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Eaton Corp Porters Five Forces Model

Essay by   •  December 10, 2011  •  Essay  •  350 Words (2 Pages)  •  3,402 Views

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1. Competitive rivalry within the industry

The company faces significant competition from both larger and smaller companies, with the key competitive factors being customer and end-user service, price, quality, brand name and innovation.

Key Competitors of Eaton (ETN):

Cooper Industries

Danaher

Honeywell International

ITT

Illinois Tool Works

Johnson Controls

Parker-Hannifin

Rockwell Automation

Textron

United

What is Eaton's market share in the industry of focus? (Industrial Machinery)

* Fragmented competitive structure increases rivalry. Competitors are quite diverse that makes it tough to become the best in the industry and increases competition.

* Constant innovations and other industry changes heat up competition as well.

* Moderate market growth - S&P just changed their rating for Industrial Machinery from neutral to positive. Eaton started concentrating more on growing markets.

* High fixed costs - competitors need to produce near capacity to attain lower costs and sell these large quantities that intensifies rivalry

* High exit barriers - Plant and equipment assets are very specialized so they can't be sold easily and it intensifies rivalry.

INTENSE RIVALRY

2. Threat of New Entrants / Barriers to Entry

* High initial capital investment - highly specialized plants and equipment

* Patented technologies

* Economies of scale/high fixed costs

* Strict Government regulations

* Established relationships with buyers

HIGH BARRIERS TO ENTRY

3. Threat of Substitutes

* High possibility of cheaper or/and better innovative products and technologies

* Moderate Level of Buyers' willingness to substitute for standardized products

* Low Customer switching costs

HIGH THREAT OF SUBSTITUTES

4. Bargaining Power of Suppliers

Source: Mergent Horizon:

Eaton has 22

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