Evolution and Strategic Drivers of Komatsu (EME)3
Five-Force Analysis: The EME Industry:5
Resource Based Competitive Advantage8
Financials & Future Course9
Company on The Right Path11
Komatsu, the Japan based earth moving equipment taking on Caterpillar manufacturer has been studied by management students around the globe for years now. This story of David vs Goliath provides us an insight about the strategies followed by David in bringing down Goliath. Komatsu’s evolution and its strategies were studied in comparison with that of Caterpillar. Responses to each other’s moves in the global earth moving equipment industry have been analysed in the context of their international business strategies. An industry to analysis was done to understand the environmental factors that affected the competition between the giant and the emerging. A SWOT analysis identified the internal resources and capabilities of Komatsu that aided it to develop its distinctive competitiveness. How Komatsu achieve a sustained profitability, higher than the industry average despite the volatile international EME market was studied under the financial analysis. The role of organizational culture in enabling Komatsu to succeed in the highly competitive industry was also studied in the case analysis. Through all the above mentioned analysis, it was found out that the company was in the right track. Measures to ensure that the company continues to stay in the high profitability section have been discussed in the concluding part of the report.
Evolution and Strategic Drivers of Komatsu (EME)
Komatsu Limited or Komatsu is a multinational corporation that manufactures construction mining, and military equipment, Industrial equipments such as press machines, lasers and thermoelectric generators. Komatsu is the world's second largest manufacturer of construction and mining equipments after Caterpillar. However, in some areas (Japan, China), Komatsu has a larger share than Caterpillar. It has manufacturing operations in Japan, Asia, Americas and Europe.
Komatsu was especially dangerous to Caterpillar due to the fact that it was the second largest EME company worldwide. The 1920s to the 1930s marked major developments for Komatsu and prominent growth. The company stressed that the management should have two important perspectives
* Overseas orientation
* User orientation
During World War II, Komatsu thrived by producing for the Japanese military surplus of products (military tractors, bulldozers, tanks, howitzers etc.). After the war, the company introduced commercial bulldozers and forklifts to its equipment line up meanwhile experiencing exponential growth precipitated by strong market demand in a post-war construction era. The company brought a wide range of new products to market by the late 1960s. The company continued to expand through the 1970s but sales began to steadily decline as early as 1982.
Komatsu now understood the competition it faced but still held a 60% market share within Japan. With the threat of the Caterpillar/Mitsubishi venture taking place Komatsu decided to attempt a revitalization of the company. Since Komatsu mainly exported whole machines, the company soon realized that needed to also expand into other markets and set up assembly plants.
Unable to persuade dealers to sell its equipment, the company set up its own branch sales offices and authorized small repaid shops to be Komatsu service agents. The company set two goals during the 1960s. * The acquisition of the necessary advanced technology from abroad * The improvement of product quality within the company.
In the early 1970s, Komatsu started to recognize its distributor network worldwide, aiming to supplement the direct sales offices with more servicing dealers (similar to CAT’s). The company...