Komatsu Limited
...rategy was exercising both quality improvement and cost reduction methods into its business simultaneously. This allowed Komatsu to actually compete in the global market. It helped Komatsu to gain global presence because its products are now reliable, and at the same time, are charged 30% to 40% lower than competitors. Komatsu’s other strength are its continual R&D program. The company encouraged workers from top to bottom to think outside of the box. People comes up with new ideas, the company will actually research it and perhaps implement it if it’s applicable. This energy drives the innovation in Komatsu, allowing it to come up with machines and equipments that are easier to use and adapting to different environments. Komatsu also realized the differences of each regional market. EME markets are highly differentiated because the unique trances and environments due to their geographic location. Some machines and equipments might work in certain area, but hard to adapt in others. Komatsu took the opportunity in this niche market, and decided to design specifically for the targeted market. At the same time, it still keeps the cost down by establishing differentiated parts and those standardized parts. Because of economy of scale, it allowed Komatsu to produce standardized parts at a low price; company will then apply specialized parts to standardized machines to adapt different markets. This strategy enabled Komatsu to become the prefer supplier in some of the regions despite its lack of servicing and sales network. Komatsu’s biggest weakness is its sales and service network. Even though it was able to capture market share in developing countries or less developed countries, Komatsu think that to capture market shares in developed countries are the only way to become a consistent player in EME industry. In order to gain market share in developed countries, Komatsu needed to establish its sales and services networks and also to become a full-line EME manufacturer. It tried to copy Caterpillar’s model by setting sales and service points around the globe. It offers trainings and supports to dealers; however, dealers were reluctant to become Komatsu’s carrier exclusively. Reason that was given was because Komatsu simply did not offer full line of EMEs. Komatsu later refocus its R&D and became a full-line carrier/manufacturer. The company was however, still not able to match its competitor Caterpillar in terms of distribution network. Another constraint that Komatsu faced was its centralized manufacturing. Almost all of the products were manufactured in Japan and shipped out to other countries. The transportation cost could be detrimental. Although this strategy might allow Komatsu to keep the cost down because of labors’ wage, and low cost of Japan steel (raw material); the transportation cost can sometimes add up to 10% of the total cost. Komatsu can perhaps set up assembly plants overseas similar to Caterpillar. The company can produce core components within the country or wherever has the cost advantage for both labor and resources. Company then would ship these components out to regional assembly plants. This will be beneficial to Komatsu because it will not only reduce the cost of transportation; it can also build regional presence in areas demands EME. Setting up assembly plants overseas also helps Komatsu to expand its distribution and servicing networks. One of the greatest strength for Komatsu was perhaps its people. Because of the leadership from top management, the company was able to excel in all level. All personnel were striving to make the company better. Workers were committed to the company; they felt they were part of the company. One right thing the CEO of Komatsu did was to let his employees to realize their v...