PRESENTED BY:RUCHIKA WARDHAN

SUSHANT SAURAVMUSKAAN SINGH

ROHIT KUMAR

Komatsu Limited

Agenda

Case Summary Company History Komatsu (1984) & Strategy External analysis:

PESTEL Analysis Industry Analysis – 5 forces

Internal Analysis: SWOT Analysis

Recommendations

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Company History

Japanese Company, headquartered in Tokyo, Osaka

Started out as specialized producer of mining equipments

In Post-war era moved to Industrial EME (earth-moving equipment)

1960s Licensing Agreement with International Harvester and Bucyrus-Erie

Started with TQC (Total Quality Control)

Exports to sales reached 55% in 1975

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Company Strategy

Focus on manufacturing excellence : Total Quality Control (TQC)

Exporting to LDC countries

Direct sales

Payment accepted in terms of countertrade (as a solution for Equipment Financing Inability)

Product development

Cross-functional prospects tapping

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External

Analysis

PESTEL

Analysis

5 forces Model

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PESTEL Analysis

Political:

•Political Instability in traditional Source Countries

•Good Relationship with Eastern Bloc.

•Signed contract with Soviet Union.

•Local Government Pressures

Economical:

•Currency movements : Yen/Dollar Exchange Rates

•US Recession in 1980s leading to fall in Construction Company’s contracts.

Social

•Developing Countries were more Labour oriented

•Financing was to be provided to Developing Countries for EMEs

•Dealers were reluctant to become exclusive because they didn’t have a brand image.

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PESTEL Analysis

Technologic

al:

•Technology was with American EME manufacturers

•Technology to increase Fuel Efficiency was major concern

•Country-wise Different Industry Standards

Environmental:

•Mining environment with different operating conditions in different countries.

Legal:

•Different Legal Requirements in different countries to safeguard the workers working on EMEs.

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5 Forces Model

• Caterpillar with good sales and distribution network and good foothold in US market.Rivalry

• High barriers to entry• Government policiesNew

Entrants

• Human Labor (especially in Developing Countries)

• Low threat of substitutesSubstitution:

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5 Forces Model• International Harvester and Bucyrus-Erie :

technology suppliers supplied on the price of restriction on Export

• Dealers reluctant to become exclusiveSupplier power

• Low bargaining power – Developing economies• Developing Economies was Labor Intensive• Price sensitivity• Financing was prior needBuyer power

• For South East Asia and Africa importing machines involved countertrade

• Ronald Reagan’s Embargo gave Soviet Contracts to Komatsu

• Japan opened EME Industry to International Capital

Government

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Opportunities Threats

Cash strapped International Harvester

Different Countries had different mining operating Environments

Siberian Natural Resource Project

Reagan Administration’s embargo

• Dealers reluctant to become exclusive due to narrow product line

• Slowing demand of Construction Equipment

• Currency Movement: Yen/Dollar Rate Fluctuation

Technological Access for the price of Export Restriction

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Strengths Weaknesses

Good R&D base (5.8 % spending on R&D).

Total Quality Control (TQC), PDCA and Management by Policy Philosophy.

Relatively efficient and cost effective Labor as compared to CAT.(15.2 % as compared to 10.6%)

No essential Technical know-how

Poor sales distribution and After Sales Network

Small field population of Komatsu Products

Highly Centralized Production System

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Innovative Initiatives

TQC(Total Quality

Control)

PDCA(Plan, Do, Check and

Act)

Management By Policy

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Key Projects

Project A Project BEPOCHS

( Efficient Production-Oriented Choice Specifications)

V-10 Campaign F and F ( Future and Frontiers)

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