KOMATSU CASE ANALYSIS

By Group 1 (Roll No.1-16)

FACTORS LEADING TO SUCCESS OF KOMATSU

Factor Strategic alliance with International Harvester (wheel loader technology), Bycyrus-Erie (excavator technology), Cummins Engine (diesel Engine) Implementation of TQC concept to upgrade the quality of their products Type of factor Reason for selection

External

Strengthening relationship with related and supporting industries (according to the National Diamond theory by Porter) As Japanese companies are known for their Quality Control programs, it will help the company to gain competitive advantage and improve the national diamond Makes the web cluster stronger. EME industry needs strong after sales support; diagnose & spare parts required for recomissioning the machine at earliest if it is under breakdown It brings in the Strategic Intent for the organization and motivates employees to achieve the goals

Internal

Strengthening dealer network & spare parts support Time and again introducing projects like project A, project B, Future and Frontiers, Maru C

External

Internal

FACTORS LEADING TO SUCCESS OF KOMATSU CONTD

Factor Investment in R&D during the early 1960s and thereby increasing number of models The company priced 30% to 40% below Cat equipments in target markets Benchmarking with Caterpillar helped Komatsu to improve continuously Became a full line supplier during the 1980s and improved production efficiency Type of factor Internal Reason for selection Achieving competitive advantage through innovation Cost leadership helped the company to gain foothold in target market by offering low priced products Helped them to seek out the most capable competitor as motivator

Internal

Internal

Internal

It helped them to gain competitive advantage over its rivals

5 FORCES MODEL
Product: Earth Moving Equipment

Threat of potential entrants (LOW) 1.Huge investments 2. Complex technology

Bargaining power of supplier (HIGH) 1. No in house R&D. Technology dependence on IH, Bycyrus-Erie & Cummins 2. Dealers, operators of machine

Inter firm rivalry(HIGH) 1.Cat is market leader 2.Price as well as technology driven

Bargaining power of buyers (HIGH) 1.Customised product for various locations 2.Corporate buying 3. Availability of options

Complementator 1.Govt policy 2.Natural Calamities

Threat of substitutes (LOW) 1. Blasting is not permitted in city area. 2. Even in mines blasting is not always economical; after blasting also loaders or excavators are required

SUSTAINABILTY OF FACTORS with 5FORCES MODEL

Porter force Bargaining power of buyer Impact Reason for being sustainable Strong home base support provided competitive advantage due to customization for international market Globalized to tap selective advantages in other nation Acquisition of technically advanced firms abroad by licensing and buy out Training of operators and strengthening the dealer network

Different conditions in different nations requiring customized products

Corporate buyers Bargaining power of supplier Dependent on foreign players for supply of advanced technology Dealers and machine operator

High

High

SUSTAINABILTY OF FACTORS with 5FORCES MODEL contd..

Porter force Inter firm rivalry Caterpillar is the market leader High Price war Impact Reason for being sustainable Seeking out the leader i.e. Caterpillar as motivator and applied the concept of Maru-C

They adopted cost leadership strategy maintaining the same product quality and pricing the same products 30-40% below similar Cat equipments