Strategic Plan and Presentation - CB&I STRATEGIC PLAN AND PRESENTATION - CB&I 37 Strategic Plan and Presentation - CB&I Julie L. Bentley STR/581 April 6, 2015 Kenneth Chapman Running head: STRATEGIC PLAN AND PRESENTATION - CB&I 1 STRATEGIC PLAN AND PRESENTATION - CB&I 10 Strategic Plan and Presentation - CB&I EXECUTIVE SUMMARY Chicago Bridge & Iron Horace E. Horton- Original Founder Phillip Asherman, CEO, President One CB&I Plaza 2103 Research Forest Drive The Woodlands, Texas 77380 Telephone: 832-513-1000 Chicago Bridge & Iron (referred to from hereon in as the "Company") was established as a S Corporation at One CB&I Plaza, 2103 Research Forest Drive, The Woodlands, Texas 77380 with the expectation of rapid expansion in the energy infrastructure industry. GOAL INITIATIVE FOR STRATEGIC PLANNING: · The company wishes to change the strategic planning of this organization which already includes: 1) operational excellence, 2) customer intimacy, 3) product leadership, 4) differentiation, 5) focus, 6) concentrated growth, 7) product development, 8) innovation, 9) horizontal and vertical acquisitions, 10) concentric diversification, with a change to include a new grand strategy of 11) conglomerate diversification. · Solicit financial backing in order to be able to introduce its products and services to new global areas (described below). Business Description: · The Company was formed on August, 1889 as an S Corporation under Illinois state laws and headed by Horace E. Horton. Director of Development and introduction of Pratt-Truss Bridge. Director and opening of first fabrication plant in Washington Heights, IL. Product Development and Refinement of Energy Storage Tanks for water, petroleum, and natural gas. Development of first automatic girth seam welder which improved weld quality of storage tanks. · 1889 - Establishment of Chicago Bridge and Iron · 1889-Present - Operational Excellence, Customer Intimacy, and Product Leadership · 1894 - First elevated steel plate water storage tank. · 1923 - First floating roof tank for oil, natural gas, and petroleum. · 1923- First Hortonsphere Pressure Vessel was designed and trademarked. · 1930 - First Fractionating Towers were built for Standard Oil of Louisiana. · 1959 - Development of Ornamental Water storage Tanks, Awards for global energy storage devices used. · Currently – Global Energy Infrastructure Organization. Acquisitions: · Howe-Baker International, L.L.C. · Shaw Group · Pitt-Des Moines, Inc. · John Brown Hydrocarbons, Limited · Fabrication shop in Beaumont, TX, which has deep water access to Gulf of Mexico. · Lummus Corp. · Catalytic Distillation Technologies (CDTECH) · E-gas solids gasification technology for conversion of coal and petroleum coke into syngas. · 1996- Praxair, Inc. merged with CB&I. The Company currently employs 54,000 full-time employees and 4,868 part-time employees. Management Team: The Company has assembled an experienced management team: President and Chief Executive Officer of CB&I - Philip K. Asherman, 35 years experience. Executive Vice President and operating group President of Engineering, Construction and Maintenance. - Patrick K. Mullen, 25 years experience. Executive Vice President and operating group President of Technology - Daniel M. McCarthy, 37 years experience. Executive Vice President and operating group President of Fabrication Services - Luke V. Scorsone, 34 years experience. Vice President and operating group President of Environmental Solutions - E. Chip Ray, 30 years of global experience in operations, business development, strategic planning, mergers & acquisitions, investor relations and marketing & communications. Prior to his current role, he served as Executive Vice President, Corporate Planning from September 2007. Before joining CB&I, he worked as Executive Director of Strategy and Marketing for Fluor Corporation. Before joining Fluor, he spent 13 years with Nalco Chemical Company. Executive Vice President and Chief Administration Officer - Beth A. Bailey, 39 years - in 1976 and has progressed through increasingly responsible roles in the IT organization. She was named Vice President –Information Technology in March 1999. Executive Vice President, Chief Legal Officer and Secretary - Richard E. Chandler, Jr., 30 years extensive experience in corporate law, mergers and acquisitions, antitrust and international business transactions. Prior to joining CB&I, he served as Senior Vice President, General Counsel and Corporate Secretary of Smith International, Inc. since 2005, where he was responsible for developing and managing the company’s international legal strategy, including the design and implementation of its legal compliance program. From 1986 to 2005, he served as Vice President & General Counsel of M-I/SWACO, a leading supplier of engineered drilling fluid systems and drilling waste management and environmental solutions. Executive Vice President of Global Systems - James W. Sabin, 30 years of project execution and information technology experience. Prior to his current role, Mr. Sabin served as Senior Vice President of Global Systems and Senior President of Shaw’s Power Group. He previously held several senior leadership positions with increasing levels of responsibility within Shaw. Executive Vice President and Chief Financial Officer – Michael S. Taff, 30 years of financial and global industry experience. He joins CB&I from Flowserve Corporation where he served as Senior Vice President and Chief Financial Officer. He previously served as Senior Vice President and Chief Financial Officer for McDermott International Inc., and also for The Babcock and Wilcox Company following its spin-off from McDermott. Mr. Taff also has held finance leadership roles at HMT, Inc., Philip Services Corporation and British Petroleum Oil Company. He spent nine years in public accounting at Price Waterhouse, has a bachelor of business administration degree in accounting from Stephen F. Austin State University and is a certified public accountant. "Mike has extensive experience leading corporate financial organizations. His breadth of knowledge, particularly within our industry, makes him an ideal addition to CB&I's executive management team, and we are confident he will help the company continue to drive shareholder value," said Philip K. Asherman, CB&I's President and Chief Executive Officer. Business Mission: "CB&I is the most complete energy infrastructure focused company in the world and a major provider of government services. With 125 years of experience and the expertise of approximately 54,000 employees, CB&I provides reliable solutions while maintaining a relentless focus on safety and an uncompromising standard of quality. As one of the most complete providers of a wide range of services including design, engineering, construction, fabrication, maintenance and environmental services, no project is too big for CB&I. Our timely and cost-effective solutions not only satisfy our customers' needs, but also improve the quality of life for people around the world" (cbi.com, 2015). The Mission Statement states: "Sustain earnings (profit) growth at levels where stakeholders view CB&I as a "growth" company" (cbi.com, 2015). New Product/Services: · Conglomerate Diversification strategy change where acquisition of business or competition would present the most promising investment opportunity available leading to increase in CB&I’s stock value, acquirement of needed resources quickly, achievement of tax savings 12-28%, increase in the efficiency and profitability of synergy between CB&I and the acquired business. · After a period of thorough trial and error, the Company is prepared to introduce the following product/services to the market – 4 new storage tank devices in Middle East and current restructuring of water supply system and storage in Japan. · Energy Infrastructure Storage Tank-Petroleum, Natural Gas, Water: Includes maintenance and environmental Services for new energy infrastructure projects. · Demand for safe, uncompromising standard of quality, and improvement of quality of life for people domestically and globally of energy infrastructure products with maintenance and service contracts for continuous improvements of product and service. 1) Major Events Milestones for Implementation of new strategic management initiative: The following event milestones will be used for evaluation of continued implementation of new strategic management initiative of conglomerate diversification: Event Department Responsible Date Due: Responsible Person Contact 1. Beginning of Strategic Management Change Corporate and World Headquarters: Administration, Executive Board, Board of Trustees, Governing Board May 1, 2015 Phillip Asherman James Sabin Michael Taff 2. Implementation Internally Operating Department – Domestic and Global June 30, 2015 Phillip Asherman Patrick Mullen Beth Bailey Richard E. Chandler, Jr. James Sabin Michael Taff 3. Measurement of internal acceptance to expand externally Operating Department Every 3 months starting May 1, 2015, August 31, 2015, December 30, 2015. Patrick Mullen, Richard E. Chandler, Jr. James Sabin, Michael Taff 4. Assessment of Measurement Controls Finance and Operation Departments Quarterly starting May 1, 2015, August 31, 2015, December 30, 2015. Michael Taff, James Sabin, Patrick Mullen, Beth Bailey, 5. Completion of Strategic Management -Conglomerate Diversification Regional and Corporate Headquarters, Operating Department December 31, 2015 Phillip Asherman, James Sabin, Beth Bailey, Richard E. Chandler, Patrick Mullen, Daniel McCarthy, Luke Scorsone, E. Chip Ray Michael Taff 2) Event Milestones for new storage tank contracted projects: Event Responsible Region or Department Date Due Contact Persons Petroleum Storage Tank in Dubai Middle East Division Corporate Operating Office December 31, 2016 James Sabin Patrick Mullen E. Chip Ray Richard Chandler Jr. Luke Scorsone Daniel McCarthy Beth Bailey Michael Taff Natural Gas Storage and Piping in Arab Emirates Middle East Division and Corporate Operating Office December 31, 2017 James Sabin Patrick Mullen E. Chip Ray Richard Chandler Jr. Luke Scorsone Daniel McCarthy Beth Bailey Michael Taff Water Storage Tank in Egypt Middle East Division and Corporate Operating Office December 31, 2018 James Sabin Patrick Mullen E. Chip Ray Richard Chandler Jr. Luke Scorsone Daniel McCarthy Beth Bailey Michael Taff Water storage Tank in Japan with piping Asia Division and Corporate Operating Office December 15, 2019 James Sabin Patrick Mullen E. Chip Ray Richard Chandler Jr. Luke Scorsone Daniel McCarthy Beth Bailey Michael Taff Upkeep maintenance and service for Japan Water Storage Devices Asia Division and Corporate Operating Office December 31, 2019 James Sabin Patrick Mullen E. Chip Ray Richard Chandler Jr. Luke Scorsone Daniel McCarthy Beth Bailey Michael Taff Funding Request: The Company requests a total loan of $2,000,000,000.00 over the course of 15 years, to be used for the following purposes: 1) 4 projects - Middle East- Petroleum, Natural Gas, Water Storage Facilities, and 2) Upkeep of Japanese water infrastructure since environmental weather disasters. Purpose Loan Amount: · Staffing $8.4 million dollars · Equipment- $1 billion dollars · Contract Pricing- $10.5 million dollars · Business Law/Legal Regulatory Licensure fees - $2 million dollars · Logistical Transport- $12 million dollars · Long-term debt payment is a key feature of the Company's financial plan. We expect to break even within an 8-12 year time period following the introduction of our products. Financial predictions suggest a minimum 22.17% percent return on investment by the conclusion of the financing period. Business Goals and Objectives: Short-Term Goals: · Continuous improvement of safety standards measured monthly for up to one year on OSHA standards. Increase of 2-5% this year. · Procurement of 99% quality steel within 6 months of new projects initiated in May 2015. · Reduction of turnover rate of 3% for May 2015 - November 2015. · Increase in contract approvals of 5%. Globally: · Decrease in delay of fabrication of steel for petroleum storage - Monthly 1-2%. · Decrease in transport time - 3% for next year. · Increase in cultural standards of care for environment social issues with building of projects - 2-5%. Measured monthly at end of month and sent to corporate headquarters. · Increase in communication globally with project managers - 2-5% technology increase (Skype, Email, Phone, Text). Long-Term Goals: · Continuous product development. · Innovation of greatly improved and new energy infrastructure projects - reap initially high profits associated with customer acceptance. · Differentiation: attributes of final product over other product qualities, and customer loyalty. · Focus: attend to needs of domestic and global projects. Maintenance and service for infrastructure projects. · Operational Excellence · Customer Intimacy · Product Leadership · Concentrated Growth · Market Development · Horizontal and Vertical Acquisition · Concentric Diversification · Conglomerate Diversification - NEW GRAND STRATEGY INNOVATION LONG TERM GOAL. Future plans for CB&I: With the additional strategic plan of conglomerate diversification, the management team is wanting to present to the Board and venture capitalist group a most promising investment opportunity to increase CB&I’s stock value for shareholders, achievement of tax savings, an increase in the efficiency and profitability of synergy between CB&I and the company or companies acquired (Pearce & Robinson, 2013). We as Chicago Bridge & Iron’s strategic management team have discovered that using a combination of the value disciplines, generic and a combination of grand strategies that Chicago Bridge & Iron has in the past, concurrently, and in the future will continue to be one of the largest energy infrastructure organizations that shares its knowledge and expertise domestically and globally. Implementation of the new conglomerate diversification strategy may lead to growth and expansion where previously not considered in domestic and global markets, with a tax savings of 12-28%, a ROI of 22.17% is calculated from accounting department and will continue to be evaluated during the implementation of the milestone objectives. Strategic Plan Chicago Bridge and Iron (CB&I) used grand strategies from the establishment of the organization in 1889 by Horace E. Horton to the present day. These strategies have changed throughout the 125 years that it has been in the energy infrastructure business, but it has never lost the desire, need, or demand to not grow. Looking at these strategies can help show us how CB&I use these strategies to grow and stay the leader in the energy infrastructure industry (cbi.com, 2015). Recommendations for Chicago Bridge and Iron would be along with the current strategies of operational excellence, customer intimacy (domestic and global), product leadership, differentiation, focus, concentrated growth of dominant product, market, and dominant technology for the energy infrastructure products, product development, innovation, horizontal and vertical acquisitions, concentric diversification, the addition of the grand strategy of conglomerate diversification where acquisition of a business or competition would present the most promising investment opportunity available for the shareholder of CB&I (Pearce & Robinson, 2013). The potential for growth using implementation of the conglomerate diversification grand strategy would be an 1) increase in CB&I’s stock value, 2) acquirement of needed resources quickly (such as acquisition of fabrication shop in Beaumont, Texas, which has deep water access to Gulf of Mexico, which increases CB&I’s capacity to fabricate and transport large scale process modules, shop built vessels, and large steel plate subassemblies), 3) achievement of tax savings (12-28%) if purchasing a firm that tax losses offset current or future earnings for CB&I), 4) an increase in the efficiency and profitability of synergy between Chicago Bridge & Iron and the company acquired (Pearce & Robinson, 2013). Table of Contents Title Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-9 Event Milestone Graphs (ES) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5,6 Future Plans of CB&I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Strategic Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Company Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 External and Internal Environment Scan with Trend Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Most Important External Environmental Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Most Important Internal Strengths and Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 SWOT Analysis Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Sources to Perform an External Environmental Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Assessment of Chicago Bridge and Iron’s Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Competitive Position and Possibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Current Structure of Chicago Bridge & Iron . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Best Value Discipline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Best Generic Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 A Combination of Grand Strategies at CB&I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Recommendation of Strategy to Implement for Opportunity of Growth . . . . . . . . . . . . . . . . . . 23 Implementation Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Milestone Chart (New Strategic Management Initiative) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Milestone Chart (New Projects – Middle East, Japan) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Strategy Map Implementation Schedule with Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26-31 Control Plan For Chicago Bridge and Iron . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Functional Tactics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Resource Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Required Organizational Change Management Strategies for Implementation . . . . . . . . . . . . 33 Budget, Forecasted Financials, and Break Even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Key Risks With Contingency Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Company Background Chicago Bridge and Iron (CB&I – NYSE) was started in 1889 by Horace E. Horton with the startup of Bridge-Truss which then after the first 3-4 projects turned into a fabrication shop in Washington Heights, IL (cbi.com, 2015). It turned to acquisitions, and working with the energy infrastructure development, and when war need and demand occurred it developed what was needed for oil, and energy for the war efforts. It continued to develop and refine its current products of water, petroleum, oil, and natural gas storage devices, and even developed and engineered refinement of an automatic welder which increased finished production of the storage devices in 1959. With continued growth, and sustainability, CB& I became the leader in the energy infrastructure domestic and global business world which continues to this very day. Following is their mission, vision, and value statements which describe what Chicago Bridge & Iron is all about. CB&I’s strategic statement is stated as “CB&I is the most complete energy infrastructure focused company in the world and a major provider of government services. With 125 years of experience and the expertise of approximately 54,000 employees, CB&I provides reliable solutions while maintaining a relentless focus on safety and an uncompromising standard of quality. As one of the most complete providers of a wide range of services including design, engineering, construction, fabrication, maintenance and environmental services, no project is too big for CB&I. Our timely and cost-effective solutions not only satisfy our customers’ needs, but also improve the quality of life for people around the world” (cbi.com, 2015). The mission statement reads, “Become a preferred global supplier in our strategic markets across the full spectrum of our services. Sustain earnings (profit) growth at levels where stakeholders view CB&I as a “growth” company” (cbi.com, 2015). The value statement is “At CB&I, we conduct business in a fair, ethical, and lawful manner worldwide, and we associate with business partners (customers, suppliers, subcontractors, and financial institutions) that share this approach. As a company and as individual employees, the fundamental values that we will not compromise are: 1) safety, 2) integrity, 3) excellence, 4) innovation, 5) potential, and 6) accountability. Our code of ethics is part of our value system and we will strive to uphold the highest ethical standards in all our worldwide operations” (cbi.com, 2015). External and Internal Environment Scan with Trend Analysis External and internal factors are considered along with the structure of the organization when looking at the internal operational performance and the effects that this entails on the competitive position and possibilities of an organization (Pearce & Robinson, 2013). Following is an analysis that will look at the external environmental factors and the internal strengths and weakness of Chicago Bridge & Iron, along with the trends identified. It will look at how the external and internal factors give assessment of Chicago Bridge & Iron’s competitive position and possibilities, and how in evaluation and analysis this plays a part in the structure and how this affects CB&I’s operational and internal operational performance. Most Important External Environmental Factors The most important external environmental factors include some from each environment. In the remote environment, the most important external factors are economic, social, political, and technological. In the industry environment, the most important external environmental factors are supplier power and buyer power due to the global environment that CB&I operates. The most important external factors in the operating environment are the creditors, customers, labor, and suppliers which all determine when the projects are finished and when the final product is done in the country that initially contracts the job (Pearce & Robinson, 2013). The economic factors concern the nature and direction of the economy in which CB& I conduct business affairs. Social factors that affect CB& I are the values, beliefs, opinions, and lifestyles of the firm’s countries where projects are built. The stability and direction of the political powers in control of the countries where it operates is another factor that determines the strategic direction of the organization. Technological advances worldwide are enabling the remote business of CB&I to go into areas where previously it would have been hard to conduct a project, or other infrastructure endeavors (Pearce & Robinson, 2013). In the industry environment the most important factors were supplier power and buyer power. Supplier power is shown to CB& I by exerting their power over the prices charged for the steel, and supplies needed to complete the infrastructure projects. Reduction of the quality of the goods was also seen in some of the infrastructure materials used in China for a new waterway system (cbi.com, 2015). Buyer power was used to force down the prices charged by CB& I of the projects bid on, demanding higher quality and more service for the projects done (Pearce & Robinson, 2013). Bargaining power is seen much in the Middle East region of Kuwait, and in Qatar (cbi.com). In the operating environment, the customers, creditors, suppliers, and labor all contribute to Chicago Bridge and Iron’s success or failure. The operating environment is also known as the competitive or task environment and comprises factors in the competitive situation that affects CB& I’s success in acquiring needed resources or profitably marketing its goods or services (Pearce & Robinson, 2013). We will discuss the competitive position and environment of CB&I in a section below. The customer profiles that are the market of CB& I determine the strategic plan so resources can be reallocated if the country has political unrest, or resources are unavailable. CB& I consumer and buyer behaviors in these countries globally, and determines the cultural factors before even beginning an infrastructure project. Creditors are used to determine if a project will be completed due to repayment schedules of the country that needs the infrastructure project. Suppliers that are dependable are a must for CB& I. Long term relationships are built with these suppliers due to the type of work that Chicago Bridge and Iron does. The labor market is another operating environment factor that is most important when working globally with infrastructure projects. Availability, reputation, and employment rates internationally determine what type of worker that is available with the infrastructure projects (Pearce & Robinson, 2013). Most Important Internal Strengths and Weaknesses Following is the SWOT analysis for Chicago Bridge and Iron. It shows that strengths and weaknesses of the whole organization without being cut up into pieces regionally with different offices throughout the domestic and international world. Strengths · 125 Year History · Energy Infrastructure World-Wide · 58,468 Employee Strong · Provides Reliable Solutions · Focus on Safety · Uncompromising Standard of Quality Weaknesses · Delay in Production Time Frame · Delay of Resource Materials Opportunities · Energy Infrastructure Globally · Cross Cultural Learning Team Initiatives · Growth domestic and globally · Timely and Cost Effective Solutions Threats · Global Competitors · Governmental Regulations and Restrictions · Lack of Cultural Resources – manpower, machinery, weather, and environmental factors. · Civil Wars Globally The most important of the strengths are 1) 125 year history, 2) energy infrastructure world-wide that provides reliable solutions and safety, and 3) uncompromising standard of quality of every project that CB& I constructs (cbi.com, 2015). The most important of the weaknesses are the delay in production time schedules, and the delay of resources due to logistical shipment, political unrest, or environmental issues. Sources to Perform an External Environmental Analysis The sources used for the external environmental analysis is using factors from the remote, industry, and operating environments. In the remote environment the research proposal will concentrate on economic factors domestic and globally, social factors domestic and globally, direction and stability of the political environment domestic and globally, and ecological factors that will control and monitor pollution domestic and globally. Regulatory factors will be followed internationally with using the less cost resources for ecological factors of air, land, and water pollution prevention (Pearce & Robinson, 2013). Technological factors will be the last to be analyzed due to the international regulation of internet and wireless electronic data transfer to the home offices in 5 different continents. In the industry external environment an analysis of competition in the industry will be of great value to CB&I. Strategy for this industry environment is finding a way of coping and using the competition as subcontractors for the infrastructure development of the project. Assessment of the determinants of suppliers domestic and globally with be the main emphasis for this industrial environment (Pearce & Robinson, 2013). Also, looking at the economies of scale with the discounted governmental regulations will be of benefit for additional projects and the integrity of work well done. In evaluation of the research proposal in respect to the operating environment it is found that CB&I has the capability of acquiring the needed resources and profitably marketing its goods and services simply in relation to what the vision statement means when it states that 1) “we expect consistent and strong growth regardless of market cycles”, 2) “we will focus on earnings (profit) growth as our primary measure”, and 3) “we are continuing to focus our long-term strategy on how to best grow our business based on our core competencies” (cbi.com, 2015). Assessment of Chicago Bridge & Iron’s Resources Chicago Bridge and Iron has three basic resources. The tangible assets are the physical and financial means CB&I used to provide value to its customers (Pearce & Robinson, 2013). The total assets that was evidenced by CB&I was from the balance sheet annual report that totaled $9,389,593. That does not include the acquisition of Shaw Industries in 2013, which Chicago Bridge and Iron bought because of external environmental factors of modulation, and electrical energy infrastructure (cbi.com, 2015). The intangible assets are the company reputation, organizational morale with 58,468 plus employees, technical infrastructure knowledge, patents and trademarks, and the accumulated experience of 125 years (Pearce & Robinson, 2013). Organizational capabilities are the other resource that CB& I utilizes to a maximum to combine assets, people, and processes of taking inputs into output of superb global infrastructure systems (Pearce & Robinson, 2013). The trend analysis of Chicago Bridge and Iron monitors the performance over an extended period of time and does annual reports with all accounting statements and financial information filed with the Security Exchange Commission Office. Key performance indicators are evaluated 4 times per year for CB& I and this information is used to refine the business decisions and strategies. The measurements used with Chicago Bridge and Iron are the sales, cost of goods and inventory sitting before going to a project, overhead, cash flow, net profits, and ratio’s that are calculated to determine if the project needs additional manpower labor, or resource materials. Another good trend that is used at CB&I is staff turnover and injury rate which evaluates their core competency of 125 years of service in the infrastructure industry with safety as one of their main competencies (Queensland, 2015). Using the trend analysis for business improvement is one of the reasons that Chicago Bridge and Iron has survived for so long with short and long term initiatives. They use the trend analysis to identify areas of performing well, identify underperforming issues, and the trend analysis provides evidence for strategic management decision making for continued projection of future infrastructure projects in areas not previously entered globally (Queensland, 2015). Competitive Position and Possibilities Chicago Bridge and Iron has other competition which has been started in the early 1900’s. One is Spectra Energy, which is an infrastructure company (King, 2015), and a newer competitor to the market is NiSource, which is separating its electric and natural gas businesses so that it can create more value to its shareholders and value to its community and customers (NiSource, 2015). One of the ways that I see competition position of Chicago Bridge and Iron is that they may misread the signals that may indicate a shift in the focus of competitors in the industry and a refinement of their present strategies or tactics to gain access to global job projects. Another competitive mistake that may occur is the overlooking of a potential international competitor that may have worked with CB&I in the past. Chicago Bridge and Iron does acquire companies that exhibit a strong competition for them such as Shaw Industries in 2013 (cbi.com, 2015). CB&I does not hold any competition as far as experience and knowledge goes because it uses the best people from diverse countries to accomplish its international and global strategic plans. The only possibility was mentioned above which is the possible international entry of a new competitor (Pearce & Robinson, 2013). Current Structure of Chicago Bridge and Iron The organizational structure of Chicago Bridge and Iron has a combination of three, possibly four different structures. It has the traditional organizational structure with the divisional aspect with a central corporate office located at The Hague, Netherlands. It also has a matrix organizational structure where because of the increased diversity of the infrastructure projects that it provides skill and resources where and when they are most needed or vital (Pearce & Robinson, 2013). The matrix organizational structure also has a product team structure element to it so that Chicago Bridge and Iron can strategically position its resources to important projects where most needed (Pearce & Robinson, 2013). It has also started expanding its structure into the agile virtual organization due to its acquirement of a modular organization of Shaw Industries in 2013 (cbi.com, 2015). Due to all the regions that CB&I conducts business in outsourcing some of the work to local areas has become the initiative. Having a combination of these different organizational structures allows Chicago Bridge and Iron to have the staying success of any infrastructure industry giant. As the growth into new global markets continues with the knowledge and technological advances that 2015 holds, CB&I can only expect that it will have advantages internally and with its organizational performance. The new water containment system that was just built in Kuwait received an international award, and other projects are held at high standards of safety and reliable solutions for our growing world (cbi.com, 2015). As the market share continues to climb on the stock exchange that can only mean a rise in salary and benefit packages for those that work hard to make sure that Chicago Bridge and Iron stays on top of the infrastructure industry. In conclusion of looking at the internal and external environment factors and how they relate to the organizational structure and competitive position allows any company such as CB&I to redefine and look at the strategic plans that they want to accomplish in the next 3-5 years. Knowing that Chicago Bridge and Iron has stabile strengths and a competitive advantage over the structures of other companies will ensure that the strategic plans are being followed and the future trends that may occur will not affect it financially, structurally, or business sense wise. Best Value Discipline Chicago Bridge and Iron (CB&I) use a combination of all three of the value disciplines in how they do business in the infrastructure industry – 1) operational excellence, 2) customer intimacy, and 3) product leadership (Pearce & Robinson, 2013). CB&I uses operational excellence by using technological and creative processes for remaking the current product for the best safety energy storage devices known in today’s world (Pearce & Robinson, 2013). They use customer intimacy such as the development of the ornamental pineapple water storage tank in 1959 for the statehood of Hawaii (cbi.com). CB&I continues to develop storage and infrastructure items individualized for customer projects with what the customer needs and desires for the best impact for all. CB&I built trust using this value discipline (Pearce & Robinson, 2013). Chicago Bridge and Iron (CBI) uses product leadership as another value by production of energy infrastructure products and services for projects with awards received for many of their storage tanks and infrastructure projects completed (cbi.com, 2015). Best Generic Strategy Using the best competitive advantage to compete in the marketplace, there are two of the generic strategies that Chicago Bridge and Iron use past, present, and future. They are 1) differentiation, and 2) focus (Pearce & Robinson, 2013). CB&I uses differentiation to stress the attribute of the final product above the other product qualities, and thus, CB&I creates customer loyalty with growth into the other markets that they have previously not made infrastructure products for (Pearce & Robinson, 2013). If one petroleum, water, or natural gas storage tank is used for storage at a commercial place of business, then the competition of that industry expects to use CB&I in development of their natural gas, water, or petroleum storage tank. This promotes growth for Chicago Bridge and Iron. CB&I use focus strategy as a second generic strategy. A focus strategy attempts to attend to the needs of a particular market segment (Pearce & Robinson, 2013). Chicago Bridge and Iron has pursued putting water, petroleum, and natural gas storage tanks in isolated geographic areas, and even a underwater oil storage tank in Dubai in 1969 (cbi.com, 2015). This contributes to the focus strategy because of the needs of the smaller countries being able to have storage tanks for the safe storage of water, petroleum, oil, or natural gas. A Combination of Grand Strategies at CB&I A combination of grand strategies is used at Chicago Bridge and Iron. A grand strategy is defined as “a master long-term plan that provides basic direction for major actions for achieving long-term business objectives” (Pearce & Robinson, 2013). The grand strategies have changed as time progresses to capture new growth and markets in areas not previously tried. Expertise is needed in all of the projects because of the magnitude, and immensity of the projects that Chicago Bridge and Iron design and build in the energy infrastructure industry. In 1889, concentrated growth was the grand strategy used by Horace E. Horton when he established Chicago Bridge and Iron in Chicago, Illinois. Also, concentrated growth continued with the opening of the first fabrication plant in Washington Heights, IL (cbi.com, 2015). The beginning product and service was the Pratt-Truss Bridge built in Newton, IL, in 1890. The conditions for CB&I that favor concentrated growth is the product market was sufficiently distinctive to dissuade competitors in adjacent product markets from trying to invade CB&I’s segments (Pearce & Robinson, 2013). CB&I also directed its resources to the profitable growth of a dominant product, market, and had a dominant technology when combined with acquisitions of other technology companies that caused expansion into the refinement of storage tanks for the energy infrastructure industry (Pearce & Robinson, 2013). Another grand strategy that was used by CB&I was product development which involves the substantial modification of existing products or creation of new but related products that can be marketed to current customers through established channels (Pearce & Robinson, 2013). This was seen when in 1950, CB&I introduces the automatic girth seam welder which reduced the hours required to build a tank while improving the weld quality of the storage tank projects (cbi.com, 2015). Innovation was a grand strategy used many times throughout the history of Chicago Bridge and Iron’s energy infrastructure projects. Innovation is a strategy to reap the initially high profits associated with customer acceptance of a new or greatly improved product (Pearce & Robinson, 2013). This happened first in 1894 with the first elevated steel plate water storage tank that is located in Fort Dodge, IA. Then, in 1923, CB&I introduced the first floating roof tank for oil industry to reduce the product loss and fire hazards. The roof tank remains the industry standard for safe and economical storage of petroleum products (cbi.com, 2015). In 1923, the first Hortonsphere Pressure Vessel was designed which is trademarked. In 1930, the first petroleum fractionating towers were built for Standard Oil of Louisiana in Baton Rouge, LA. These fractionating towers offer comprehensive scale of technology and Environmental Protection Containment services for refiners worldwide. The new products and storage capabilities continue to this day for Chicago Bridge and Iron (cbi.com, 2015). Both horizontal and vertical acquisitions are a grand strategy that continues with CB&I with the acquiring of: 1) Howe-Baker International, L.L.C., 2) Shaw Group (Scott, 2012), 3) Pitt-Des Moines, Inc., 4) John Brown Hydrocarbons, Limited, headquartered in London, England, 5) fabrication shop in Beaumont, TX, which has deep water access to Gulf of Mexico, 6) Lummus, 7) Catalytic Distillation Technologies (CDTECH), 8) E-gas solids gasification technology for conversion of coal and petroleum coke into syngas (cbi.com, 2015). Concentric Diversification was another grand strategy that is used by Chicago Bridge and Iron. Turnaround is another grand strategy that was used in 1996 when Praxair, Inc. merged with CBI Industries in March of 1996. Praxair assembled a new management team that was led by Gerald M. Glenn. CB&I Company remains with the Chicago Bridge & Iron Company N.V, a Netherlands corporation and current parent company that remains to 2015 (cbi.com, 2015). I am unsure whether there are joint ventures, strategic alliances, or consortia found in Chicago Bridge and Iron. Further assessment and evaluation will be needed to answer this question. Recommendation of Strategy to Implement for Opportunity for Growth Recommendations for Chicago Bridge and Iron would be the grand strategy of conglomerate diversification where acquisition of a business or competition would present the most promising investment opportunity available (Pearce & Robinson, 2013). The potential for growth using implementation of the conglomerate diversification would be an 1) increase in CB& I’s stock value, 2) acquirement of needed resources quickly (such as the acquisition of fabrication shop in Beaumont, Texas, which has deep water access to Gulf of Mexico, which increased CB&I’s capacity to fabricate and transport large scale process modules, shop built vessels, and large steel plate subassemblies), 3) achievement of tax savings (if purchasing a firm that tax losses offset current or future earnings for CB&I), 4) an increase in the efficiency and profitability of synergy between CB&I and the company acquired (Pearce & Robinson, 2013). In conclusion, we have discovered that using a combination of the value disciplines, generic strategies, and a combination of grand strategies Chicago Bridge and Iron has in the past, concurrently, and in the future will continue to be one of the largest energy infrastructure organizations that shares its knowledge and expertise domestically and globally. Implementation of a different grand strategy which is may lead to growth and expansion where previously not considered, as only time will tell once implementation initiates, starting April 30, 2015 for implementation of the new strategic planning choice in addition to the current ones being used. Implementation Plan 1) Major Events Milestones for Implementation of New Strategic Management Initiative: The following event milestones will be used for evaluation of continued implementation of new strategic management initiative of conglomerate diversification: Event Department Responsible Date Due: Responsible Person Contact 6. Beginning of Strategic Management Change Corporate and World Headquarters: Administration, Executive Board, Board of Trustees, Governing Board May 1, 2015 Phillip Asherman James Sabin Michael Taff 7. Implementation Internally Operating Department – Domestic and Global June 30, 2015 Phillip Asherman Patrick Mullen Beth Bailey Richard E. Chandler, Jr. James Sabin Michael Taff 8. Measurement of internal acceptance to expand externally Operating Department Every 3 months starting May 1, 2015, August 31, 2015, December 30, 2015. Patrick Mullen, Richard E. Chandler, Jr. James Sabin, Michael Taff 9. Assessment of Measurement Controls Finance and Operation Departments Quarterly starting May 1, 2015, August 31, 2015, December 30, 2015. Michael Taff, James Sabin, Patrick Mullen, Beth Bailey, 10. Completion of Strategic Management -Conglomerate Diversification Regional and Corporate Headquarters, Operating Department December 31, 2015 Phillip Asherman, James Sabin, Beth Bailey, Richard E. Chandler, Patrick Mullen, Daniel McCarthy, Luke Scorsone, E. Chip Ray Michael Taff 2) Event Milestones for New Storage Tank Contracted Projects: Event Responsible Region or Department Date Due Contact Persons Petroleum Storage Tank in Dubai Middle East Division Corporate Operating Office December 31, 2016 James Sabin Patrick Mullen E. Chip Ray Richard Chandler Jr. Luke Scorsone Daniel McCarthy Beth Bailey Michael Taff Natural Gas Storage and Piping in Arab Emirates Middle East Division and Corporate Operating Office December 31, 2017 James Sabin Patrick Mullen E. Chip Ray Richard Chandler Jr. Luke Scorsone Daniel McCarthy Beth Bailey Michael Taff Water Storage Tank in Egypt Middle East Division and Corporate Operating Office December 31, 2018 James Sabin Patrick Mullen E. Chip Ray Richard Chandler Jr. Luke Scorsone Daniel McCarthy Beth Bailey Michael Taff Water storage Tank in Japan with piping Asia Division and Corporate Operating Office December 15, 2019 James Sabin Patrick Mullen E. Chip Ray Richard Chandler Jr. Luke Scorsone Daniel McCarthy Beth Bailey Michael Taff Upkeep maintenance and service for Japan Water Storage Devices Asia Division and Corporate Operating Office December 31, 2019 James Sabin Patrick Mullen E. Chip Ray Richard Chandler Jr. Luke Scorsone Daniel McCarthy Beth Bailey Michael Taff Strategy Map Implementation President – CEO, CFO, COO, and Executive Board Human Resources Purchasing Operations Production Finance Logistics Marketing R & D Recruitment of employees with Team Concept – starting daily April 2015 through December 31, 2020. 1. Purchase of Resources- daily starting April 30, 2015 – December 31, 2020. Regulation changes depending on project culture- daily starting on April 30, 2015, monthly starting April 30, 2015. Daily production schedule – daily starting April 1, 2015 – December 31, 2020. Exchange rate changes – daily starting April 1, 2015 – December 31, 2020. Shipment dates and times – daily starting April 1, 2015 – December 31, 2020. Evaluation of culture advertise-ments -weekly, monthly, yearly. Current Product Assess-ment – daily, weekly, monthly, yearly. 2. Benefit Packages-daily. 2. Purchase of Maintenance items – equipment. 2. Inventory assessment and data for purchasing department. 2. Inventory assessment 2. Daily production sales. 2. Assessment of ways for efficient travel. 2. Magazine and News Article Stories. 2. Yearly Conventions for new innova- tive techni- ques. 3. Reward Compensa -tion Packages- monthly starting April 30, 2015. 3. Purchase of additional buildings for continued production growth. Every 6 months starting in April 2015 through 2020. 3. Division offices data reporting – daily with date starting in April 30, 2015. 3. Employee cross training-weekly starting in April 2015, monthly 2015, yearly 2015 – 2020. 3. Daily inventory counts – starting April 30, 2015. Send to the Financial and Operations office. 3. Regulation assessment of transport system-licensing, insurance, weight daily starting April 1, 2015 – December 31, 2020. 3. Introduc-tion in New Markets-monthly starting May, 2015, and yearly 2015- 2020. 3. Global Technologist, science innovation, and physics seminars- weekly starting May, 2015, monthly 2015 - 2020, and yearly 2015 – 2020 . 4. Retirement and Social Security Issues- daily starting April 30, 2015. 4. Rentals for space and production needs – 6 months to 12 month assessment which starts in May, 2015. 4. Machine maintenance- daily starting in April, 30, 2015, weekly starting April, 30, 2015, monthly starting April 30, 2015, and yearly starting 2015-2020. 4. Line evaluation and controls – starting daily, April 30, 2015. 4. SEC regulations and audit reports – every 3 months starting April 1, 2015. The quarterly months will follow like banking quarters. 1st Quarter – Jan., Feb., March, 2nd Quarter – April, May, June, 3rd Quarter – July, August, September, 4th Quarter – Oct., Nov., Dec., Starts April 2015-December 31, 2020. 4. Evaluation of air, train, highway, and sea costs for transport – Monthly starting on April 30, 2015. 4. Documen-tary clips and photos- monthly starting April 30, 2015, and yearly starting April 30, 2015 – December 31, 2020. 5. Employee education and cross-training monthly April 30, 2015 – December 31, 2020, and yearly 2015 – 2020. 5. Inventory of licenses for equipment- and space- monthly starting April 30, 2015 – December 31, 2020, and yearly 2015 - 2020. 5. Assessment of storage devices and safety issues- (QI) (OSHA) - daily starting April 1, 2015 through December 31, 2015 -2020 5. Assessment of expiration dates for materials- daily starting April 1, 2015 – December 31, 2020. 5. Monthly finance reports and data audits – monthly starting April 1, 2015 – through December 31, 2020. 5. Monitoring of daily travel logistical issues – starting April 1, 2015 – through December 31, 2020. 5. Consul-tation for additional means of Marketing Product- daily starting April 1, 2015 – through December 31, 2020. 6. Insurance and safety (OSHA) – daily starting April 1, 2015 – December 31, 2020. 6. Regulation fees for storage facilities monthly starting April 1, 2015 through December 31, 2020. 6. Evaluation of marketing response – monthly using current customers starting April 1, 2015 through December 31, 2020. The strategy map table above is used to direct the organization throughout the organization to reach the goals individualized for the different departments (Kaplan and Norton, 1996). Timeframes for evaluation and completion of the goals are following the different goals and the due date of implementation is found in the Executive Summary. Having a strategy map using short-term objectives, functional tactics, policies that empower, and rewards that align the manager and employee priorities with organizational objectives and shareholder value provide very effective direction in strategy implementation (Pearce & Robinson, 2013). The action bullets are many for a big organization such as Chicago Bridge and Iron. The dates are listed in the tables as was requested at our last meeting. I hope that this will guide the board and the venture capitalist in making a final decision. Next, we will discuss the control and contingency plans. Control Plan For Chicago Bridge and Iron Strategic control is described as “concerned with tracking a strategy as it is being implemented, detecting problems or changes in its underlying premises, and making necessary adjustments” (Pearce & Robinson, 2013). Chicago Bridge and Iron uses mostly implementation control using key strategic thrusts and milestones for the different projects globally with the storage devices made specifically for water, petroleum, natural gas, and other energy items. Other control measures that CB& I uses is a mixture of the other three different types which include premise control, strategic surveillance at a low scale, and special alert controls due to energy regulations on the global scale at locations where the storage devices are used (Pearce & Robinson, 2013). CB& I bases their strategic controls on major and minor environmental and industry variables that are affected by the global market for energy and the storage of the petroleum, natural gas, and water (Pearce & Robinson, 2013). Along with the implementation control measure, Chicago Bridge and Iron also uses the balanced scorecard for measurement of: 1) learning and growth, 2) business process, 3) customer perspective, and 4) financial perspective with resource movement if needed (Pearce & Robinson, 2013). Using this scorecard approach enables the strategy of CB& I to be linked with the shareholder value while providing several outcomes that are measurable that guides and monitors strategy implementation with the strategic thrusts that occur with the global energy market for storage devices (Pearce & Robinson, 2013). All of the above mentioned are measurable and results are reported monthly to the corporate and division Chicago Bridge and Iron offices. Functional Tactics In the implementation process, functional tactics that are used daily at Chicago Bridge & Iron with the implementation of the short and long term objectives is one of specificity due to the different cultures the projects are designed in, the logistics of moving and transporting the finished product, and the function of the finished product. Specificity is used by CB& I due to the clear time frame for development and assembly of the products that are bought globally for the energy infrastructure of cities and countries, and the identification of who is responsible in the region for who is building, transporting, and final assembly in the receiving site for these structures (Pearce & Robinson, 2013, pages 288-289). Resource Allocation Resources are allocated to Chicago Bridge and Iron per job project MCR (Master Control Resource) sheet. Regional offices are alerted to what resources such as equipment, licensure, manpower, and supplies are needed daily. When logistical shipment and transport are not available there is a delay in project completion which is electronically communicated to the different division project work site and administration. Required Organizational Change Management Strategies for Implementation Managers show a commitment to innovation and change by embracing three interrelated activities: 1) clarifying strategic intent, 2) building an organization, and 3) shaping organizational structure so that culture will be exemplified through each employee working at CB& I and will be evident in the work completion competitively while discussed at the tables globally and domestically (Pearce & Robinson, 2013). Chicago Bridge & Iron uses strategic intent which is a clear statement of where they want to lead the company and what results they expect to achieve with printing and sending to shareholders the annual report (Pearce & Robinson, 2013). This is also communicated internally to employees through a monthly newsletter Email which shows which direction the company would like to go, and how this relates to yearly work performance evaluations and compensation with wage increase or bonuses (Pearce & Robinson, 2013). CB& I implements building an organization into their everyday activities functionally by building the organization and ensuring a common understanding about organizational priorities in the monthly newsletters, clarification of responsibility among managers and organizational divisional areas, education of leadership development as part of the weekly initiatives and education on safety along with wage increase, opening authority to lower managers at CB& I, and communicating the changes inside and outside the organization with its regional and global customers – mostly individual countries due to the energy infrastructure business (Pearce & Robinson, 2013). Advisory groups and research and development teams are assigned to daily and weekly look at the existing products and projects and to creatively innovate and develop new ways of sustaining better and bigger projects. Principles are used according to culture and project for safety, integrity, and ethical factors environmentally and socially (Pearce & Robinson, 2013). Chicago Bridge and Iron shapes organizational culture by creating a passion with employees domestically and globally (contracted workers) for the values that CB& I holds in each and every energy project that it develops, initiates, and completes. It also looks, recruits, develops, and retains talented operational leadership project teams. Pearce & Robinson, 2013, states, “leaders look to managers they need to execute strategy as another source of leadership to accept risk and cope with the complexity that change brings about” (p. 364). The culture of Chicago Bridge and Iron means that each employee’s beliefs and values influence the opinions and actions internally in the firm, and is shown externally in the cities and countries where the project is built (Pearce & Robinson, 2013). Budget, Forecasted Financials, and Break-Even Analysis Using assumed assets, sales, and costs for implementation of the conglomerate diversification strategy identified last week is a budget set for one petroleum storage tank project at $8.4 billion dollars which holds 700,000 gallons of off-shore petroleum. The current market share is $43.13 per share. Conglomerate diversification raises the market share per share to $52.16 which is a 9.03% increase with 100 shares. In evaluation of the Price-earnings share ratio the formula would be $52.16/$3.20 earnings per share (Parrino,2012). Projected financials for 5 years would be 3% for the first 2 years, then years 3 and 4 – 2.8%, and with the final 5 year financials being at 2.2%. The simple calculation of sale of the infrastructure project assumed sale price is $10.6 billion dollars with a liabilities cost of $8.4 billion to build as mentioned above. The gross profit margin is calculated using the formula: sales minus cost of goods sold divided by the sales, which is 0.21 or 21%. This amount over the next 3-5 years will continue to be analyzed for continued growth advantages. The return on assets (ROI) for this one project is calculated by taking the net earnings divided by total assets, which is $ 10.6/$47.8 billion dollars (Parrino, 2012). This amount is 22.17%. This might look good for a temporary fix, but continued analysis will need to be completed (Pearce & Robinson, 2013). A break even analysis was not done due to individual pricing for each project that is done in different countries, cities, etc. Key Risks with Contingency Plan In the changing environment of working with energy infrastructure such as Chicago Bridge and Iron key risks are monitored. When faced with concentrated growth due to the storage containers for energy, two of the risks is economic and lack of resources to complete the project. Contingency plans are based on environmental, culture, and psychological behaviors that are seen in the different areas of the world. There is always a delay with each product and storage device, and when these contingency plans are initiated due to factors that are seen and unseen, the customer, supplier, and project team is notified electronically so other options can be reviewed and acted upon (Pearce & Robinson, 2013). The contingency plans are implemented with local contractors and environmental safety officers that are appointed in the local culture domestically and internationally. There is a contingency office director that is assigned at Corporate Headquarters at The Hague, Netherlands. The risk management plan would be technological advances throughout the project sites, and another would be communication with logistical and transport personnel when weather delays delivery of the needed supplies, and final completed project. Risk management would be evaluated for need for shorter time span for regulation paperwork controls, and building approvals at the global and domestic sites. In conclusion, there are many factors that can affect, change, or move the implementation plan and strategic plan for the organization. Following the strategy map, and looking at the control measures with the functional tactics can lead to a more efficient way of teaching and making the strategic implementation part of the everyday environment at the organization. Chicago Bridge and Iron uses a 5 minute message at the start of each work day to inform employees how that plan is going to go for the day, and how that will affect the final project regionally, division, and corporate wide (cbi.com, 2015). Having a contingency plan is important for delay of supplies, service, and employees to complete the tasks assigned and the timeframes given for completion of each project. A leader manager is one that can show and teach, and react to change and use that to instruct the culture of implementation strategic management to make it understandable for a project well done and the implementation of the new strategic planning initiative of conglomerate diversification. References Form Swift Builder. (2014). Retrieved from http://formswift.com/builder.php?member=1 &documentType=executive-summary-template&ses=8e5c518e04c0a4ee Kaplan, R.S., & Norton, D.P., (1996) The Balanced Scorecard: Translating Strategy into Action (1st ed). Presidents and Fellows of Harvard College, US. King, B. (2015). “A Pipe Dream Come True: Spectra Energy Corp.” Retrieved from http://dailyreckoning.com/free-reports/investing-in-energy-infrastructure/ Master Production Schedule. (2015). Retrieved from http://(https://www.google.com/search? Q=msp+schedule&sourceid=ie7&rls=com.microsoft:en-US:IE-SearchBox&ie=&oe=&gws_ Rd=ssl#rls=com.microsoft:en-US:IE-SearchBox&q=master+schedule+plan NiSource. (2015). Creating Two Infrastructure Companies. Retrieved from https://www.nisource .com/about-us/creating-two-energy-infrastructure-companies Parrino, R., Kidwell, D.S., & Bates, T.W. (2012) Fundamentals of Corporate Finance (2nd ed). Hoboken, NJ: John Wiley & Sons. Pearce, J.A., & Robinson, R.B. (2013) Strategic Management: Planning for Domestic and Global Competition (13th ed). New York, NY: McGraw-Hill. Scott, M. (2012). Chicago Bridge & Iron to Buy Shaw Group for $3 Billion. Retrieved from http://dealbook.nytimes.com/2012/07/30/Chicago-bridge-iron-to-buy-shaw-group-for-3- billion/?ref=topics&_r=0 Queensland Government. (2015). Trend Analysis for Business Improvement. Retrieved from https://www.business.qld.gov.au/business/business-improvemtn/trend-analysis-business- improvement Form Swift Builder. (2014). Retrieved from http://formswift.com/builder.php?member=1 &documentType=executive-summary-template&ses=8e5c518e04c0a4ee
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STR 581 Week 6 Individual Strategic Plan and Presentation

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Strategic Plan and Presentation - CB&I STRATEGIC PLAN AND PRESENTATION - CB&I 37 Strategic Plan and Presentation - CB&I Julie L. Bentley STR/581 April 6, 2015 Kenneth Chapman Running head: STRATEGIC PLAN AND PRESENTATION - CB&I 1 STRATEGIC PLAN AND PRESENTATION - CB&I 10 Strategic Plan and Presentation - CB&I EXECUTIVE SUMMARY Chicago Bridge & Iron Horace E. Horton- Original Founder Phillip Asherman, CEO, President One CB&I Plaza 2103 Research Forest Drive The Woodlands, Texas 77380 Telephone: 832-513-1000 Chicago Bridge & Iron (referred to from hereon in as the "Company") was established as a S Corporation at One CB&I Plaza, 2103 Research Forest Drive, The Woodlands, Texas 77380 with the expectation of rapid expansion in the energy infrastructure industry. GOAL INITIATIVE FOR STRATEGIC PLANNING: · The company wishes to change the strategic planning of this organization which already includes: 1) operational excellence, 2) customer intimacy, 3) product leadership, 4) differentiation, 5) focus, 6) concentrated growth, 7) product development, 8) innovation, 9) horizontal and vertical acquisitions, 10) concentric diversification, with a change to include a new grand strategy of 11) conglomerate diversification. · Solicit financial backing in order to be able to introduce its products and services to new global areas (described below). Business Description: · The Company was formed on August, 1889 as an S Corporation under Illinois state laws and headed by Horace E. Horton. Director of Development and introduction of Pratt-Truss Bridge. Director and opening of first fabrication plant in Washington Heights, IL. Product Development and Refinement of Energy Storage Tanks for water, petroleum, and natural gas. Development of first automatic girth seam welder which improved weld quality of storage tanks. · 1889 - Establishment of Chicago Bridge and Iron · 1889-Present - Operational Excellence, Customer Intimacy, and Product Leadership · 1894 - First elevated steel plate water storage tank. · 1923 - First floating roof tank for oil, natural gas, and petroleum. · 1923- First Hortonsphere Pressure Vessel was designed and trademarked. · 1930 - First Fractionating Towers were built for Standard Oil of Louisiana. · 1959 - Development of Ornamental Water storage Tanks, Awards for global energy storage devices used. · Currently – Global Energy Infrastructure Organization. Acquisitions: · Howe-Baker International, L.L.C. · Shaw Group · Pitt-Des Moines, Inc. · John Brown Hydrocarbons, Limited · Fabrication shop in Beaumont, TX, which has deep water access to Gulf of Mexico. · Lummus Corp. · Catalytic Distillation Technologies (CDTECH) · E-gas solids gasification technology for conversion of coal and petroleum coke into syngas. · 1996- Praxair, Inc. merged with CB&I. The Company currently employs 54,000 full-time employees and 4,868 part-time employees. Management Team: The Company has assembled an experienced management team: President and Chief Executive Officer of CB&I - Philip K. Asherman, 35 years experience. Executive Vice President and operating group President of Engineering, Construction and Maintenance. - Patrick K. Mullen, 25 years experience. Executive Vice President and operating group President of Technology - Daniel M. McCarthy, 37 years experience. Executive Vice President and operating group President of Fabrication Services - Luke V. Scorsone, 34 years experience. Vice President and operating group President of Environmental Solutions - E. Chip Ray, 30 years of global experience in operations, business development, strategic planning, mergers & acquisitions, investor relations and marketing & communications. Prior to his current role, he served as Executive Vice President, Corporate Planning from September 2007. Before joining CB&I, he worked as Executive Director of Strategy and Marketing for Fluor Corporation. Before joining Fluor, he spent 13 years with Nalco Chemical Company. Executive Vice President and Chief Administration Officer - Beth A. Bailey, 39 years - in 1976 and has progressed through increasingly responsible roles in the IT organization. She was named Vice President –Information Technology in March 1999. Executive Vice President, Chief Legal Officer and Secretary - Richard E. Chandler, Jr., 30 years extensive experience in corporate law, mergers and acquisitions, antitrust and international business transactions. Prior to joining CB&I, he served as Senior Vice President, General Counsel and Corporate Secretary of Smith International, Inc. since 2005, where he was responsible for developing and managing the company’s international legal strategy, including the design and implementation of its legal compliance program. From 1986 to 2005, he served as Vice President & General Counsel of M-I/SWACO, a leading supplier of engineered drilling fluid systems and drilling waste management and environmental solutions. Executive Vice President of Global Systems - James W. Sabin, 30 years of project execution and information technology experience. Prior to his current role, Mr. Sabin served as Senior Vice President of Global Systems and Senior President of Shaw’s Power Group. He previously held several senior leadership positions with increasing levels of responsibility within Shaw. Executive Vice President and Chief Financial Officer – Michael S. Taff, 30 years of financial and global industry experience. He joins CB&I from Flowserve Corporation where he served as Senior Vice President and Chief Financial Officer. He previously served as Senior Vice President and Chief Financial Officer for McDermott International Inc., and also for The Babcock and Wilcox Company following its spin-off from McDermott. Mr. Taff also has held finance leadership roles at HMT, Inc., Philip Services Corporation and British Petroleum Oil Company. He spent nine years in public accounting at Price Waterhouse, has a bachelor of business administration degree in accounting from Stephen F. Austin State University and is a certified public accountant. "Mike has extensive experience leading corporate financial organizations. His breadth of knowledge, particularly within our industry, makes him an ideal addition to CB&I's executive management team, and we are confident he will help the company continue to drive shareholder value," said Philip K. Asherman, CB&I's President and Chief Executive Officer. Business Mission: "CB&I is the most complete energy infrastructure focused company in the world and a major provider of government services. With 125 years of experience and the expertise of approximately 54,000 employees, CB&I provides reliable solutions while maintaining a relentless focus on safety and an uncompromising standard of quality. As one of the most complete providers of a wide range of services including design, engineering, construction, fabrication, maintenance and environmental services, no project is too big for CB&I. Our timely and cost-effective solutions not only satisfy our customers' needs, but also improve the quality of life for people around the world" (cbi.com, 2015). The Mission Statement states: "Sustain earnings (profit) growth at levels where stakeholders view CB&I as a "growth" company" (cbi.com, 2015). New Product/Services: · Conglomerate Diversification strategy change where acquisition of business or competition would present the most promising investment opportunity available leading to increase in CB&I’s stock value, acquirement of needed resources quickly, achievement of tax savings 12-28%, increase in the efficiency and profitability of synergy between CB&I and the acquired business. · After a period of thorough trial and error, the Company is prepared to introduce the following product/services to the market – 4 new storage tank devices in Middle East and current restructuring of water supply system and storage in Japan. · Energy Infrastructure Storage Tank-Petroleum, Natural Gas, Water: Includes maintenance and environmental Services for new energy infrastructure projects. · Demand for safe, uncompromising standard of quality, and improvement of quality of life for people domestically and globally of energy infrastructure products with maintenance and service contracts for continuous improvements of product and service. 1) Major Events Milestones for Implementation of new strategic management initiative: The following event milestones will be used for evaluation of continued implementation of new strategic management initiative of conglomerate diversification: Event Department Responsible Date Due: Responsible Person Contact 1. Beginning of Strategic Management Change Corporate and World Headquarters: Administration, Executive Board, Board of Trustees, Governing Board May 1, 2015 Phillip Asherman James Sabin Michael Taff 2. Implementation Internally Operating Department – Domestic and Global June 30, 2015 Phillip Asherman Patrick Mullen Beth Bailey Richard E. Chandler, Jr. James Sabin Michael Taff 3. Measurement of internal acceptance to expand externally Operating Department Every 3 months starting May 1, 2015, August 31, 2015, December 30, 2015. Patrick Mullen, Richard E. Chandler, Jr. James Sabin, Michael Taff 4. Assessment of Measurement Controls Finance and Operation Departments Quarterly starting May 1, 2015, August 31, 2015, December 30, 2015. Michael Taff, James Sabin, Patrick Mullen, Beth Bailey, 5. Completion of Strategic Management -Conglomerate Diversification Regional and Corporate Headquarters, Operating Department December 31, 2015 Phillip Asherman, James Sabin, Beth Bailey, Richard E. Chandler, Patrick Mullen, Daniel McCarthy, Luke Scorsone, E. Chip Ray Michael Taff 2) Event Milestones for new storage tank contracted projects: Event Responsible Region or Department Date Due Contact Persons Petroleum Storage Tank in Dubai Middle East Division Corporate Operating Office December 31, 2016 James Sabin Patrick Mullen E. Chip Ray Richard Chandler Jr. Luke Scorsone Daniel McCarthy Beth Bailey Michael Taff Natural Gas Storage and Piping in Arab Emirates Middle East Division and Corporate Operating Office December 31, 2017 James Sabin Patrick Mullen E. Chip Ray Richard Chandler Jr. Luke Scorsone Daniel McCarthy Beth Bailey Michael Taff Water Storage Tank in Egypt Middle East Division and Corporate Operating Office December 31, 2018 James Sabin Patrick Mullen E. Chip Ray Richard Chandler Jr. Luke Scorsone Daniel McCarthy Beth Bailey Michael Taff Water storage Tank in Japan with piping Asia Division and Corporate Operating Office December 15, 2019 James Sabin Patrick Mullen E. Chip Ray Richard Chandler Jr. Luke Scorsone Daniel McCarthy Beth Bailey Michael Taff Upkeep maintenance and service for Japan Water Storage Devices Asia Division and Corporate Operating Office December 31, 2019 James Sabin Patrick Mullen E. Chip Ray Richard Chandler Jr. Luke Scorsone Daniel McCarthy Beth Bailey Michael Taff Funding Request: The Company requests a total loan of $2,000,000,000.00 over the course of 15 years, to be used for the following purposes: 1) 4 projects - Middle East- Petroleum, Natural Gas, Water Storage Facilities, and 2) Upkeep of Japanese water infrastructure since environmental weather disasters. Purpose Loan Amount: · Staffing $8.4 million dollars · Equipment- $1 billion dollars · Contract Pricing- $10.5 million dollars · Business Law/Legal Regulatory Licensure fees - $2 million dollars · Logistical Transport- $12 million dollars · Long-term debt payment is a key feature of the Company's financial plan. We expect to break even within an 8-12 year time period following the introduction of our products. Financial predictions suggest a minimum 22.17% percent return on investment by the conclusion of the financing period. Business Goals and Objectives: Short-Term Goals: · Continuous improvement of safety standards measured monthly for up to one year on OSHA standards. Increase of 2-5% this year. · Procurement of 99% quality steel within 6 months of new projects initiated in May 2015. · Reduction of turnover rate of 3% for May 2015 - November 2015. · Increase in contract approvals of 5%. Globally: · Decrease in delay of fabrication of steel for petroleum storage - Monthly 1-2%. · Decrease in transport time - 3% for next year. · Increase in cultural standards of care for environment social issues with building of projects - 2-5%. Measured monthly at end of month and sent to corporate headquarters. · Increase in communication globally with project managers - 2-5% technology increase (Skype, Email, Phone, Text). Long-Term Goals: · Continuous product development. · Innovation of greatly improved and new energy infrastructure projects - reap initially high profits associated with customer acceptance. · Differentiation: attributes of final product over other product qualities, and customer loyalty. · Focus: attend to needs of domestic and global projects. Maintenance and service for infrastructure projects. · Operational Excellence · Customer Intimacy · Product Leadership · Concentrated Growth · Market Development · Horizontal and Vertical Acquisition · Concentric Diversification · Conglomerate Diversification - NEW GRAND STRATEGY INNOVATION LONG TERM GOAL. Future plans for CB&I: With the additional strategic plan of conglomerate diversification, the management team is wanting to present to the Board and venture capitalist group a most promising investment opportunity to increase CB&I’s stock value for shareholders, achievement of tax savings, an increase in the efficiency and profitability of synergy between CB&I and the company or companies acquired (Pearce & Robinson, 2013). We as Chicago Bridge & Iron’s strategic management team have discovered that using a combination of the value disciplines, generic and a combination of grand strategies that Chicago Bridge & Iron has in the past, concurrently, and in the future will continue to be one of the largest energy infrastructure organizations that shares its knowledge and expertise domestically and globally. Implementation of the new conglomerate diversification strategy may lead to growth and expansion where previously not considered in domestic and global markets, with a tax savings of 12-28%, a ROI of 22.17% is calculated from accounting department and will continue to be evaluated during the implementation of the milestone objectives. Strategic Plan Chicago Bridge and Iron (CB&I) used grand strategies from the establishment of the organization in 1889 by Horace E. Horton to the present day. These strategies have changed throughout the 125 years that it has been in the energy infrastructure business, but it has never lost the desire, need, or demand to not grow. Looking at these strategies can help show us how CB&I use these strategies to grow and stay the leader in the energy infrastructure industry (cbi.com, 2015). Recommendations for Chicago Bridge and Iron would be along with the current strategies of operational excellence, customer intimacy (domestic and global), product leadership, differentiation, focus, concentrated growth of dominant product, market, and dominant technology for the energy infrastructure products, product development, innovation, horizontal and vertical acquisitions, concentric diversification, the addition of the grand strategy of conglomerate diversification where acquisition of a business or competition would present the most promising investment opportunity available for the shareholder of CB&I (Pearce & Robinson, 2013). The potential for growth using implementation of the conglomerate diversification grand strategy would be an 1) increase in CB&I’s stock value, 2) acquirement of needed resources quickly (such as acquisition of fabrication shop in Beaumont, Texas, which has deep water access to Gulf of Mexico, which increases CB&I’s capacity to fabricate and transport large scale process modules, shop built vessels, and large steel plate subassemblies), 3) achievement of tax savings (12-28%) if purchasing a firm that tax losses offset current or future earnings for CB&I), 4) an increase in the efficiency and profitability of synergy between Chicago Bridge & Iron and the company acquired (Pearce & Robinson, 2013). Table of Contents Title Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-9 Event Milestone Graphs (ES) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5,6 Future Plans of CB&I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Strategic Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Company Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 External and Internal Environment Scan with Trend Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Most Important External Environmental Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Most Important Internal Strengths and Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 SWOT Analysis Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Sources to Perform an External Environmental Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Assessment of Chicago Bridge and Iron’s Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Competitive Position and Possibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Current Structure of Chicago Bridge & Iron . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Best Value Discipline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Best Generic Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 A Combination of Grand Strategies at CB&I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Recommendation of Strategy to Implement for Opportunity of Growth . . . . . . . . . . . . . . . . . . 23 Implementation Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Milestone Chart (New Strategic Management Initiative) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Milestone Chart (New Projects – Middle East, Japan) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Strategy Map Implementation Schedule with Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26-31 Control Plan For Chicago Bridge and Iron . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Functional Tactics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Resource Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Required Organizational Change Management Strategies for Implementation . . . . . . . . . . . . 33 Budget, Forecasted Financials, and Break Even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Key Risks With Contingency Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Company Background Chicago Bridge and Iron (CB&I – NYSE) was started in 1889 by Horace E. Horton with the startup of Bridge-Truss which then after the first 3-4 projects turned into a fabrication shop in Washington Heights, IL (cbi.com, 2015). It turned to acquisitions, and working with the energy infrastructure development, and when war need and demand occurred it developed what was needed for oil, and energy for the war efforts. It continued to develop and refine its current products of water, petroleum, oil, and natural gas storage devices, and even developed and engineered refinement of an automatic welder which increased finished production of the storage devices in 1959. With continued growth, and sustainability, CB& I became the leader in the energy infrastructure domestic and global business world which continues to this very day. Following is their mission, vision, and value statements which describe what Chicago Bridge & Iron is all about. CB&I’s strategic statement is stated as “CB&I is the most complete energy infrastructure focused company in the world and a major provider of government services. With 125 years of experience and the expertise of approximately 54,000 employees, CB&I provides reliable solutions while maintaining a relentless focus on safety and an uncompromising standard of quality. As one of the most complete providers of a wide range of services including design, engineering, construction, fabrication, maintenance and environmental services, no project is too big for CB&I. Our timely and cost-effective solutions not only satisfy our customers’ needs, but also improve the quality of life for people around the world” (cbi.com, 2015). The mission statement reads, “Become a preferred global supplier in our strategic markets across the full spectrum of our services. Sustain earnings (profit) growth at levels where stakeholders view CB&I as a “growth” company” (cbi.com, 2015). The value statement is “At CB&I, we conduct business in a fair, ethical, and lawful manner worldwide, and we associate with business partners (customers, suppliers, subcontractors, and financial institutions) that share this approach. As a company and as individual employees, the fundamental values that we will not compromise are: 1) safety, 2) integrity, 3) excellence, 4) innovation, 5) potential, and 6) accountability. Our code of ethics is part of our value system and we will strive to uphold the highest ethical standards in all our worldwide operations” (cbi.com, 2015). External and Internal Environment Scan with Trend Analysis External and internal factors are considered along with the structure of the organization when looking at the internal operational performance and the effects that this entails on the competitive position and possibilities of an organization (Pearce & Robinson, 2013). Following is an analysis that will look at the external environmental factors and the internal strengths and weakness of Chicago Bridge & Iron, along with the trends identified. It will look at how the external and internal factors give assessment of Chicago Bridge & Iron’s competitive position and possibilities, and how in evaluation and analysis this plays a part in the structure and how this affects CB&I’s operational and internal operational performance. Most Important External Environmental Factors The most important external environmental factors include some from each environment. In the remote environment, the most important external factors are economic, social, political, and technological. In the industry environment, the most important external environmental factors are supplier power and buyer power due to the global environment that CB&I operates. The most important external factors in the operating environment are the creditors, customers, labor, and suppliers which all determine when the projects are finished and when the final product is done in the country that initially contracts the job (Pearce & Robinson, 2013). The economic factors concern the nature and direction of the economy in which CB& I conduct business affairs. Social factors that affect CB& I are the values, beliefs, opinions, and lifestyles of the firm’s countries where projects are built. The stability and direction of the political powers in control of the countries where it operates is another factor that determines the strategic direction of the organization. Technological advances worldwide are enabling the remote business of CB&I to go into areas where previously it would have been hard to conduct a project, or other infrastructure endeavors (Pearce & Robinson, 2013). In the industry environment the most important factors were supplier power and buyer power. Supplier power is shown to CB& I by exerting their power over the prices charged for the steel, and supplies needed to complete the infrastructure projects. Reduction of the quality of the goods was also seen in some of the infrastructure materials used in China for a new waterway system (cbi.com, 2015). Buyer power was used to force down the prices charged by CB& I of the projects bid on, demanding higher quality and more service for the projects done (Pearce & Robinson, 2013). Bargaining power is seen much in the Middle East region of Kuwait, and in Qatar (cbi.com). In the operating environment, the customers, creditors, suppliers, and labor all contribute to Chicago Bridge and Iron’s success or failure. The operating environment is also known as the competitive or task environment and comprises factors in the competitive situation that affects CB& I’s success in acquiring needed resources or profitably marketing its goods or services (Pearce & Robinson, 2013). We will discuss the competitive position and environment of CB&I in a section below. The customer profiles that are the market of CB& I determine the strategic plan so resources can be reallocated if the country has political unrest, or resources are unavailable. CB& I consumer and buyer behaviors in these countries globally, and determines the cultural factors before even beginning an infrastructure project. Creditors are used to determine if a project will be completed due to repayment schedules of the country that needs the infrastructure project. Suppliers that are dependable are a must for CB& I. Long term relationships are built with these suppliers due to the type of work that Chicago Bridge and Iron does. The labor market is another operating environment factor that is most important when working globally with infrastructure projects. Availability, reputation, and employment rates internationally determine what type of worker that is available with the infrastructure projects (Pearce & Robinson, 2013). Most Important Internal Strengths and Weaknesses Following is the SWOT analysis for Chicago Bridge and Iron. It shows that strengths and weaknesses of the whole organization without being cut up into pieces regionally with different offices throughout the domestic and international world. Strengths · 125 Year History · Energy Infrastructure World-Wide · 58,468 Employee Strong · Provides Reliable Solutions · Focus on Safety · Uncompromising Standard of Quality Weaknesses · Delay in Production Time Frame · Delay of Resource Materials Opportunities · Energy Infrastructure Globally · Cross Cultural Learning Team Initiatives · Growth domestic and globally · Timely and Cost Effective Solutions Threats · Global Competitors · Governmental Regulations and Restrictions · Lack of Cultural Resources – manpower, machinery, weather, and environmental factors. · Civil Wars Globally The most important of the strengths are 1) 125 year history, 2) energy infrastructure world-wide that provides reliable solutions and safety, and 3) uncompromising standard of quality of every project that CB& I constructs (cbi.com, 2015). The most important of the weaknesses are the delay in production time schedules, and the delay of resources due to logistical shipment, political unrest, or environmental issues. Sources to Perform an External Environmental Analysis The sources used for the external environmental analysis is using factors from the remote, industry, and operating environments. In the remote environment the research proposal will concentrate on economic factors domestic and globally, social factors domestic and globally, direction and stability of the political environment domestic and globally, and ecological factors that will control and monitor pollution domestic and globally. Regulatory factors will be followed internationally with using the less cost resources for ecological factors of air, land, and water pollution prevention (Pearce & Robinson, 2013). Technological factors will be the last to be analyzed due to the international regulation of internet and wireless electronic data transfer to the home offices in 5 different continents. In the industry external environment an analysis of competition in the industry will be of great value to CB&I. Strategy for this industry environment is finding a way of coping and using the competition as subcontractors for the infrastructure development of the project. Assessment of the determinants of suppliers domestic and globally with be the main emphasis for this industrial environment (Pearce & Robinson, 2013). Also, looking at the economies of scale with the discounted governmental regulations will be of benefit for additional projects and the integrity of work well done. In evaluation of the research proposal in respect to the operating environment it is found that CB&I has the capability of acquiring the needed resources and profitably marketing its goods and services simply in relation to what the vision statement means when it states that 1) “we expect consistent and strong growth regardless of market cycles”, 2) “we will focus on earnings (profit) growth as our primary measure”, and 3) “we are continuing to focus our long-term strategy on how to best grow our business based on our core competencies” (cbi.com, 2015). Assessment of Chicago Bridge & Iron’s Resources Chicago Bridge and Iron has three basic resources. The tangible assets are the physical and financial means CB&I used to provide value to its customers (Pearce & Robinson, 2013). The total assets that was evidenced by CB&I was from the balance sheet annual report that totaled $9,389,593. That does not include the acquisition of Shaw Industries in 2013, which Chicago Bridge and Iron bought because of external environmental factors of modulation, and electrical energy infrastructure (cbi.com, 2015). The intangible assets are the company reputation, organizational morale with 58,468 plus employees, technical infrastructure knowledge, patents and trademarks, and the accumulated experience of 125 years (Pearce & Robinson, 2013). Organizational capabilities are the other resource that CB& I utilizes to a maximum to combine assets, people, and processes of taking inputs into output of superb global infrastructure systems (Pearce & Robinson, 2013). The trend analysis of Chicago Bridge and Iron monitors the performance over an extended period of time and does annual reports with all accounting statements and financial information filed with the Security Exchange Commission Office. Key performance indicators are evaluated 4 times per year for CB& I and this information is used to refine the business decisions and strategies. The measurements used with Chicago Bridge and Iron are the sales, cost of goods and inventory sitting before going to a project, overhead, cash flow, net profits, and ratio’s that are calculated to determine if the project needs additional manpower labor, or resource materials. Another good trend that is used at CB&I is staff turnover and injury rate which evaluates their core competency of 125 years of service in the infrastructure industry with safety as one of their main competencies (Queensland, 2015). Using the trend analysis for business improvement is one of the reasons that Chicago Bridge and Iron has survived for so long with short and long term initiatives. They use the trend analysis to identify areas of performing well, identify underperforming issues, and the trend analysis provides evidence for strategic management decision making for continued projection of future infrastructure projects in areas not previously entered globally (Queensland, 2015). Competitive Position and Possibilities Chicago Bridge and Iron has other competition which has been started in the early 1900’s. One is Spectra Energy, which is an infrastructure company (King, 2015), and a newer competitor to the market is NiSource, which is separating its electric and natural gas businesses so that it can create more value to its shareholders and value to its community and customers (NiSource, 2015). One of the ways that I see competition position of Chicago Bridge and Iron is that they may misread the signals that may indicate a shift in the focus of competitors in the industry and a refinement of their present strategies or tactics to gain access to global job projects. Another competitive mistake that may occur is the overlooking of a potential international competitor that may have worked with CB&I in the past. Chicago Bridge and Iron does acquire companies that exhibit a strong competition for them such as Shaw Industries in 2013 (cbi.com, 2015). CB&I does not hold any competition as far as experience and knowledge goes because it uses the best people from diverse countries to accomplish its international and global strategic plans. The only possibility was mentioned above which is the possible international entry of a new competitor (Pearce & Robinson, 2013). Current Structure of Chicago Bridge and Iron The organizational structure of Chicago Bridge and Iron has a combination of three, possibly four different structures. It has the traditional organizational structure with the divisional aspect with a central corporate office located at The Hague, Netherlands. It also has a matrix organizational structure where because of the increased diversity of the infrastructure projects that it provides skill and resources where and when they are most needed or vital (Pearce & Robinson, 2013). The matrix organizational structure also has a product team structure element to it so that Chicago Bridge and Iron can strategically position its resources to important projects where most needed (Pearce & Robinson, 2013). It has also started expanding its structure into the agile virtual organization due to its acquirement of a modular organization of Shaw Industries in 2013 (cbi.com, 2015). Due to all the regions that CB&I conducts business in outsourcing some of the work to local areas has become the initiative. Having a combination of these different organizational structures allows Chicago Bridge and Iron to have the staying success of any infrastructure industry giant. As the growth into new global markets continues with the knowledge and technological advances that 2015 holds, CB&I can only expect that it will have advantages internally and with its organizational performance. The new water containment system that was just built in Kuwait received an international award, and other projects are held at high standards of safety and reliable solutions for our growing world (cbi.com, 2015). As the market share continues to climb on the stock exchange that can only mean a rise in salary and benefit packages for those that work hard to make sure that Chicago Bridge and Iron stays on top of the infrastructure industry. In conclusion of looking at the internal and external environment factors and how they relate to the organizational structure and competitive position allows any company such as CB&I to redefine and look at the strategic plans that they want to accomplish in the next 3-5 years. Knowing that Chicago Bridge and Iron has stabile strengths and a competitive advantage over the structures of other companies will ensure that the strategic plans are being followed and the future trends that may occur will not affect it financially, structurally, or business sense wise. Best Value Discipline Chicago Bridge and Iron (CB&I) use a combination of all three of the value disciplines in how they do business in the infrastructure industry – 1) operational excellence, 2) customer intimacy, and 3) product leadership (Pearce & Robinson, 2013). CB&I uses operational excellence by using technological and creative processes for remaking the current product for the best safety energy storage devices known in today’s world (Pearce & Robinson, 2013). They use customer intimacy such as the development of the ornamental pineapple water storage tank in 1959 for the statehood of Hawaii (cbi.com). CB&I continues to develop storage and infrastructure items individualized for customer projects with what the customer needs and desires for the best impact for all. CB&I built trust using this value discipline (Pearce & Robinson, 2013). Chicago Bridge and Iron (CBI) uses product leadership as another value by production of energy infrastructure products and services for projects with awards received for many of their storage tanks and infrastructure projects completed (cbi.com, 2015). Best Generic Strategy Using the best competitive advantage to compete in the marketplace, there are two of the generic strategies that Chicago Bridge and Iron use past, present, and future. They are 1) differentiation, and 2) focus (Pearce & Robinson, 2013). CB&I uses differentiation to stress the attribute of the final product above the other product qualities, and thus, CB&I creates customer loyalty with growth into the other markets that they have previously not made infrastructure products for (Pearce & Robinson, 2013). If one petroleum, water, or natural gas storage tank is used for storage at a commercial place of business, then the competition of that industry expects to use CB&I in development of their natural gas, water, or petroleum storage tank. This promotes growth for Chicago Bridge and Iron. CB&I use focus strategy as a second generic strategy. A focus strategy attempts to attend to the needs of a particular market segment (Pearce & Robinson, 2013). Chicago Bridge and Iron has pursued putting water, petroleum, and natural gas storage tanks in isolated geographic areas, and even a underwater oil storage tank in Dubai in 1969 (cbi.com, 2015). This contributes to the focus strategy because of the needs of the smaller countries being able to have storage tanks for the safe storage of water, petroleum, oil, or natural gas. A Combination of Grand Strategies at CB&I A combination of grand strategies is used at Chicago Bridge and Iron. A grand strategy is defined as “a master long-term plan that provides basic direction for major actions for achieving long-term business objectives” (Pearce & Robinson, 2013). The grand strategies have changed as time progresses to capture new growth and markets in areas not previously tried. Expertise is needed in all of the projects because of the magnitude, and immensity of the projects that Chicago Bridge and Iron design and build in the energy infrastructure industry. In 1889, concentrated growth was the grand strategy used by Horace E. Horton when he established Chicago Bridge and Iron in Chicago, Illinois. Also, concentrated growth continued with the opening of the first fabrication plant in Washington Heights, IL (cbi.com, 2015). The beginning product and service was the Pratt-Truss Bridge built in Newton, IL, in 1890. The conditions for CB&I that favor concentrated growth is the product market was sufficiently distinctive to dissuade competitors in adjacent product markets from trying to invade CB&I’s segments (Pearce & Robinson, 2013). CB&I also directed its resources to the profitable growth of a dominant product, market, and had a dominant technology when combined with acquisitions of other technology companies that caused expansion into the refinement of storage tanks for the energy infrastructure industry (Pearce & Robinson, 2013). Another grand strategy that was used by CB&I was product development which involves the substantial modification of existing products or creation of new but related products that can be marketed to current customers through established channels (Pearce & Robinson, 2013). This was seen when in 1950, CB&I introduces the automatic girth seam welder which reduced the hours required to build a tank while improving the weld quality of the storage tank projects (cbi.com, 2015). Innovation was a grand strategy used many times throughout the history of Chicago Bridge and Iron’s energy infrastructure projects. Innovation is a strategy to reap the initially high profits associated with customer acceptance of a new or greatly improved product (Pearce & Robinson, 2013). This happened first in 1894 with the first elevated steel plate water storage tank that is located in Fort Dodge, IA. Then, in 1923, CB&I introduced the first floating roof tank for oil industry to reduce the product loss and fire hazards. The roof tank remains the industry standard for safe and economical storage of petroleum products (cbi.com, 2015). In 1923, the first Hortonsphere Pressure Vessel was designed which is trademarked. In 1930, the first petroleum fractionating towers were built for Standard Oil of Louisiana in Baton Rouge, LA. These fractionating towers offer comprehensive scale of technology and Environmental Protection Containment services for refiners worldwide. The new products and storage capabilities continue to this day for Chicago Bridge and Iron (cbi.com, 2015). Both horizontal and vertical acquisitions are a grand strategy that continues with CB&I with the acquiring of: 1) Howe-Baker International, L.L.C., 2) Shaw Group (Scott, 2012), 3) Pitt-Des Moines, Inc., 4) John Brown Hydrocarbons, Limited, headquartered in London, England, 5) fabrication shop in Beaumont, TX, which has deep water access to Gulf of Mexico, 6) Lummus, 7) Catalytic Distillation Technologies (CDTECH), 8) E-gas solids gasification technology for conversion of coal and petroleum coke into syngas (cbi.com, 2015). Concentric Diversification was another grand strategy that is used by Chicago Bridge and Iron. Turnaround is another grand strategy that was used in 1996 when Praxair, Inc. merged with CBI Industries in March of 1996. Praxair assembled a new management team that was led by Gerald M. Glenn. CB&I Company remains with the Chicago Bridge & Iron Company N.V, a Netherlands corporation and current parent company that remains to 2015 (cbi.com, 2015). I am unsure whether there are joint ventures, strategic alliances, or consortia found in Chicago Bridge and Iron. Further assessment and evaluation will be needed to answer this question. Recommendation of Strategy to Implement for Opportunity for Growth Recommendations for Chicago Bridge and Iron would be the grand strategy of conglomerate diversification where acquisition of a business or competition would present the most promising investment opportunity available (Pearce & Robinson, 2013). The potential for growth using implementation of the conglomerate diversification would be an 1) increase in CB& I’s stock value, 2) acquirement of needed resources quickly (such as the acquisition of fabrication shop in Beaumont, Texas, which has deep water access to Gulf of Mexico, which increased CB&I’s capacity to fabricate and transport large scale process modules, shop built vessels, and large steel plate subassemblies), 3) achievement of tax savings (if purchasing a firm that tax losses offset current or future earnings for CB&I), 4) an increase in the efficiency and profitability of synergy between CB&I and the company acquired (Pearce & Robinson, 2013). In conclusion, we have discovered that using a combination of the value disciplines, generic strategies, and a combination of grand strategies Chicago Bridge and Iron has in the past, concurrently, and in the future will continue to be one of the largest energy infrastructure organizations that shares its knowledge and expertise domestically and globally. Implementation of a different grand strategy which is may lead to growth and expansion where previously not considered, as only time will tell once implementation initiates, starting April 30, 2015 for implementation of the new strategic planning choice in addition to the current ones being used. Implementation Plan 1) Major Events Milestones for Implementation of New Strategic Management Initiative: The following event milestones will be used for evaluation of continued implementation of new strategic management initiative of conglomerate diversification: Event Department Responsible Date Due: Responsible Person Contact 6. Beginning of Strategic Management Change Corporate and World Headquarters: Administration, Executive Board, Board of Trustees, Governing Board May 1, 2015 Phillip Asherman James Sabin Michael Taff 7. Implementation Internally Operating Department – Domestic and Global June 30, 2015 Phillip Asherman Patrick Mullen Beth Bailey Richard E. Chandler, Jr. James Sabin Michael Taff 8. Measurement of internal acceptance to expand externally Operating Department Every 3 months starting May 1, 2015, August 31, 2015, December 30, 2015. Patrick Mullen, Richard E. Chandler, Jr. James Sabin, Michael Taff 9. Assessment of Measurement Controls Finance and Operation Departments Quarterly starting May 1, 2015, August 31, 2015, December 30, 2015. Michael Taff, James Sabin, Patrick Mullen, Beth Bailey, 10. Completion of Strategic Management -Conglomerate Diversification Regional and Corporate Headquarters, Operating Department December 31, 2015 Phillip Asherman, James Sabin, Beth Bailey, Richard E. Chandler, Patrick Mullen, Daniel McCarthy, Luke Scorsone, E. Chip Ray Michael Taff 2) Event Milestones for New Storage Tank Contracted Projects: Event Responsible Region or Department Date Due Contact Persons Petroleum Storage Tank in Dubai Middle East Division Corporate Operating Office December 31, 2016 James Sabin Patrick Mullen E. Chip Ray Richard Chandler Jr. Luke Scorsone Daniel McCarthy Beth Bailey Michael Taff Natural Gas Storage and Piping in Arab Emirates Middle East Division and Corporate Operating Office December 31, 2017 James Sabin Patrick Mullen E. Chip Ray Richard Chandler Jr. Luke Scorsone Daniel McCarthy Beth Bailey Michael Taff Water Storage Tank in Egypt Middle East Division and Corporate Operating Office December 31, 2018 James Sabin Patrick Mullen E. Chip Ray Richard Chandler Jr. Luke Scorsone Daniel McCarthy Beth Bailey Michael Taff Water storage Tank in Japan with piping Asia Division and Corporate Operating Office December 15, 2019 James Sabin Patrick Mullen E. Chip Ray Richard Chandler Jr. Luke Scorsone Daniel McCarthy Beth Bailey Michael Taff Upkeep maintenance and service for Japan Water Storage Devices Asia Division and Corporate Operating Office December 31, 2019 James Sabin Patrick Mullen E. Chip Ray Richard Chandler Jr. Luke Scorsone Daniel McCarthy Beth Bailey Michael Taff Strategy Map Implementation President – CEO, CFO, COO, and Executive Board Human Resources Purchasing Operations Production Finance Logistics Marketing R & D Recruitment of employees with Team Concept – starting daily April 2015 through December 31, 2020. 1. Purchase of Resources- daily starting April 30, 2015 – December 31, 2020. Regulation changes depending on project culture- daily starting on April 30, 2015, monthly starting April 30, 2015. Daily production schedule – daily starting April 1, 2015 – December 31, 2020. Exchange rate changes – daily starting April 1, 2015 – December 31, 2020. Shipment dates and times – daily starting April 1, 2015 – December 31, 2020. Evaluation of culture advertise-ments -weekly, monthly, yearly. Current Product Assess-ment – daily, weekly, monthly, yearly. 2. Benefit Packages-daily. 2. Purchase of Maintenance items – equipment. 2. Inventory assessment and data for purchasing department. 2. Inventory assessment 2. Daily production sales. 2. Assessment of ways for efficient travel. 2. Magazine and News Article Stories. 2. Yearly Conventions for new innova- tive techni- ques. 3. Reward Compensa -tion Packages- monthly starting April 30, 2015. 3. Purchase of additional buildings for continued production growth. Every 6 months starting in April 2015 through 2020. 3. Division offices data reporting – daily with date starting in April 30, 2015. 3. Employee cross training-weekly starting in April 2015, monthly 2015, yearly 2015 – 2020. 3. Daily inventory counts – starting April 30, 2015. Send to the Financial and Operations office. 3. Regulation assessment of transport system-licensing, insurance, weight daily starting April 1, 2015 – December 31, 2020. 3. Introduc-tion in New Markets-monthly starting May, 2015, and yearly 2015- 2020. 3. Global Technologist, science innovation, and physics seminars- weekly starting May, 2015, monthly 2015 - 2020, and yearly 2015 – 2020 . 4. Retirement and Social Security Issues- daily starting April 30, 2015. 4. Rentals for space and production needs – 6 months to 12 month assessment which starts in May, 2015. 4. Machine maintenance- daily starting in April, 30, 2015, weekly starting April, 30, 2015, monthly starting April 30, 2015, and yearly starting 2015-2020. 4. Line evaluation and controls – starting daily, April 30, 2015. 4. SEC regulations and audit reports – every 3 months starting April 1, 2015. The quarterly months will follow like banking quarters. 1st Quarter – Jan., Feb., March, 2nd Quarter – April, May, June, 3rd Quarter – July, August, September, 4th Quarter – Oct., Nov., Dec., Starts April 2015-December 31, 2020. 4. Evaluation of air, train, highway, and sea costs for transport – Monthly starting on April 30, 2015. 4. Documen-tary clips and photos- monthly starting April 30, 2015, and yearly starting April 30, 2015 – December 31, 2020. 5. Employee education and cross-training monthly April 30, 2015 – December 31, 2020, and yearly 2015 – 2020. 5. Inventory of licenses for equipment- and space- monthly starting April 30, 2015 – December 31, 2020, and yearly 2015 - 2020. 5. Assessment of storage devices and safety issues- (QI) (OSHA) - daily starting April 1, 2015 through December 31, 2015 -2020 5. Assessment of expiration dates for materials- daily starting April 1, 2015 – December 31, 2020. 5. Monthly finance reports and data audits – monthly starting April 1, 2015 – through December 31, 2020. 5. Monitoring of daily travel logistical issues – starting April 1, 2015 – through December 31, 2020. 5. Consul-tation for additional means of Marketing Product- daily starting April 1, 2015 – through December 31, 2020. 6. Insurance and safety (OSHA) – daily starting April 1, 2015 – December 31, 2020. 6. Regulation fees for storage facilities monthly starting April 1, 2015 through December 31, 2020. 6. Evaluation of marketing response – monthly using current customers starting April 1, 2015 through December 31, 2020. The strategy map table above is used to direct the organization throughout the organization to reach the goals individualized for the different departments (Kaplan and Norton, 1996). Timeframes for evaluation and completion of the goals are following the different goals and the due date of implementation is found in the Executive Summary. Having a strategy map using short-term objectives, functional tactics, policies that empower, and rewards that align the manager and employee priorities with organizational objectives and shareholder value provide very effective direction in strategy implementation (Pearce & Robinson, 2013). The action bullets are many for a big organization such as Chicago Bridge and Iron. The dates are listed in the tables as was requested at our last meeting. I hope that this will guide the board and the venture capitalist in making a final decision. Next, we will discuss the control and contingency plans. Control Plan For Chicago Bridge and Iron Strategic control is described as “concerned with tracking a strategy as it is being implemented, detecting problems or changes in its underlying premises, and making necessary adjustments” (Pearce & Robinson, 2013). Chicago Bridge and Iron uses mostly implementation control using key strategic thrusts and milestones for the different projects globally with the storage devices made specifically for water, petroleum, natural gas, and other energy items. Other control measures that CB& I uses is a mixture of the other three different types which include premise control, strategic surveillance at a low scale, and special alert controls due to energy regulations on the global scale at locations where the storage devices are used (Pearce & Robinson, 2013). CB& I bases their strategic controls on major and minor environmental and industry variables that are affected by the global market for energy and the storage of the petroleum, natural gas, and water (Pearce & Robinson, 2013). Along with the implementation control measure, Chicago Bridge and Iron also uses the balanced scorecard for measurement of: 1) learning and growth, 2) business process, 3) customer perspective, and 4) financial perspective with resource movement if needed (Pearce & Robinson, 2013). Using this scorecard approach enables the strategy of CB& I to be linked with the shareholder value while providing several outcomes that are measurable that guides and monitors strategy implementation with the strategic thrusts that occur with the global energy market for storage devices (Pearce & Robinson, 2013). All of the above mentioned are measurable and results are reported monthly to the corporate and division Chicago Bridge and Iron offices. Functional Tactics In the implementation process, functional tactics that are used daily at Chicago Bridge & Iron with the implementation of the short and long term objectives is one of specificity due to the different cultures the projects are designed in, the logistics of moving and transporting the finished product, and the function of the finished product. Specificity is used by CB& I due to the clear time frame for development and assembly of the products that are bought globally for the energy infrastructure of cities and countries, and the identification of who is responsible in the region for who is building, transporting, and final assembly in the receiving site for these structures (Pearce & Robinson, 2013, pages 288-289). Resource Allocation Resources are allocated to Chicago Bridge and Iron per job project MCR (Master Control Resource) sheet. Regional offices are alerted to what resources such as equipment, licensure, manpower, and supplies are needed daily. When logistical shipment and transport are not available there is a delay in project completion which is electronically communicated to the different division project work site and administration. Required Organizational Change Management Strategies for Implementation Managers show a commitment to innovation and change by embracing three interrelated activities: 1) clarifying strategic intent, 2) building an organization, and 3) shaping organizational structure so that culture will be exemplified through each employee working at CB& I and will be evident in the work completion competitively while discussed at the tables globally and domestically (Pearce & Robinson, 2013). Chicago Bridge & Iron uses strategic intent which is a clear statement of where they want to lead the company and what results they expect to achieve with printing and sending to shareholders the annual report (Pearce & Robinson, 2013). This is also communicated internally to employees through a monthly newsletter Email which shows which direction the company would like to go, and how this relates to yearly work performance evaluations and compensation with wage increase or bonuses (Pearce & Robinson, 2013). CB& I implements building an organization into their everyday activities functionally by building the organization and ensuring a common understanding about organizational priorities in the monthly newsletters, clarification of responsibility among managers and organizational divisional areas, education of leadership development as part of the weekly initiatives and education on safety along with wage increase, opening authority to lower managers at CB& I, and communicating the changes inside and outside the organization with its regional and global customers – mostly individual countries due to the energy infrastructure business (Pearce & Robinson, 2013). Advisory groups and research and development teams are assigned to daily and weekly look at the existing products and projects and to creatively innovate and develop new ways of sustaining better and bigger projects. Principles are used according to culture and project for safety, integrity, and ethical factors environmentally and socially (Pearce & Robinson, 2013). Chicago Bridge and Iron shapes organizational culture by creating a passion with employees domestically and globally (contracted workers) for the values that CB& I holds in each and every energy project that it develops, initiates, and completes. It also looks, recruits, develops, and retains talented operational leadership project teams. Pearce & Robinson, 2013, states, “leaders look to managers they need to execute strategy as another source of leadership to accept risk and cope with the complexity that change brings about” (p. 364). The culture of Chicago Bridge and Iron means that each employee’s beliefs and values influence the opinions and actions internally in the firm, and is shown externally in the cities and countries where the project is built (Pearce & Robinson, 2013). Budget, Forecasted Financials, and Break-Even Analysis Using assumed assets, sales, and costs for implementation of the conglomerate diversification strategy identified last week is a budget set for one petroleum storage tank project at $8.4 billion dollars which holds 700,000 gallons of off-shore petroleum. The current market share is $43.13 per share. Conglomerate diversification raises the market share per share to $52.16 which is a 9.03% increase with 100 shares. In evaluation of the Price-earnings share ratio the formula would be $52.16/$3.20 earnings per share (Parrino,2012). Projected financials for 5 years would be 3% for the first 2 years, then years 3 and 4 – 2.8%, and with the final 5 year financials being at 2.2%. The simple calculation of sale of the infrastructure project assumed sale price is $10.6 billion dollars with a liabilities cost of $8.4 billion to build as mentioned above. The gross profit margin is calculated using the formula: sales minus cost of goods sold divided by the sales, which is 0.21 or 21%. This amount over the next 3-5 years will continue to be analyzed for continued growth advantages. The return on assets (ROI) for this one project is calculated by taking the net earnings divided by total assets, which is $ 10.6/$47.8 billion dollars (Parrino, 2012). This amount is 22.17%. This might look good for a temporary fix, but continued analysis will need to be completed (Pearce & Robinson, 2013). A break even analysis was not done due to individual pricing for each project that is done in different countries, cities, etc. Key Risks with Contingency Plan In the changing environment of working with energy infrastructure such as Chicago Bridge and Iron key risks are monitored. When faced with concentrated growth due to the storage containers for energy, two of the risks is economic and lack of resources to complete the project. Contingency plans are based on environmental, culture, and psychological behaviors that are seen in the different areas of the world. There is always a delay with each product and storage device, and when these contingency plans are initiated due to factors that are seen and unseen, the customer, supplier, and project team is notified electronically so other options can be reviewed and acted upon (Pearce & Robinson, 2013). The contingency plans are implemented with local contractors and environmental safety officers that are appointed in the local culture domestically and internationally. There is a contingency office director that is assigned at Corporate Headquarters at The Hague, Netherlands. The risk management plan would be technological advances throughout the project sites, and another would be communication with logistical and transport personnel when weather delays delivery of the needed supplies, and final completed project. Risk management would be evaluated for need for shorter time span for regulation paperwork controls, and building approvals at the global and domestic sites. In conclusion, there are many factors that can affect, change, or move the implementation plan and strategic plan for the organization. Following the strategy map, and looking at the control measures with the functional tactics can lead to a more efficient way of teaching and making the strategic implementation part of the everyday environment at the organization. Chicago Bridge and Iron uses a 5 minute message at the start of each work day to inform employees how that plan is going to go for the day, and how that will affect the final project regionally, division, and corporate wide (cbi.com, 2015). Having a contingency plan is important for delay of supplies, service, and employees to complete the tasks assigned and the timeframes given for completion of each project. A leader manager is one that can show and teach, and react to change and use that to instruct the culture of implementation strategic management to make it understandable for a project well done and the implementation of the new strategic planning initiative of conglomerate diversification. References Form Swift Builder. (2014). Retrieved from http://formswift.com/builder.php?member=1 &documentType=executive-summary-template&ses=8e5c518e04c0a4ee Kaplan, R.S., & Norton, D.P., (1996) The Balanced Scorecard: Translating Strategy into Action (1st ed). Presidents and Fellows of Harvard College, US. King, B. (2015). “A Pipe Dream Come True: Spectra Energy Corp.” Retrieved from http://dailyreckoning.com/free-reports/investing-in-energy-infrastructure/ Master Production Schedule. (2015). Retrieved from http://(https://www.google.com/search? Q=msp+schedule&sourceid=ie7&rls=com.microsoft:en-US:IE-SearchBox&ie=&oe=&gws_ Rd=ssl#rls=com.microsoft:en-US:IE-SearchBox&q=master+schedule+plan NiSource. (2015). Creating Two Infrastructure Companies. Retrieved from https://www.nisource .com/about-us/creating-two-energy-infrastructure-companies Parrino, R., Kidwell, D.S., & Bates, T.W. (2012) Fundamentals of Corporate Finance (2nd ed). Hoboken, NJ: John Wiley & Sons. Pearce, J.A., & Robinson, R.B. (2013) Strategic Management: Planning for Domestic and Global Competition (13th ed). New York, NY: McGraw-Hill. Scott, M. (2012). Chicago Bridge & Iron to Buy Shaw Group for $3 Billion. Retrieved from http://dealbook.nytimes.com/2012/07/30/Chicago-bridge-iron-to-buy-shaw-group-for-3- billion/?ref=topics&_r=0 Queensland Government. (2015). Trend Analysis for Business Improvement. Retrieved from https://www.business.qld.gov.au/business/business-improvemtn/trend-analysis-business- improvement Form Swift Builder. (2014). Retrieved from http://formswift.com/builder.php?member=1 &documentType=executive-summary-template&ses=8e5c518e04c0a4ee
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