1

Signature Assignment: Environmental Scan Paper

2
Signature Assignment: Environmental Scan Paper
Environmental scanning consists of internal and external factors (Wheelen, 2015). It is
important to scan the environment so as to determine the possibility for business development as
well as to survey factors which may influence future successes of the business in a process
known as forecasting. Environmental scanning is the gathering and analysis of information
pertaining to patterns, trends and relationships within the organizations environment (Wheelen,
2015).
The first step of environmental scanning is the internal analysis (Wheelen, 2015). This
includes the analyzing of the internal environment of the organization which focuses on the
employees and managements interactions as well as shareholder interactions. Brand,
organization structure, operational potential and other factors may also be surveyed in order to
identify the strengths and weaknesses of an organization.
External analysis corresponds with the collection and analyzing of data pertaining to the
immediate industry environment, national environment and socio-economic or macro-economic
environment (Wheelen, 2015). The industry environment will help the organization to see how
they measure up with regard to the competition. It is also important to consider any trends in the
industry performance such as the dynamics or history of the industry. The national environment
should be considered in order to gain a competitive advantage in a globalized environment.
Macro-environment analysis will include the macro-economic, social, government and legal or
technological factors which will come into play. External environmental analysis will bring into
view the various opportunities and threats for the organization. It is not just important to
acknowledge the current situation with regard to environment, but it is doubly important to

3
notice any trends and utilize them in order to forecast future possibilities the company may need
to be able to adapt to.
For the purpose of narrowing the scope, the focus will be directed at the mining industry
as it relates to the mining equipment carried by Caterpillar and one of its major competitors in
the industry, Joy Global. It is important for both companies to evaluate the external and internal
environments in order to understand how best to compete in the mining equipment industry
market.
The mining industry is facing intense challenges currently including social, economic and
political changes as of lately. Both companies must be more aggressive in their strategic planning
in order to combat the challenges the industry is facing. It is important that the companies not
just focus on how they are performing in the industry but how the industry itself is performing.
There is no use being the best shipmate on a sinking ship. Of the factors at play in the mining
industry, currently, the cost of doing business is one which is hurting key players. Commodity
prices are high and it is increasing production costs as well as slowing the availability of supply.
Inflation and boosts in mining taxes as well as other fees are also causing trouble, in addition to
demand for heightened corporate social responsibility. The price of gold has dropped, fires have
halted work in the oil sands of Canada and China has plateaued, as far as growth, sending the
mining industry to an almost screeching halt.
Internal factors will also come into play, especially in times of external environmental
challenge. Caterpillar is vested in success when it comes to internal environmental factors. The
culture of Caterpillar is unique in that it favors values over rules. Not only does Caterpillar
ensure success by diversifying their product line into many different categories, but they also
maintain a global presence in multiple markets. Caterpillar ensures their customers have access

4
to as much value adding activity as possible. They take care of their customers, and their
machines from start to finish. This is a key element in their success because they know that, even
if new machine sales is settling, the filters, service, diagnostics and after-market parts business
holds true. Furthermore, their strategy includes funding innovative projects which will allow for
more growth and diversification as a company.
When it comes to Caterpillars internal culture, it is important to see which values stand
out and pave the way to success for the company. "Values in Action" include five core values
which paramount company success: Integrity, Excellence, Teamwork, Commitment and
Sustainability

Best Team

Safety

Inclusion

Superior Results

Earnings per Share

Operating Profit after Capital Charge

Cash Flow

Global Leader

Quality

Aftermarket Parts

PINS

PODD

Joy Global is also a very conscientious company focused on the well-being of their
customers. Joy Global follows similar values to that of Caterpillar which include: Integrity,
Respect, Diversity, Teamwork, Reliability and Performance (Joy Global, 2016). Joy Global does
mining well and responsibly. One thing that both companies have in common is that they focus
on value adding services and are committed to a life cycle management approach (Joy Global,
2016). It is easy to see why these companies are in such direct competition. However, while
Caterpillars primary competitor in the mining equipment industry, Joy Global, is also a global
company, their product line is less diverse than that of Caterpillar. This means that when mining
suffers dramatically, Joy Global suffers dramatically.
Both companies use similar key performance indicators in order to measure performance
as well as strive for continuous improvement. The companies use various means of process
improvement including Lean and Six Sigma. As demonstrated by the charts below, both
companies compete rather closely at any given time. Joy Global has only slightly pulled ahead in
recent years (Jones, 2013). However, Caterpillar, as mentioned, is more diversified in other
industries.

(Jones, 2013)
It is easy to see why it is so important for companies to engage in environmental scanning
both externally and internally. Without the amount of information which is provided by

6
environmental scanning, it would be difficult for companies to accurately forecast and plan for
adaptations as well as make responsible decisions with the interest of their stakeholders in mind.
It is important for companies to be able to behave responsibly and ethically when it comes to
protecting their brand, employees, customers and shareholders. Environmental scanning, internal
and external, allows them do so.

7
References
Jones, D. (2013). Joy Global vs. Caterpillar: which offers better value?. Retrieved from
http://www.fool.com/investing/general/2013/10/24/joy-global-vs-caterpillar-whichoffers-better-valu.aspx
Joy Global company information. (2016). Retrieved from
http://www.joyglobal.com/company/our-company#!who-we-are
Wheelen, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C.E., (2015). Concepts in strategic
management and business policy: Globalization, innovation and sustainability (14th ed.).
Upper Saddle River, New Jersey: Pearson Education, Inc.