1. Globalization of Komatsu
Digging Out of Trouble
Presented By
Bhooshan Kanani

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The Content
Komatsu at a Glance
Komatsu’s Business Focus
Komatsu’s Performance
Strategies for Competing in International Markets
Conclusion

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Komatsu at a GlanceKomatsu Corporate Profile
Established on May 13, 1921
Headoffice located in Japan
Main Business: Manufacture and sale of construction and mining equipment, utilities, forest machines and industrial machinery
Komatsu Group consists of Komatsu Ltd., and 182 other companies, which consist of: Consolidated Subsidiaries:146Companies accounted for by the equity method: 36

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Komatsu’s Business Focus

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Komatsu’s Business Focus
Domestic Focus (1921 –1964)
1921: Started out as specialized mining equipment manufacturer
1930s: Expanded its operations into agricultural machinery & subsequently provided military equipment during world war II
1947 –1964: shifted the emphasis towards applying new technology to civil engineering and towards manufacturing construction in Japan. Consequency: Improve Product Quality!
To support that program, in 1961: Launched a company wide quality control programmeKomatsu Domestic Focus

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Komatsu’s Business Focus
Domestic and Export Phase (1964 –1982)
Management succession from Yoshinari Kawai to Ryoichi Kawai
These strategies run succesfully, proved by increasing 50% sales and 65% domestic market shareKomatsu Domestic & Export Phase
Implementation Management by Policy, which focus on these following strategic priorities:
•Upgrade Product Quality by obtain international certification for Komatsu Product
•Enhance Efficiency: scutinizing all aspects of production & launched “World A” campaign
Focus on export and product growth:
•1975: export 50% of sales
•1982: export 75% of sales

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Komatsu’s Business Focus
Internationalization (1982 ahead) Internationalization Phase
Strategy: centralized international production facilities, cost cutting, and aggressive export sales
US economic recession & declining in construction market demand happened which led to price war
Diversification: expanding the geographic into non construction machinery production to reduce

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Komatsu’s Performance

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Net Income
Komatsu’s Performance

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Komatsu’s Performance
Net Sales

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Top 10 Market Share –Global Construction Machinery Industry
Komatsu’s Performance

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Strategies for Competing in International Market

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Strategies forCompeting in International MarketsFive Major Reasons Why Companies Entering Foreign Markets
To gain access to new customers
To achieve lower costs through economies of scale, experience, and
Increased purchasing power
To further exploit its core competency
To gain access to resources and capabilities located in foreign markets
To spread it business risk across a wider market base

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Strategies forCompeting in International MarketsWhy Competing Across National Borders Makes Strategy Making More Complex
Cross-country variation in Factors that affect industry Competitiveness
Locating value chain activities for competitive advantage
The impact of government policies and economic conditions in host countries
The risks of adverse exchange rate shift
Cross-country differences in demographic cultural and market conditions

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Strategies forCompeting in International MarketsThe Three Main Strategic Approach for Competing Internationally
Multi-domestic Strategy –Think Local, Act Local
Global Strategy –Think Global, Act Global
Transnational Strategy –Think Global, Act Local

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Strategies forCompeting in International Markets
The Three Main Strategic Approach for Competing Internationally

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Conclusion
The Komatsu’s reasons in expanding into foreign market :
•Gain access to new customer
•Achieve lower cost and enhance competitiveness
•Spread business risk across wider market base
Strategic option used by Komatsu for entering International Market :
•Export Strategies
•Acquisition Strategies
•Alliance and Joint Venture Strategies
Strategic approach used by Komatsu : Global Strategy

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Thank You