Steps Discuss drafts of your Business Model and Strategic Plan, Part I Individual assignment from Week 2

Assignment Steps Discuss drafts of your Business Model and Strategic Plan, Part I Individual assignment from Week 2 with all team members.Choose two or three team member’s drafts and review as a team this week. You will review a different team member’s drafts each week. By Week 5, all team members’ papers should have been reviewed at least once.Propose detailed feedback and critical analysis team members can incorporate into their drafts.Prepare a maximum 700-word synopsis summarizing what the team has learned from the review and discussion. Please make sure to include specific recommendations for each of the submitted papers.
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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 d …
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