The document discusses the history and growth of the earthmoving equipment (EME) industry from the late 1800s through the 1980s. It notes that demand for EME grew as machines replaced manual labor, especially in developed countries. Key players like Komatsu focused on quality improvements and exporting to global markets to meet doubling demand. Komatsu analyzed competitors like Caterpillar and pursued strategies like joint ventures and cost reduction to strengthen their position in the mining and construction industries, which comprised 60% of the EME market.

2.  Gnana Kumar . G (IPMX07018)
 Himanshu Arora (IPMX07021)
 Kshitij Goswami (IPMX07025)
 Mahanand Upadhyay (IPMX07026)
 Piyush Agrawal (IPMX07039)
 Suparna Verma (IPMX07060)
 Vivek Menon (IPMX07070)
Presented by

3. 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

4. Excavators, bulldozers, graders, loaders off highway tractors and
haulers
EME demand was doubling throughout 1973-1980’s
Mining / Construction industry -60% of the EME market
Low cost labor method created competition
EME Industry focused on improvements for existing products

5. 1960’s
 Low quality products
 Entry of Mitsubishi – CAT JV
 Launched Project A, TQC
 First quality, then cost reduction
1970’s
 Focus on export to China, Europe, and
LDCs.
 Opened Komatsu USA.
 Launched Project B – Large Bulldozers.
 Innovation – Large dump trucks, Radio
controlled bulldozers.
 Four part cost reduction strategy.

6. 1980’s
 Bought technologies from technologies supplier.
 Expansion of subsidiaries, over see offices & distributors internationally.
 Increased expenditure in advertising campaign through special trade magazines in USA.
 Program EPOCHS - Efficient Production-Oriented Choice Specification
 Future & Frontier Project – Arc welding robots, heat pumps.

7. Differentiation strategy
Extending its markets globally- plants in over 8 foreign countries
Providing high-quality, extensive product line backed by efficient
service
100% ownership of its subsidiaries (resists joint ventures)
Recognizing opportunities in external environment (postwar
opportunity)

8. Worldwide demand has doubled- expanding markets globally
Intensity of competition increased. Understand these markets
needs and wants better. (Competitive analysis)
Less developed countries were increasing their rates of
construction activity
New opportunities to target new customers
Financing problems with LDC

9. Construction in the U.S is decreasing-less U.S dominated and
less concentrated in the U.S
Advanced developing countries are entering the industry and
increasing competitive competition
World contractors are becoming better placed than U.S
contractors to perform contract
Foreign companies are more flexible and easier to form joint
ventures with

10. Overseas market focus and User oriented products
Joint Ventures to gain hold of technology
High Focus on Quality products
Centralized Production with very limited manufacturing outside
Japan
Maintain good relations with Union and focus highly on
Individual Job satisfaction
Pre-Sale Service in Less Developed Countries

11.  Diverse Market Products ranging from sea water bulldozers to radio controlled equipments
and robotics.
 High Quality Products by continuous improvement and implementing TQC
 High Labor Productivity
 Low Cost High Quality Products that provides 10% more value in 10% less price compared to
CAT
 Four Part Cost reduction strategy
 Adapting to changing market dynamics

12. • Operational Efficiency
• Wide Product Base
• Low Cost Labor
• Better control on Supply Chain
• Legal Proceedings
• Weak Distributor Network
• Less Flexibility
Emerging Markets
Inorganic Growth
Facility Expansion
Environmental Regulations
Currency Rates

14. Opportunities
and threats
External Analyses’ Outcomes
By studying the external environment, firms identify
what they might choose to do.

15. Positive Neutral Negative
Demographic
Age 
Rising Affluence 
Socio cultural
Environmental concern 
Political/Legal
Protected Mkts 
Political Environment/Lobbying 
Technological
Innovation/New Product design by
competitor

Green Technology 
Economic
High Interest Rates 
Currency Fluctuations 
Globalization

16. Positive Neutral Negative
Demographic
Age

Rising Affluence 
Socio cultural
Environmental concern 
Political/Legal
Protected Mkts 
Political Environment/Lobbying 
Technological
Innovation/New Product design by
competitor

Green Technology 
Economic
High Interest Rates 
Currency Fluctuations 
Globalization

17. Internal Analyses’ Outcomes
By studying the internal environment, firms
identify what they can do
Unique resources,
capabilities, and
competencies
(required for sustainable
competitive advantage)

18. Components of Internal Analysis

20. 3–20
Value Chain Analysis
• Allows the firm to understand the parts of its
operations that create value and those that do
not.
• A template that firms use to:
– Understand their cost position.
– Identify multiple means that might be used to
facilitate implementation of a chosen business-
level strategy.

21. 3–21
Value Chain Analysis

22. Value Chain Model
Firm Infrastructure (General Management)
Human Resource Management
Technology Development
Procurement
Inbound
Logistics
Operation
s
Outbound
Logistics
Sales &
Marketing
Service and
Support
PRIMARY ACTIVITIES
SUPPORT
ACTIVITIES
Strong
Control
over
Supply
Side
High
Process
Efficiency
High Cost
due to
centralized
production
system
Developing
network
Establishing
a network

23. Value Chain Model
Firm Infrastructure
Human Resource Mgmt
Technology Development
Procurement
Inbound
Logistics
Ops. Outbound
Logistics
Sales &
Marketing
Service and
Support
PRIMARY ACTIVITIES
SUPPORT
ACTIVITIES
Mgmt focus on export
Strong Integrated Culture
Strong Focus on R&D
Good Control on Supply side

24. Value Chain & Value System of Komatsu
Inbound
Logistics
Operations Marketing Service
Outbound
Logistics
Low Cost RM, Backward
Integration ,Suppliers
Operational Efficiency, R&D,
Strategic Alliances
Transporters, Shipping across
the globe. Dealer Network,
Regional Warehouses, Dealer
Workshops, Distributors, Service
Centers

25.  Ryochi Kawai ‘s slogan of Maru C Encircle Caterpillar- Analyse
CAT’s products, strategies, read company related news etc.
Kawai warned about sense of complacency- success today does
not necessarily imply success tomorrow
Encircle Caterpillar as strategic intent sets up an urgent
challenge. It creates a misfit between resources and goals.

26. Scenario 1 Improving the competitiveness of its machinery by:
Reduction of costs by 10%
Reduce the number of parts by 20%
Redesign the products to gain economies in material or manufacturing
Rationalization of the manufacturing system
Scenario 2 Komatsu should obtain global sourcing arrangements through:
Wholly owned subsidiary – May be established in a country with low-cost labor t
to supply components to the domestic plant, or the subsidiary may produce a
product not made in the domestic market.
Overseas joint venture – Established where labor costs are lower than those in
the domestic market to supply components to the domestic manufacturer.
Scenario 3 Create Strategic Intent for the future:
Strategic intent envisions a desired leadership position and establishes the
criterion the organization will use to chart its progress. The process is one in
which leadership team transform themselves and culture of their organizations
through a creative commitment to radically different future. Leading from the
premise of a strategic intent requires one to think and plan backwards from that
envisioned future in order to take effective action in the present.

27. Strike strategic partnerships and develop relations with manufacturers in US, Europe &
LDC to get access to markets.
Increased emphasis on mining side of the business because of the fact that emerging
markets will require coal and other resources. New Products & solutions
Venture into financing & leasing of EME’s specially in LDC
Expand their dealership facilities into the Asia and Middle Eastern markets. Support
customer relations through repair & maintenance scheduling
Diversify into related businesses like railways, marine & heavy machinery, electric
engines, robotics & semiconductors.
Excel at Product Development – quality, emissions, growth markets and next
generation products

28. THANK YOU