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Executive Summary
This report is an endeavor to analyze the case, Komatsu Limited from Human resource,
Marketing, Operations and Finance point of view.
We have first dealt with the business landscape that gives us a sneak peek through Komatsu’s
timeline. We get an insight of how the idea of Komatsu was conceptualized and what are the
challenges faced by it today.
Later we have examined the Strengths, Weakness, Threats and Opportunities of Komatsu in the
construction and EME industry amidst the various environmental factors.
Based on the weakness of Komatsu we have suggested some recommendations. These
recommendations have been studied from the Human resource, Finance, Operations and
Marketing perspective.
Then we have moved on to Industry analysis. Following this we have the main issue that
Komatsu is facing and what are our recommendations which are based on elaborate logic and
reasoning.
At the end we have suggested some recommendations for Corporate, business and functional
strategy. And with this we have concluded.
Business Landscape
Komatsu Ltd. was founded by Mr. Takeuchi in the year 1921 in Osaka, Japan. Its main goals
were “overseas orientation” and “user orientation”. It started off as a producer of mining
equipment then ventures in to other equipment manufacturing sections. The company started
making steel castings and was first one to manufacture the agriculture tractor in the year 1931.
During the Second World War Komat6su produced Bulldozers, tanks, howitzers etc. Komatsu’s
products did not meet the international quality standards so it was unable to persuade dealers to
sell its products and had to set up its own branches of sales office.
In 1963 the Japanese Ministry of International Trade and Investment decided to open the EME
(Earth Moving Equipment) industry to foreign capital. This would lead to exchange of technical
knowhow for access to Japanese market. Mr. Kawai decided that to compete with the world
leader in EME industry, Komatsu needed knowledge of latest technology and improved high
quality products. Komatsu began “Project A” in 1964 which aimed at upgrading medium sized
bulldozers. For this reason the company entered in to a licensing agreement with International
Harvester, Bucyrus-Eric and Cummins Engine, but it had to pay heavy price for this, not only in
financial terms but also had to restrict its exports. Thus the company started its own Research
and Development (R&D) Centre in 1966. Here they launched the Total Quality Control (TQC) to
ensure highest quality in every aspect of Komatsu’s operations. Using this TQC system the
company produced high quality products and reduced it warranty claims by 67%. During the
early 1960, Komatsu started opening a market in Eastern Bloc countries and started promoting
trade relations with China and USSR.
In 1967 Komatsu Europe was established as the European marketing subsidiary. In 1972 it
launched another “Project B” with an aim of expanding its overseas market. It also established a
presale service department in 1974 that provided assistance from the earliest planned
development stage in the Less Developed Countries and also started to set up its dealer networks.
With all these efforts the sales rose to 55% (1975) from 20% (1973). By 1976 the Japanese
markets were saturated with Komatsu and Mitsubishi-Cat holding 60% and 30% of the market
share respectively, so Komatsu decided to improve the competitiveness of its products.
2
They launched a four- part cost reduction plan. They were:
1) V-10 Campaign- reduce cost by 10%
2) Reduce the number of parts by over 20%
3) Value Engineering and gain Economies of Scale
4) Rationalization of manufacturing system.
In 1977 Japanese yen started appreciating, so manufacturing was responsible for obtaining a cost
structure. To have a strong foothold in the market, Komatsu strengthened its dealer and service
network. In 1981 the company launched EPOCHS (Efficient Productions Oriented Choice
Specifications). The aim of this project was to improve production efficiency without reducing
the number of product specifications required by the market. By 1983 Komatsu became an
“Integrated” and “Concentrated” production system. The company also introduced PDCA (Plan,
Do, Check and Act). All this ensured that the company produces high quality products and owns
a chunk of market share. With all these improvements the company became the second largest
producer of EME and wants to sustain it.
3
Industry Analysis:
Industry Rivalry: High
Komatsu is the second largest player in the world EME industry with a market share of 60% in
Japan and 25% worldwide. Caterpillar is the major competitor with a market share of 43%
worldwide. It faced competition from other established global players like J.I.Case, John Deere,
Clark Equipment and Fiat-Allis. Along with these global players it also faced competition from
specialized local players in Europe and North America.
Instability in the economy causes the overcapacity in the industry and leads to a fierce
competition which results in price wars and favourable terms for the buyers.
Komatsu has focused on lower prices and higher quality of its products to maintain the
competitive position in the market.
Threat of Substitutes: Low
The threat of substitute products is minimal. There isn’t any other product that can perform the
same functions at a comparable cost. Human labour is the only possible substitute but it requires
a lot of time to perform the same function.
4
Buyer’s Power: Medium
Presence of a good number of local firms along with Komatsu and other global players give the
customers quite a bit of choice for purchasing the equipment rendering the buyer power to be
medium. To attract the customers, Komatsu has priced its products 30-40% below the similar
cat’s equipments and Komatsu has a broad product line with number of variants. Komatsu has
always focused on quality through TQC, technology and long term customer relationship which
offer substantial savings to the customers. So Komatsu has positioned itself as a reliable source
in the minds of the customers.
Supplier’s Power: Low
The suppliers have a little influence on Komatsu as it is a vertically integrated player. Komatsu is
the largest producer of the steel casting in Japan. Komatsu manufactures diesel engines, presses,
machine tools, solar batteries and iron casting which are major raw materials for Komatsu’s
products. Vertical integration has helped Komatsu to price its products at lower prices.
Threat of new entrants: Low
EME manufacturing business not only requires huge capital investment and R&D expenditure
but the new brand must offer brand equity by differentiating its products from the other players
already in the market. This poses huge entry barriers in EME industry so threat of new entrants
in this industry is very low.
SWOT
Internal Environment
Strengths
Low labor costs and high productivity labor force was its biggest asset. (Komatsu
employees earned only 55% of the wages paid to Cat employees)
Its effort to produce new & differentiated products helped it to build a network of
exclusive distributors overseas.
They worked closely with suppliers (Komatsu trained them in adopting its TQC system)
It cultivated cordial relationship with governments in third world countries.
5
Its position as the second largest EME producer along with its pricing which was 10 -
15% lesser than that of CAT (lower labour costs) helped them in getting contracts.
Twin orientation towards vertical integration & consumer satisfaction.
System of TQC,PDCA and management by policy contributed to company performance
and employee development
Weaknesses
Despite having a strong market in Japan, Komatsu had a very small dealer network in
other countries.
Komatsu did not promote itself when it diversified abroad.
Initially had narrow product lines because of which many were not willing to become
their exclusive dealers.
Central production strategy of Komatsu exposed it to risks from fluctuating exchange
rates and increased logistical costs of shipping heavy equipment which could result in the
loss of its competitiveness.
External Environment
Opportunities:
Komatsu could exploit the opportunities in developing countries like India, China, Korea,
Middle East etc which would provide the infrastructure projects.
Joint venture and acquisition programs with local players in countries where the host
governments have special treatments for local players. Komatsu has responded to the
demands of local governments by commencing assembly operations in Brazil and
Mexico. In Indonesia, Komatsu has a market share of 70% in EME business as a result of
JV with a local partner.
Komatsu should focus on Asia and Oceania as Komatsu’s sale has been increasing in
these areas significantly. (Refer Annexure)
Increasing construction activity due to growing population: Population rise will
significantly impact the construction industry. The company has a strong presence in the
6
construction equipment market and is well positioned to take advantage of the
opportunity to grow in this segment.
Threats
During early 1980s, the Construction industry in US had faced a major downturn. It poses
a potential threat on EME Industry as construction industry represents 60% of EME
Industry’s market.
The market of EME industry in developed countries is reaching at saturation point which
decreases the demand for the products. It would result in fierce competition and could
threaten Komatsu’s growth. Komatsu was actually losing its market share in American
market.
Komatsu majorly relied on independent and non exclusive dealers for sale of its products.
Economic instability creates demand-supply imbalances which would stagnant the
demand and could harm the growth of Komatsu.
Exchange rate fluctuation poses a major threat to the Komatsu. In the fall of 1977,
Japanese yen began appreciating against dollar. The appreciation in domestic currency
makes the products expensive in the international market which encourages buyers to
shift to other markets.
Trade policies of other nations could affect the revenues of Komatsu. As EEC was
considering the imposition of countervailing duties on the Komatsu’s products because
these products were considered to be dumped.
Distinctive Competencies of Komatsu
The following distinctive competencies helped Komatsu to achieve operational effectiveness
and shrink the gap between itself and Caterpillar:
Labor cost advantage
Clarity of vision and goals which was shared by the whole organization
Value Engineering
Good labor relations
7
Key strategies of Komatsu
1960s
1. Issue: Acquisition of technology from abroad.
Analysis: Post world war, the quality of products manufactured by Komatsu was found to be
half of that of international standards. Due to this, in early 1960’s the company entered licensing
agreements with IH, Bucyrus – Eric and Cummins. The cost of access to technology was high
and the agreements also laid certain restrictions on Komatsu in terms of exports. This led to
Komatsu setting up its own R&D lab in 1966. This sequence of events, in the end, helped
Komatsu to build its own R&D centers, it later set up four more, thereby building world class
products. Once the company was self-sufficient it was able to terminate the licensing contracts
with the previously mentioned companies.
2. Issue: Improve the product quality within the company.
Analysis: In the late 1950’s post-war reconstruction started in Japan. During this period, the
products manufactured by Komatsu were found to be low in quality which led to customer
complaints. Due to which Komatsu decided to implement the TQC (Total Quality Control)
concept in its manufacturing process. Since the TQC concept was applicable to all the activities
of the organization, the overall performance of the employees improved. It also led to
improvement in the performance and quality of the products. The company also won the Deming
Prize for quality control in 1964.
3. Issue: Delaying Caterpillar’s entry into Japan.
Analysis: The Japanese Government realized that the standard and competitiveness of the
companies in the EME industry was low. To improve this, Japan decided to open up the market
for foreign investment. Caterpillar immediately tried to use this opportunity to enter Japan.
Komatsu realized that it was not ready to compete with Caterpillar’s products and therefore with
the help of MITI it delayed Caterpillar’s project in Japan for 2 years. During this period, it
prepared itself to compete with foreign companies.
8
4. Issue: Two phases of Project A.
Analysis: The Company aimed at building world class products for its domestic market.
Therefore Komatsu encouraged its employees to focus on building better products and to ignore
costs. Two years later, the products were found to be of better quality, reliability and durability.
The second phase aimed at reducing cost for each and every activity that took place in the
organization. Activities like design, assembly and production were scrutinized and costs
allocated to such activities were brought down. These two phases helped the company move
forward and increase its domestic market share to 65% between the years 1965- 70.
1970s
1. Strategy: Expansion abroad.
Analysis: Until the 60’s, Komatsu did not have enough contacts abroad. Their exports were
based on inquiry on certain parties abroad and entering into contract with them. The CEO’s son
Ryoichi understood the issue and travelled abroad to countries like USSR, China to improve the
company’s trade relations.
Komatsu entered the North American market by setting up business units there. It identified its
competitor, Caterpillar, and launched limited product lines and priced those 30% below
Caterpillars products.
As already mentioned, Komatsu did not have enough dealer contacts abroad because of this they
maintained huge inventories for different service parts. The inability of Komatsu to get the best
dealers was because of Komatsu being a late mover to North America, the presence of strong
competitors for different product lines and the agreements that the dealers had with these
companies that restricted them to enter partnership with Komatsu or any other company.
2. Strategy: Launch of Project B focusing on exports.
Analysis: This project was similar to Project A. Here different products that had a huge market
abroad were identified to be improved in terms of design, technology etc. Employees were
encouraged to bring the products to world standards and then the cost reduction activities were
9
carried on. This not only helped them to better their market position abroad but also reinforce
their domestic position.
3. Strategy: Penetrate the markets of LDCs.
Analysis: Komatsu identified the industrializing nations like Asia and Latin America. It
established Presale service departments in these countries. This move helped Komatsu in
educating the LDCs for activities like planning for projects; conducting feasibility studies etc so
that their practices and products could be easily sold there later. It helped them to increase their
overall ratio on exports and gain a strong foothold in LDCs by moving in early. It also helped
them in long term as their sales in Asia increased from 11.2% in 1977 to 30.5 in 1983.
4. Strategy: Launch of four-part cost-reduction plan (V-10 campaign).
Analysis: During the late 70’s the market situation was not favourable for Komatsu’s growth and
demand for the construction equipment worldwide was falling. Due to this, Komatsu introduced
a cost reduction plan that aimed at reducing costs by 10 % while maintaining the same quality,
reducing the number of parts, value engineering and rationalizing the manufacturing system.
This move helped them to reduce costs and increase its market share as this was the time the
demand for Caterpillar’s products were reducing. From 1976, the market share of Komatsu
constantly increased where as Caterpillar’s market share kept fluctuating and by 1984 Komatsu’s
market share increase to 25% from 11% whereas Caterpillar’s reduced to 43% from 56%.
5. Strategy: A pessimistic approach to address the Yen’s appreciation over dollar.
Analysis: In 1977 Yen’s value appreciated over dollar from 290 to 240. So, Komatsu set a worst
case exchange value of 180 and asked its management to develop manufacturing and other
activities accordingly and make profits in this scenario. The company’s V–10 campaign helped
Komatsu in achieving cost reduction and with the weakening of Yen in 1978 the company
addressed this issue effectively.
In this era, Komatsu also increased its product lines. Benefitting from the R&D lab that it built
earlier, Komatsu was able to build innovative products like amphibious bulldozer and radio-
controlled bulldozer etc.
10
1980’s
1. Strategy: Licensing agreements with Bucyrus-Erie and International Harvester.
Analysis: Komatsu’s progress was being impeded by its narrow product line. So in order to
develop into a full line manufacturer it entered into licensing agreements with Bucyrus-Erie and
International Harvester even though it restricted their freedom to export. Also, dealers were
reluctant to become exclusive citing its narrow product line.
Effect: Komatsu immensely benefitted from the technical know-how obtained from these 2
companies. Not only did it get all the data which it wanted but also bought half of International
Harvester’s interest in loader business. This helped Komatsu to emerge as a full line competitor
and export its products worldwide thus strengthening its position globally.
2. Strategy: Reorganization of its worldwide distributor network.
Analysis: To compete against industry giants like Caterpillar, there was a necessity for Komatsu
to strengthen its dealer network to increase its visibility and ability to provide customer service at
par with the best in the industry.
Effect: After Komatsu had emerged as a full line competitor and promoted heavily about its full
line capability and product reliability, it strengthened its presence abroad by establishing regional
centers for parts distribution and service and making available Japanese engineers to help dealers
with repair problems.
3. Strategy: Launch of “Efficient Production Oriented Choice Specifications (EPOCHS)”.
Analysis: This was done in order to meet the dual goal of local adaptation of the products and
improve production efficiency. As the share of exports increased, there was an increased demand
for the adaptation of its products according to the local working conditions, legal requirements,
field service management etc.
Effect: It led to the development of standardized core module for major products and the
products was then modified according to the local market needs. This approach helped Komatsu
to build products according to the user needs without giving away its cost advantage. Due to this
11
its products were preferred above that of Caterpillar’s (e.g. Australian mining industry) which
helped it in increasing its market share and inching closer to its main competitor, Caterpillar.
4. Strategy: Commitment to research and development
Analysis: Komatsu’s endeavour to trounce its competition (mainly Caterpillar) required it to
introduce new and better products which required setting up of research and development
facilities. Its commitment can be seen by its expenditure on R & D as a percentage of sales
which at 5.3% was much higher than the industry average. It opened product development plants
and research facilities in four major plants.
Effect: In the International Construction Equipment Exposition it was able to display prototypes
which were better than the top-of-the-line products of the industry leader Caterpillar. This
brought worldwide recognition to Komatsu and it was now seen as a serious player which could
bring out innovative and cost effective products.
5. Strategy: Launch of the “Future and Frontier (F&F)” project.
Analysis: It was part of the company’s focus on the future and encouraged the employees to
come up with suggestions to meet the needs of the present and future customers. It was an
initiative to differentiate itself and stay ahead of its competition by anticipating the changing
trends in the business environment.
Effect: It led to development of new and diverse products like welding robots, heat pump etc. It
entered into a joint research agreement with Cummins Engine for sharing information of the fuel
efficient engines indigenously developed by Komatsu. It was able to develop breakthrough
technology in Cast iron alloy used in the manufacturing of diesel engines and became one of the
top manufacturers of arc-welding and material robots. Thus by constantly focusing on future,
Komatsu was able to successfully diversify its portfolio through ‘Related Diversification’.
6. Strategy: Good networking and Strong relationships.
Analysis: Komatsu kept on increasing its global foot print through joint ventures (in Mexico)
and opening 20 overseas offices, 8 marketing subsidiaries and 160 distributors abroad. This
helped the company provide strong dealer network and good quality customer service to its
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clients due to which it could strengthen its relationships with its customers especially the Eastern
Bloc.
Effect: As a result, there was a backlog of orders from Siberia and also it was able to procure
Cat’s contract in Russia. It further entered into a contract to develop Russian made Scrapers
using Japanese components and a collaboration with Russia for other products as well. This
helped Komatsu in reducing its dependency on the local Japanese market and further expanding
its exports globally.
7. Strategy: Continuous emphasis on quality through TQC and PDCA.
Analysis: Komatsu was aware of its products being inferior to Caterpillar and recognized the
need to drastically improve its quality in order to establish itself as a true global player. This was
done through adopting practices like TQC and PDCA in all the activities being carried out from
the shop floor to the top management. It included these practices in its policy so that it becomes a
part of life in the company. It also encouraged its suppliers to adopt these practices and helped
them in its implementation free of cost.
Effect: It won the Japan quality control prize which was considered as the world’s supreme
quality-control honour and also twice won the gold medals from Union of Japanese Scientists
and Engineers. This emphasis on quality helped Komatsu to differentiate itself from its
competitors by enabling it to provide twice the warranty as compared to others and also
achieving a reduction of 67% in warranty claims. It was thus able to provide first-rate quality
products at prices lesser than its competitors.
8. Strategy: Close eye on its competitors.
Analysis: Komatsu considered Caterpillar as its main competitor and wanted to trounce it from
its top position. It continuously monitored the activities in Caterpillar’s headquarters Peoria.
Effect: This enabled it not to become complacent and be always on its toes trying to find
methods to be better than caterpillar and achieve its long term objective of becoming the industry
leader.
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Key Issues and Recommendations
Marketing Perspective
1) Key Issue: Komatsu’s small dealer network abroad.
Analysis: Despite having a strong market in Japan, Komatsu had a very small dealer network in
other countries. This can be attributed to various factors like Caterpillar’s first mover advantage
in many countries where it had a very wide and exclusive dealer network, Komatsu’s narrow
product lines because of which many dealers were not willing to become their exclusive dealer
and some of Komatsu’s dealers filing for bankruptcy. All these factors not only deterred the
company’s strategy to expand its dealer network but also for its promotional activities.
Recommendations: Caterpillar right from the beginning understood the need for maintaining
good relationship with dealers. That’s the reason Caterpillar’s number of dealers, sales
percentage of dealers and benefits offered to dealers were nowhere close to Komatsu’s. If the
company is not able to acquire the main dealers who have a good presence in the market, the
company should keep acquiring small dealers on a regular basis so that their sales through this
channel increases. Also, they should open their own exclusive stores in key strategic locations so
that they can save on training costs of dealers, establish direct source of communication with
customers, identify new needs and constantly improve on the current products.
2) Key Issue: Komatsu’s narrow product lines.
Analysis: Earlier when Komatsu started in Japan, its products were found to be of poor quality
because of which they had to set up service points to address the defects in their products. They
identified this as a weakness and entered into licensing agreements for certain technologies and
set up a single R&D centre. This was a main reason for Komatsu’s inability to compete with
Caterpillar’s different product lines and get main dealers etc.
Recommendations: Merely setting up R&D centres and increasing the product lines will not
help as the external environment had changed post 1980. Komatsu should first identify which are
the markets where there is scope in the near future, for ex, the Asian countries have been
showing good progress and have good potential in the future. Then, it should come up with
innovative products for which there is a need in those markets. Increasing the product lines in
14
such markets will help Komatsu to get new dealers and thereby increase sales and market share
in those countries.
3) Key Issue: Lack of promotional activities.
Analysis: Komatsu did not promote itself when it diversified abroad. Only when it started
increasing its product lines it started to advertise in trade magazines and participate in expo’s
showcasing its variety in products.
Recommendations: Caterpillar’s extensive dealer networks and service policies provided the
customers with assurance on quality, service and value for money. These factors helped to
promote the brand Caterpillar. The best way for Komatsu to market its brand is through ‘word of
mouth’ and ‘improved service’. For this it has to enhance its relationship with its current dealers,
make them feel part of Komatsu and through them communicate what Komatsu stands for. The
effect of this act will help when a customer comes to purchase from a dealer, as there will
definitely be better communication, more emphasis on the core strengths of Komatsu and the
benefits that the customer would get choosing Komatsu over other products. Service centres
represent the company’s importance to customer from a customer’s perspective. Proper
communication, timely service and quick replacements will enhance the brand value.
Financial Perspective
From the early 1970s to 1984, Caterpillar has steadily been losing market share while Komatsu
has been gaining market share, as a result of which it was able to corner 25% of world EME
market by 1984 when compared with Caterpillar’s 43%. One key reason for this shift is that
Komatsu was able to price their products by 30% to 40% below similar Cat equipment.
Komatsu gained cost advantages due to superior production techniques, lower cost of raw
material like steel which cost up to 30% lower in Japan than in US and a huge labour cost
differential of more than 45% with Cat.
In 1977 when the Japanese Yen appreciated rapidly, the management adopted a policy change
whereby manufacturing was to achieve a cost structure that could be profitable even at a worst-
case scenario of yen/dollar exchange rate reaching 180.
15
Key Issue: Yen had seen large fluctuations from 1971 to 1978, which created a huge obstacle for
the export division.
Recommendations: These fluctuations can serve as a huge risk as Komatsu is centrally sourced,
thereby creating inroads in profitability. The problem occurs because of dollar denomination of
products and services, however company can hedge itself with forward contracts to avoid
currency fluctuation problem.
Operations Perspective
Issue: Production plants only in few developing countries which renders it inflexible to changes
in economic environments in global markets.
Recommendations: In order to be more responsive to its customer needs and reduce the time
required to introduce new products, Komatsu has to augment its presence in more countries. It
can enter new markets through licensing arrangements, acquisition of local players or wholly
owned subsidiaries. To manufacture new product lines through existing production lines, flexible
manufacturing should be used at all facilities.
HR Perspective
Strengths:
1) Komatsu had good labour relations: This improved the efficiency of the workers. Mr.
Ryoichi Kawai believed that the employees had monetary as well as other needs like
conducive working environment etc. So he tried to please his employees and conveyed to
them that they were the company’s greatest assets and was valued. He made them feel they
were making great contribution to the company which indeed was true.
2) Comparatively Lower wages: the average wages paid by Komatsu to its workers were less
than that paid by Caterpillar, but still there were harmonious labour relations because the
workers were satisfied and happy to work with Komatsu. No labour unrest.
3) PDCA and management by Policy: Plan, Do, Control and Action was a management cycle
which started with the long term plans announced by the top management team and the
16
company president’s policy statement issued at the beginning of the year. This was also
referred to as Management by Policy. By this system the company ensured that the
employees knew the basic policies, values and the company’s targets extremely well.
The PDCA and Management by policy made the goals very clear to the employees, thus
providing them with guidelines to work and improve their productivity. They could make use
of the learning curve and innovate to keep the company competitive.
4) Excellent leader – Ryoichi Kawai
He inspired the people to do better. The goals and objective at each step or project were
very clear and the employees knew what was expected out of them. This has helped them
to improve market share and reduce costs.
Challenges Faced by Komatsu
Stagnant demand from developed countries would lead to fierce competition in the
markets of developing countries.
Central production strategy of Komatsu exposed it to risks from fluctuating exchange rates
and increased logistical costs of shipping heavy equipment which could result in the loss
of its competitiveness.
Rise in trade friction between the European Community and Japan. A dumping case had
been filed against Komatsu in Europe and there was a threat of imposition of duties which
would again harm its competitive pricing.
17
Recommendations:
Komatsu needs to be more flexible and use different locations for sourcing key
components and machines in order to cut costs. Despite regional options being available a
large number of components were being sourced only from Japan.
The company can opt for currency futures and options which will reduce the foreign
currency risk substantially.
To have an advantage against its competitors, Komatsu can adopt ‘Flanking’ strategy. It
can be the first to enter foreign markets where there the established players are not much
interested and enter into strategic alliances with the local firm or establish its own
facility.
It needs to continue its low prices (Low labor costs and high productivity labor force),
maintain cordial relations with officials of various governments in the wake of more
demand by state authorities, and bring out more variants in each product category before
its rivals.
In order to protect itself from the loss of trade happening due to friction between Japan
and Europe it should concentrate more on markets of developing nations and middle-east
countries where it has lesser market share.
Komatsu should continue acquiring small dealers on a regular basis so that their sales
through this channel increases.
Komatsu should open their own exclusive stores in key strategic locations so that they
can save on training costs of dealers, they should establish direct source of
communication with customers and identify new needs and constantly improve on their
current products.
To protect itself from duties in Europe, it should enter into Joint Ventures with European
companies.
Komatsu should promote its brand through ‘word of mouth communication’ by building
good relationships with dealers as this would result in better communication of the brand
Komatsu from dealers to customers and ‘improved service’ at different service points.
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Annexure
Komatsu’s sales by Geographic region: (percentage wise)
1977 1978 1979 1980 1981 1982 19830
10
20
30
40
50
60
70
Japan
Asia and Oceania
America
Europe, Middle East and Africa
Sales by Geographic Region
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