. (2017). Measuring strategic management maturity: an empirical study in Turkish public and private sector organizations. International Journal of Economics and Management Engineering, 11(11), 2678-2685.
Gattorna, J. (2017). Strategic supply chain management Creating shareholder value by aligning supply chain strategy with business strategy. In Strategic Supply Chain Alignment (pp. 32-52). Routledge.
Lysak, A., Marmon, R., & Schoen, E. J. (2020). Whistleblowing and Caterpillar Inc.’s Swiss Tax Strategy. Journal of Business Ethics Education, 17, 237-250.
Omsa, S., Ridwan, M., & Jayadi, M. (2017). The effect of strategic management practices on SME performances in Makassar, Indonesia. American Journal of Theoretical and Applied Business, 3(4), 71-80.