Caterpillar Inc (CAT): Porter's Five Forces Analysis

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Threat of New Entrants: Low
Caterpillar’s main industry of machinery has many barriers to entry which makes it difficult for new organisations to enter the market. It is a mature and highly competitive industry with few dominant competitors who have cemented their position over the decades. Furthermore, these corporations have sustained a competitive advantage over any new entrant that tries to enter into the industry.
The large initial capital investment needed for new entrants is another major barrier. The cost of machinery and manufacturing is expensive. It is hugely important and costly to have a global presence in manufacturing as it is extremely expensive to ship machinery to clients around the globe.
Maintaining profits in this
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It is clear Caterpillar is not overly worried with the power of the suppliers. (Anderson, 2012)

Bargaining Power of Buyers: Moderate
One of Caterpillar’s determining risk factors with the bargaining power of buyers is the size of the potential customer. Large multi-national corporations and third world countries have huge influences and larger revenue potentials than smaller organisations. This leads to some difficulty for Caterpillar in achieving solutions to meet terms with these organisations in order to take advantage of the substantial revenues they offer.
Caterpillar are able to hold their ground against smaller entities as they have less of an influence and attempt to compete much more on price due to the competition in the industry while Caterpillar are focused on the highest quality product and service.
Caterpillar’s extensive competitive advantage allows the organisation to focus their attention on their main customers and huge efforts are being put in nationwide and globally with larger organisations and various countries around the globe.

Threat of Substitute Products: Low
The threat of substitute products is low to Caterpillar. This is due to organisation’s use of the most efficient technology for the associated cost of operations. There is no other viable option for buyers to consider the task to be completed in a resourceful and more timely manner.
A vast majority of Caterpillar machinery are
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