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1. STRATEGIC MANAGEMENT
ASSIGNMENT
KOMATSU LIMITED CASE ANALYSIS
Presented by: Group 8 –Chaitanya Chaudhry
Prateek Sharma
Ritik Gaur
Samyak Jain
Shireen Iftkhar Ahmed
Shivani Sharma
Sneha Shaw

2. GLANCETHROUGHTHE CASE
Industry overview
▪ The EME industry began in the late 1800’s with the development of steam powered
equipment.The demand for EME depended on the increase at which machines were
substituting manual labor.
▪ Demand was higher in developed countries (US). Demand structure changed due to
the changing oil demands within the Middle Eastern countries.This lead to an
increase with construction activity.
▪ EME demand was doubling throughout 1973-1980’s .Mining / Construction industry
constituted 60% of the EME market. Low cost labor method created competition.
EME Industry focused on improvements for existing products.

3. Company’s evolution through the years:
1960’s
o Low quality products.
o Entry of Mitsubishi – CAT JV.
o Launched Project A,TQC.
o First quality, then cost
reduction
1970’s
o Focus on export to China,
Europe, and LDCs.
o Opened Komatsu USA.
o Launched Project B – Large
Bulldozers.
o Innovation – Large dump
trucks, Radio controlled
bulldozers.
o Four part cost reduction
strategy.

4.  1980’s
o Bought technologies from technology suppliers.
o Expansion of subsidiaries, over sea offices & distributors internationally.
o Increased expenditure in advertising campaign through special trade magazines in
USA.
o Program EPOCHS - Efficient Production-Oriented Choice Specification.
o Future & Frontier Project – Arc welding robots, heat pumps.

5. Ques 1: What are the sources of komatsu’s success?
▪ Early emphasis:
i. Overseas Orientation- Emphasized the need to export.
ii. User Orientation.
▪ The 1960’s:
i. MITI opened EME industry to foreign capital investment, hence to compete:
- Acquisition of necessary advanced technology.
- Improvement of Product Quality within the company.
ii. TQC-Total Quality Control concept- High performance, reliability and durability.
iii. Project A- Upgraded Quality of small and medium sized bulldozers (Primary domestic product).
iv. Project A (2nd phase)- Cost reductions for market dominance.

6.  1970’s:
i. More attention towards exports:
- Construction boom in the Middle East.
-Targeted the untapped markets in Europe- Argentina, Italy (Komatsu Europe).
-Targeted the US by selling a limited product line- crawler tractors and crawler loaders.
ii. Project B- Focus on exports to develop the company’s overseas markets.
iii. Market Penetration in LDC’s.
iv. R&D for the product development, product design, operational efficiency (excavator models, pipe
layers etc).
v. Since worldwide demand for construction equipment was slowing, focus was more on improving the
product competitiveness:
-V10 campaign
- Reducing number of parts by 20%
-Value Engineering
- Rationalization of manufacturing systems
vi. Acceleration of product Development Programs (Off- highway dump products and hydraulic
excavators).
vii. Unique Products in the market-World’s first ever radio-controlled bulldozer.

7.  1980’s:
i. Becoming Full line manufacturer with extensive sales and services network
ii. Expansion of narrow product line it offered abroad
iii. Digestion of licensing technology, establishing its own technology
iv. Projects EPOCHS- Responding to diverse market needs without compromising on
cost position
v. Emphasis on R & D- Industrial Robots
vi. Project “F and F”- Future and Frontiers- develop new products and businesses
vii. Exports Expanded-Soviet Union and marketing efforts gathered momentum
viii. Product diversification- Europe, Asia and Australia
ix. Intertwined system ofTQC, PDCA cycle and management policy
x. Good labour relations

8. Ques 2: How was the company able to challenge Caterpillar when so many
larger and better established companies- like Internal Harvester, John Deere and
J.I.Case-had failed?
▪ Launching of quality upgrade program.
▪ Implementation of project N.
▪ The second phase of project A emphasized on cost reduction.
▪ Dominance in Japan, now was the time to take over the world.
▪ Launching of project B.
▪ Penetration in low development countries.
▪ Improving the competitiveness of its products.
▪ Innovation.
▪ Freed itself from the shackles of Bucyrus.

9.  Extensive sale and service network across japan.
 Price advantage.
 New and differentiated products(innovation) .
 Vertical integration.
 TQM, PDCA, MGT BY POLICY.
 Low cost high productivity labor force.

10. Ques 3: How are environmental forces and industry changes likely to affect
Komatsu’s competitive position vis-à-vis Cat?What recommendations you may
have for Ryoichi Kawai? For Lee Morgan?
▪ For komatsu below are some environmental forces and industry change effects .
i. Cross-country variation in Factors that affect industry Competitiveness.
ii. Locating value chain activities for competitive advantage.
iii. The impact of government policies and economic conditions in host countries.
iv. The risks of adverse exchange rate shift.
v. Cross-country differences in demographic cultural and market conditions.

11. Recommendations:
i. New business ventures.
ii. Early export decisions to counter stagnant market and currency fluctuations.
iii. Huge efforts and expense on integrating its value chain.
iv. To move from a international strategy to transnational one.
v. Thinking globally and acting locally .

12. ANY QUESTIONS?