The diversification of the market demand and uncertainty

Engaged in product diversification, can increase the variety and type of business, in the national macroeconomic environment, market and production technology changes, the maximum to meet the demand of engineering machinery market, so as to disperse business risks, to maintain the stable development of enterprises. Because of the diversity of construction machinery market demand and uncertainty, so that the construction machinery business single product will face greater risks.

The economy of scale is the average cost of enterprises decreased with increase of the number of products at the same time, economies of scope is the production or sale of various products operating costs will be lower than the single production or sale of the same number of single product cost. Enterprises in the long-term development process, due to the imbalance of the production, usually accumulated surplus of some resources, diversification can make full use of remaining resources, make the core competence of the Corporation, such as technology development ability, advanced production capacity, product marketing network and brand advantages.

According to the different needs of customers, to develop integrated solutions, to provide convenience for the customer at the same time, also played a horizontal integration of the advantages of scale, make a variety of products share of intangible assets, in order to expand their visibility, barriers to new entrants, alleviate the pressure of competition, larger profit margins; through diversification, particularly horizontal and vertical mergers, can reduce competition, increase market share, increase market monopoly, to enable enterprises to obtain synergies.

Caterpillar diversification is its power of enduring. Caterpillar engineering machinery products have been covered most of the main varieties. Road machinery, earthmoving machinery, crane bridge, civil engineering machinery, engines are the main selling products, the product line width and single product sales revenue and is much larger than the size of Japan Komatsu, American Teleikesi international rivals and domestic enterprises in china. The integration of the industry chain, the upstream will focus on the construction of technology research and development platform, the localization of breakthrough of hydraulic components, for the completion of hydraulic pump, hydraulic valve, hydraulic cylinder, motor industry, downstream integration parts sales and overseas sales agent system, and the global sales network layout.

In the construction machinery industry, the gap between domestic and international focus is reflected in the level of basic component technology. Therefore, the revitalization and development of construction machinery industry, it should be based on the level of technology to enhance the basic components, strengthen technological innovation, supported by policy support, in order to fundamentally improve the technical level, to achieve the development of the industry. Technological innovation and promotion, continue to invest a lot of R & D expenses, maintenance of product design and development, formed a good circulation mechanism is Caterpillar international construction machinery giant can maintain sustained progress in the power source.