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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.

This article has started revolutionary thinking about what are the different forces in addition to direct competitors that affect competitive strategy of an organization and how better understanding of industry structure and these forces, also known as " Porter 's Five Forces", derive organization 's strategy to achieve sustainability and higher profitability. Author has explained the other factors that contribute for industry structure like industry growth rate, technology and innovation, external factors, government & regulations and complementary products and services. Industry structure changes while responding to changes in competitive forces. Author also discussed the framework to perform industry analysis and avoid common pitfall while conducting analysis. In this review I will summarize five competitive forces explained by Micheal E. Porter and their implication on organization 's strategy. Further, I will discuss the relevancy of Porter 's five forces framework in current scenario.

Mature company, has been around for more than 15 years, simple business structure – manufacturing and merchandising, heavily based on inventory sales, however it is highly prone to competition in this industry. The intensity of rivalry is very high in this industry.

Primary assumptions to the theory include, high barriers to entry and exit, high sunk costs and imperfect knowledge of the market. In addition, this paper will analyze the company’s current standing in the market along with competitive strategies executed to grasp a greater portion of market share.

Threat of new entrants: Intensified price competition as new entrants sought their share of mature market had negative effect. However, high capital requirements positively affect Ford Motor Company. High capital was allocated for research and development which was and advantage against new entrants.

A majority of the attractiveness stems from the abnormally low buyer and supplier power. However, this gain is offset by the current low barriers of entry and high competitive rivalry. In order to remain competitive, incumbents must (1) invest heavily in research and development, (2) secure technology via patents, (3) market heavily to monetize products, all of which will diminish bottom line results.

Some of the key facts and critical issues presented in the case, begin with the understanding the development and evolution of an industry. According to Jack Parnell (2014), the development stages of an industry rely on the influences of competition and the potential profitability opportunities. At the introductory stage, a fairly new industry is being to make awareness of their product, however depend remains low because the industry is new. New industries rely heavily on technology and as demand begins to rises, the industry enters the growth stage (Parnell, 2014). When the industry becomes stagnant and constant this typically results in the parting of those who will carry on in the industry and the loss of unsuccessful competitors. This

3. Collaboration with similar companies in search and development of new products and thereby decreasing the competition for resources within the company.

with a number of strategic issues facing a capital-intensive, mature industry. Their product costing system was

The company is spending more on overhead than on direct labour or material. The company has considerable diversity in its product mix.

The Porter’s analysis is a powerful tool in the strategy management. It helps to make decisions based on the external environment and the internal factors and to design the long-term goals of the company. Porter’s analysis mainly deals with the external environment of the firm which means the macro environment external to the company. The five forces of PORTER’S analysis includes

Porter's Five Forces can be applied to particular companies, market segments and industries with the step-by-step analysis of market structure and competitive situation. First of all, when implementing this module in organizations, it is necessary to determine the scope of the market to be analyzed. Following, all relevant forces for this market analyzed and key forces are identified (Gerry and Kevan, P.117). Actually some organizational strategy and the longer-term goals are mainly based on or consistent with the key forces. Hence, it is not necessary to analyze all elements of all competitive forces with the same depth. Moreover, the key forces in the competitive environment will vary in different industry. Different forces take on prominence in shaping competition in each industry (Porter,

Michael E. Porter, associate professor published the article titled “How Competitive Forces shape Strategy” in Harvard Business Review in 1979. This article is retitled as “The Five Competitive Forces That Shape Strategy” and published in Harvard Business Review in 2008. Michael E. Porter developed the model of Five Competitive Forces which is defined as “Competitive Strategy – Techniques for Analyzing Industries and Competitors”. It has become a main device for analyzing an organizations structure in strategic practices.

Investing in research and development to create new product line or enhance current products adds considerable expenses. Development costs will need to be re-cooped. This will keep competitors in check, but will be challenging to keep pricing competitive.

Two systems of distribution will be adopted. The systems of distribution include direct distribution and indirect distribution system. Indirect distribution system will be characterized by the employment of third parties in the distribution of the products. Therefore, in indirect distribution channels, the business will utilize third parties, often referred to as an intermediary, to offer a link between the manufacturer and consumers. On the other hand, in direct distribution, only two parties will be involved — the manufacturer and the consumer. In the latter system, direct distribution channel will be organized in such a way that the manufacturer will deliver the products (plantain chips) to the market directly without assistance of another independent party such as a distribution company or the intermediary. The decision on whether to employ a direct or indirect distribution channel will depend on the accessibility and distance from the processing zones.