Running head: STRATEGIC PLAN PART 1: PROPOSAL OF A NEW DIVISION 1 Strategic Plan Part 1: Proposal of a New Division Heather Strategic Plan Part 1: Proposal of a New Division Table of Contents Executive Statement……………………………………………………………………………...3 New Business Division of an Existing Company……………………………………………….4 Strategic Plan Part 2: SWOTT Analysis………………………………………………….…5-6 Strategic Plan Part 3: Assumptions, Risk and Change Management Plan………………..6-7 Strategies and Tactics Section………………………………………………………………...7-8 Conclusion……………………………………………………………………………………......8 References………………………………………………………………………………………... Executive Summary Caterpillar, based in Peoria, IL, is the world’s largest producer of heavy equipment manufacture, and was ranked number seventy-four on Forbes’ list of 500 largest corporations (Fortune.com, 2017). The mining industry was once a thriving, highly profitable industry which spanned the entire globe, and was a large source of revenue for Caterpillar. The STRATEGIC PLAN PART 1: PROPOSAL OF A NEW DIVISION 2 company also was a large innovator in the development of mining equipment, including the world’s largest mechanical drive mining truck in 1998, and acquiring new assets with acquisition of Shandong SEM Machinery Co., Ltd. in China in 2008 to cut down on transportation costs to the Far East (Caterpillar, 2017). The worldwide increase in mining not only gave Caterpillar opportunity to expand the sales and distribution of its machinery, but also provided thousands of jobs to the native inhabitants in China, India, and South America. Beginning in 2013, the coal mining industry began a steady decline because of changes in the global energy market. Electricity producers are switching to using natural gas as a cheaper alternative to produce energy, and “solar, wind and hydro is now a more affordable option for energy compared to coal."(Marketplace, 2017), reducing the need for the mining and refining of coal and its byproducts. This has reduced the need to produce new heavy machinery used in mining, resulting in massive layoffs, and the complete shutting down of whole production lines, and in some cases entire plants. By diversifying our products and adding new machinery to the Caterpillar portfolio, the skilled workers receiving unemployment benefits and empty facilities the company is still paying tax on can be utilized. New Business Division of an Existing Company A new source of revenue is necessary to provide profits to offset the $500 million in restructuring costs, and the 18% decline in sales Caterpillar has suffered due to changes in the global mining industry. The company owns several plants that sit empty because of the downsizing of the heavy machinery produced for mining, as so these facilities can be retrofitted to accommodate the production of a different line of products. In addition, a portion of the 7,700 people could be called back to be trained in the assembly of the new machinery, as they have STRATEGIC PLAN PART 1: PROPOSAL OF A NEW DIVISION 3 already been trained to work as an assembler for the company, and are familiar with the mission and vision statements of Caterpillar, Inc. The Research and Development department has analyzed the current market, and has ascertained that there exists a potential to provide small, single operator machinery to the general citizens in the private sector. Many contractors use Caterpillar backhoes and bulldozers for major construction projects, but smaller machinery could be utilized in the building of single family dwellings, landscaping in parks and city centers, and the repair and creation of city streets and sidewalks. An individual could go to any of the locations that already offer many of our existing products and rent a machine to dig a garden, remove an old stump, or move heavy landscaping blocks instead of outsourcing the labor at a greater cost. In addition, the development and production of new machinery means a new line of replacement parts will need to be produced and sold to dealers to keep the equipment in top shape, or to use to perform repairs if the situation presents itself. Strategic Plan Part 2: SWOTT Analysis The Strengths-Weaknesses-Opportunities-Threats-and Trends (SWOTT) analysis is a tool to help manages develop the strategies SO(strengths-opportunities), WO (Weaknessesopportunities), ST(strengths-threats), WT (weaknesses-threats) and future trends. Caterpillar’s external opportunities lie within a market that has few companies offering products to the consumers. Machinery of this type is usually too expensive and is of limited need for the individual user to be able to justify buying it so renting, but contracting companies have the necessary revenue and will have enough projects to purchase such equipment. STRATEGIC PLAN PART 1: PROPOSAL OF A NEW DIVISION 4 While the number of manufacturers is limited, there are a few companies such as John Deere, Bobcat, and Komatsu that offer the same type of equipment Caterpillar is proposing to develop. Of the three, only Bobcat specializes in smaller earth movers, as John Deere focuses on implements used in farming, and Komatsu is another heavy equipment manufacturer. Caterpillar’s worldwide reputation and the size of its operations will give the company an advantage over Bobcat. The company’s internal strengths are the available skilled labor that has already been trained, and the factories at its disposal. The startup time will be minimal because new buildings and the lines need to assemble the machinery on will not need to be erected. Many of the new products are simply smaller versions of existing large earth movers, so only refresher training will be needed for the returning employees. The returning employees may also represent a key internal weakness for Caterpillar. The company has had a history of lay offs and labor disputes in its recent history, so the rehiring of employees may be tainted by a distrust of the company. The idea that the new positions may only be temporary or eventually outsourced to other markets may make it difficult to get the workers to own into their jobs, and put forth a great effort. Also, the creation of new products means that new parts must be fabricated to be used in the building of the machinery, so testing and development may lead to a delayed start in the production of the new product line. The available assets at Caterpillar’s disposal will allow the introduction of a new product line when a lack of competitors will give the company an opportunity for a large market share. The time it will take to research and develop the new machines and the necessary parts, as well as the training also comes at a good time when not a lot of competition exists that could possibly affect the success of the new line’s introduction. Caterpillar may also be able to take advantage STRATEGIC PLAN PART 1: PROPOSAL OF A NEW DIVISION 5 of the time to explore new vendors to produce the parts at a more affordable cost, thus increasing the company’s profit margin across the board. Strategic Plan Part 3: Assumptions, Risk and Change Management Plan As with any large financial expenditure, there exists many risks to the corporation. Establishing a new division to manufacture and distribute new products requires a substantial amount of capital to cover startup costs that exist before the first piece of equipment is sold. A budget for advertisement, the creation of owners’ manuals, the cost of the salaries for the salesmen that will visit the dealers for pre-sales, and other items that fall outside of the scope of manufacturing must be created. To do so, money must be “borrowed” from other divisions in the corporation, or loans will need to be obtained from banks, using the company’s assets as collateral. Although the Research and Development department’s research data has indicated that a need for Caterpillar’s small earth movers exists, there is always a chance that a new product’s introduction to the market will not be as successful as initial estimates may indicate. In addition, new products may have unforeseen flaws that may result in breakdowns or recalls that may cause a poor reaction by consumers. To allow for this, the product must not be introduced to the market without first undergoing extensive testing, both on the “Proving Grounds”, and in controlled laboratory settings. The craftmanship must have extensive warranties to cover both the manufacturing and parts, which not only lets the consumer know that Caterpillar will cover any defects, but also has enough faith in the products to offer costly guarantees. Strategies and Tactics Section STRATEGIC PLAN PART 1: PROPOSAL OF A NEW DIVISION 6 While it is every company’s goal to achieve the financial objectives set forth by the stockholders and upper management, there exists certain strategic objectives that, if achieved, will complement and help to meet the financial goals. By introducing a class of machinery not previously produced by Caterpillar Inc., the company wishes to gain a larger market share in the field of earth moving vehicles. Research has indicated that there is room for growth and innovation in the small equipment field which will give the company a larger industrial footprint. The existing framework and labor force, coupled with the decades of experience in fabrication and development in the field of earth moving machinery will allow Caterpillar to have a quicker turn around in the time it takes to get an idea from the design stage to the market than its rivals. The relationships the company has with vendors will also allow for the products to have a lower cost than other similar products produced by other earth moving manufactures, and Caterpillar’s vast experience in this field will lead to faster innovation and improved products due to its being a forerunner in the field of vehicle technology. Caterpillar’s products are found on every inhabited continent on the globe, so the company’s worldwide coverage will provide a wider, more rapid distribution and replenishment than its competitors. Conclusion In conclusion, Caterpillar’s recent loss in business in the field of mining can be turned into a potentially positive financial prospect by using the company’s existing assets, skilled labor, and relationships with vendors and dealers to capitalize on the need for smaller earth movers in the private sector. STRATEGIC PLAN PART 1: PROPOSAL OF A NEW DIVISION 7 References Buedel, M. (2017, January 26). Caterpillar: No more mass layoffs planned. Retrieved from PJ Star: http://www.pjstar.com/news/20170126/caterpillar-no-more-mass-layoffs-planned Bushey, C. (2017, March 31). Caterpillar to close Aurora plant, cutting 800 jobs. Retrieved from Crain's Chicago Business: http://www.chicagobusiness.com/article/20170331/NEWS05/170339977/caterpillar-toclose-aurora-plant-cutting-800-jobs Caterpillar. (2017). Retrieved from https://www.caterpillar.com/en/company/history.html Cohen, I. (2003). The Caterpillar Labor Dispute and the UAW, 1991-1998. Labor Studies Journal, 77-99. Retrieved from Labor Studies Journal. Cunningham, N. (2017, February 17). The Decline Of The Coal Industry Is “Long-Term” And “Irreversible”. Retrieved from oilprice.com: https://oilprice.com/Energy/Coal/TheDecline-Of-The-Coal-Industry-Is-Long-Term-And-Irreversible.html David, F. R. (2017). Financial versus Strategic Objectives. In Stategic Managment A Competitive Advantage Approach. 131: Pearson Education, Inc. David, F. R. (2017). The SWOT Matrix. In Strategic Management A Competitive Approach (p. 172). Pearson Education, Inc. Griesse, M. A. (2007). Caterpillar's Interactions with Piracicaba, Brazil: A Community-based Analysis of CSR. Journal of Business Ethics, 39-51. Velasco, L. O. (2017, June 23). A Former Coal Miner's Take On The Declining Industry. Retrieved from Marketplace: https://www.marketplace.org/2017/06/22/world/formercoal-miner-s-take-declining-industry Younglai, R. (2015, December 30). 2014 in review: Decline and fall in the mining industry. Retrieved from The Globe and Mail: https://www.theglobeandmail.com/report-onbusiness/industry-news/energy-and-resources/2014-in-review-no-good-news-from-rockymining-industry/article22241394/ Running head: STRATEGIC PLAN PART I: PROPOSAL OF A NEW DIVISION 1 Strategic Plan Part I: Proposal of a New Division Natasha Strategic Plan Part I: New Product or Service Established in 1963, American Cable Systems, Inc. was purchased by Ralph and Joe Roberts. Over the years they have been able to grow their organization through an acquisition of multiple other agencies (Comcast, 2016). In 1969, they transformed their team into a combination of communication and broadcast and received the name Comcast Corporation. The acquisition of broadband cable system of the mogul AT&T and E! Entertainment provided them with the opportunity to obtain the largest cable brand operator image within the United States. Over some time, they engaged in a partnership with Time Warner Inc. and the Adelphia Communication, hence ensuring that the company was among the most significant firm providing phone and internet services within the States. New Product/Service Proposal The new division of the company proposed would be a WI-FI based wireless service product. The Mobile Virtual Network Operator, (MVNO), services were expected to launch in the mid-2017, with phones set to have the ability to connect the wireless WIFI hotspots. However, with the WIFI unavailable, the devices will connect to the Verizon Wireless Network. The initiative will avert a loss of connectivity for their customers (Comcast, 2016). Notably, with an increased amount of activity on mobile phones conducted on Wi-Fi networks instead of Cellular Networks, Cablevision is now betting that its Wi-Fi hotspots are so widespread to the STRATEGIC PLAN PART I: PROPOSAL OF A NEW DIVISION 2 extent that it can build its mobile system. Comcast will launch a wireless offering, which will combine access to hotspots with Verizon Service. The Verizon Mobile Network will be the alternative switch for any region in which the Wireless Network is unavailable. The recent years have seen the major service carriers engaging in activities to add the small wireless cell towers as a strategy to ensure their systems are improved. The tiny wireless cell towers need to have a back-to-network connection which is responsible for the interdiction of the faster mode of transmission, the 5G connection. However, concerns have arisen on the readiness of the WIFI to be used in such a scenario. With the new service line from Comcast, it is evident that the gap existing in the network communications will reduce, resulting in the increased competitive advantage for Comcast in the internet services, TV, and cellular services (Comcast, 2016). How the division addresses customer needs and achieves competitive advantage The new MVNO cellular service will create wireless connectivity for all of Comcast’s affiliated customers. The mobile service will be compatible with new phones as well as current models, offering a wireless gateway, with no gap of service, which is accessible by all phones in the continental U.S. through Comcast’s over 15 million hotspots. Although Comcast customers currently own packages or bundles of home products, cellular service will be seamless through Verizon Wireless. Regardless of what phone type is now in use, Comcast will operate on its network. Therefore, it will guarantee that calls will not drop due to internet failure. Thus, any phone besides Sprint locked phones will work. Phones bought and sold in U.S. are compatible with either network (Comcast, 2016). The location is unimportant with seamless connectivity STRATEGIC PLAN PART I: PROPOSAL OF A NEW DIVISION 3 since cellular service from hotspots with the internet is always available. Customers remain on a fast and secure network through their unique password. Vision and Business Model for new Division The new WIFI network will fit into the company module quite well. Comcast will have an advantage through the use of the comprehensive network service provided by Verizon. Customers engaging with the company are set to enjoy all the products that the firm will provide, hence the gain of new customers. It is notable that the business engages with the advanced technologies, therefore aligning their vision to ensure the firm offers the best services in the industry (Comcast, 2016). Alignment of new division’s vision and mission to company’s mission and vision Notably, within new divisions, the value, mission, and vision are established to align with the parent or the entire organization’s mission/values. At Comcast, the organizational mission ensures consumers, customers, and businesses a reliable and affordable line of products and services (Comcast, 2016). The ability to have one provider for both cell service and home cable/internet will prove to be an excellent position for Comcast. Customers prefer paying one bill for all networks used both in the country and abroad (Comcast Corporation, 2016). The technology utilized in this type of product will be a marketing dream for the major players involved. The cell services which the firm provides are set to meet the industry standards and ensure the future of communication improves through the engagement with technological services. These strategies will ensure the company gains the competitive advantage, which is evident from the promotion of Greg Butz in July 2016 as the president of the new division. The president recently outlined the Comcast Cellular division’s vision which is to evolve the internet STRATEGIC PLAN PART I: PROPOSAL OF A NEW DIVISION 4 future and their customer’s experiences. By offering them the quickest and most technological connectivity, the outfit enhanced service quality to even more people and devices. Summarize how the vision, mission, and values guide the division’s strategic direction The vision, mission, and values at Comcast define the company’s strength and motivation. These core values outlined in the Comcast code of ethics (Comcast Corporation, 2016). 1. Comply 2. Be truthful 3. Treat others justly 4. Shield assets and data 5. Steer clear of conflicts 6. Participate in the market responsibly 7. Ask about issues and concerns Guiding Principles & Values The core objective entails expanding their customer base, giving them all devices and technologies they desire, no matter their location, by providing a highly technologically advanced product and service. This product/service will be forever changing with new technologies. Innovations will drive new ideas in any market. Currently, the outcome will be the next customer's satisfaction changing since the smartphone invention. Cost savings drive customers to particular organizations (Comcast, 2016). This collaboration is alluring. WIFI is the latest in communication throughout society. Its lifecycle will be for years and decades to come. STRATEGIC PLAN PART I: PROPOSAL OF A NEW DIVISION 5 For Comcast Cable customers that desire faster mobile data service, 5G Wi-Fi is the newest technology with the reliability of the Verizon network. Comcast knows the importance of control along with an understanding of who their competitors are (Comcast, 2016). Authority encompasses two elements that include evaluation and analysis of marketing strategies outcomes when any corrective action is necessary. By having outlined evaluation and control methods, it will supply data along with any assessments needed for any other activities related to marketing. Comcast has taken necessary steps to give them control, as well as the ability to know their rivals. The firm is always developing innovative ways that will allow it to promote and market itself even better going forward. The process of the company analysis encompasses development of Comcast sales power tactics, configuration, engagement, a variety of choice, education, management, ethics, benefits, as well as assessing the organization’s staff. The firm is unable to predict the future, or what will occur within the execution of marketing objectives (Comcast Corporation, 2016). Its marketers should consistently practice marketing rule. In controlling the marketing within the company, the firm implemented a fourstep process. In the beginning, the organization’s supervisors will outline and establish marketing objectives. The second step will entail measuring performance in the outfit’s market industry to appraise any reasons and variances among the expected return. Thirdly, a corrective action will be taken by the management team to compress any rifts among the objectives and performance. In some instances, the fourth step will be required to alter action goals or may even lead to the modification of the target. Summarily, through the strength of the Comcast Corporations’ history, the scope, and magnitude of their stock/production capabilities, along with their existing market corporation, STRATEGIC PLAN PART I: PROPOSAL OF A NEW DIVISION 6 the firm feels that the product has a great need and demand in the industry. Innovative ideas from companies like Comcast bring new products that benefit both consumers and organization. Although Comcast will require assistance from other carriers to create this new product, the brand will bring confidence to consumers. Consumers will have trust in the WIFI network and continue saving on service. Customers prefer the best and most reliable service concerning their mobile devices. Comcast is in an excellent position to deliver to this market. The cell service industry will benefit from a WI-FI network because of the cost-cutting technology in use. Comcast customers will promote a service to all; more customers will therefore follow. Because of the savings on a WIFI network, Comcast will be able to gain a dominant market share in the cell service market business. The opportunity for Comcast entails delivering service to the cell arena. The move will be beneficial to the communication industry, increase organizational sales, offer additional options for Comcast bundles, improve client retention, and change views throughout the industry. References Comcast. (2016). Company Overview. Retrieved from http://corporate.comcast.com/news-information/company-overview Comcast Corporation. (2016). Code of Conduct. Retrieved from http://corporate.comcast.com/images/Code-of-Conduct.pdf BUS 475 Week 3 Peer Review Analysis and Critique Natasha Moringlane’s Paper Natasha’s company is has chosen to select to add a division or new product to is the company of American Cable Systems, Inc. She starts off by going into the company history and going into detail on what the company is and when they were founded and just how they became into what they are now. She does a great job laying the foundation before of the introduction so the reader has a grasp of the company and its back story before given you the new product or division that will be detailed to follow. The paper then goes right into the new division/product and what it is, what it is going to do and what it will be called. Natasha does a good job defining the new product and how it will benefit the company, benefit the consumer or customer and also how it will give a competitive edge over the competition. I would like to see more details on the new product in regards to specs and just how it will affect current customers on their network when using the hot spots through the United States. Questions like how will customers know when they are near hot spots, will they be alerted, do they have to keep jumping from hot spot to hot spot, etc.? Also how will or does this compare to the competition? You are guaranteeing no drop calls as they are using this new product so how do they work exactly in detail? What are the benefits to get new customers to join your company based on this new product? Heather Remmel-Burkiett’s Paper As we look and read through this paper, we can see it is a well presented and thought out proposal. Heather begins by laying out the company she is chosen and explaining the situation and reasoning behind the necessity for the new division/product. For her company she has chosen the heavy equipment manufacture of Caterpillar. I enjoyed how she sets the reader up for the situation and hooks them as to why this needs to happen and gives you very detailed points on the importance of the company, what it can do during this situation and then gets you with how it increases how it will benefit not just the company but the employees and ex-employees as well as the industry in which the company is a part of. This proposal is well designed to ensure it almost is a done deal as each section is a detailed tell all on just why this is a good move for the company when they had a division that was failing and in decline and revamping that or repurposing that to ensure it adapts to the ever changing nature of the industry that they are a part of. I would like to see of added details on how Caterpillar can make these changes and gain the completive edge over its competitors. What is going to stop them from doing the same thing? What is going to attract your customer versus going to them?
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