1. Globalization of Komatsu
Digging Out of Trouble
Presented By
Araro Jireh
Ary Andana
Bambang Wijarnako
Exc. 33 A - MMUGM - Jakarta

2. Globalization of Komatsu 2
The Content
Komatsu at a Glance
Komatsu’s Business Focus
Komatsu’s Performance
Strategies for Competing in International Markets
Conclusion

3. Globalization of Komatsu 3
Komatsu at a Glance
Komatsu 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: 146
Companies accounted for by the equity method: 35
Komatsu Ltd: 1

4. 4
Komatsu’s Business Focus

5. Globalization of Komatsu 5
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: Launcehd a company wide quality
control programme
Komatsu Domestic Focus

6. Globalization of Komatsu 6
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 share
Komatsu 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

7. Globalization of Komatsu 7
Komatsu’s Business Focus
Internationalization (1982 – 1989)
1982: Shoji Ogawa took over operational leadership
Internalization Phase
Shoji Ogawa 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
In the late 1980s: Nogawa established two key overseas
production plants: Tennessee and Newcastle
Diversification: expanding the geographic into non construction
machinery production to reduce

8. Globalization of Komatsu 8
Komatsu’s Business Focus
Regionalization and Localization (1987 – 1995)
1988: Masao Tanaka appointed as CEO
Tanaka strategies: end price discounting, high sales-pressure practices,
increase regional capacity by having autonomous bases of operations,
including finance, manufacturing and sales in the three core markets:
Japan, US and Europe
Tanaka replaced by Tetsuya Katada who introduce further local
participation in the different subsidiaries to raise their effectiveness in
their respective geographical contexts.
Katada created 3 G strategy: Growth, Global, Groupwide to gain
double sales in the next five years. He also implemented
Localizing Management and Product Diversification strategy.

9. Globalization of Komatsu
• Geographic Expansion
• Internal Restructuring
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Komatsu’s Business Focus
Globalization - Satoru Anzaki (1995 – 2001)

10. Globalization of Komatsu
Geographic Expansion
o Asian market (Singapore and Indonesia)
o Joint ventures
 Mannesmann Demag AG
 Modular Mining Systems, Inc.
 Larsen & Toubro Ltd.
Not successful on asian market expansion.
• Global demand declined, 25% (1997) to 15% (1999).
• Japan’s share declined from 30% to 20%.
• Net income loss ¥ 12.3 billion (1999).
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Komatsu’s Business Focus
Globalization - Satoru Anzaki (1995 – 2001)

11. Globalization of Komatsu
Internal Restructuring
o Consolidating factories
o Reducing the number of board directors
o Diversifying top management on International Advisory
Board (IAB)
Successful, but still suffered on domestic market and product
demand to getting worse.
Net loss of ¥852 billion ($710 million).
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Komatsu’s Business Focus
Globalization - Satoru Anzaki (1995 – 2001)

12. Globalization of Komatsu
• Company Restructuring
• Globalization Efforts
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Komatsu’s Business Focus
Globalization - Masahiro Sakane (2001 - 2007)

13. Globalization of Komatsu
Company Restructuring
o Reducing the workforce by 10%
o Consolidating businesses and affiliated companies (Japan
and abroad)
o Developing the promotion of human resource
development throughout Komatsu’s global operations.
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Komatsu’s Business Focus
Globalization - Masahiro Sakane (2001 - 2007)

14. Globalization of Komatsu
Globalization Efforts
o Expanding Geographically
o Expanding core construction and mining equipment,
“Global Cycling System for Construction Equipment”.
Successful. Increasing net income from ¥3,009 billion (2003)
to ¥114, 290 billion (2006).
14
Komatsu’s Business Focus
Globalization - Masahiro Sakane (2001 - 2007)

15. Globalization of Komatsu
• Global Growth Efforts
• Strengthening Organizational and Leadership
Capability
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Komatsu’s Business Focus
Globalization - Kunio Noji (2007 - 2010)

16. Globalization of Komatsu
Global Growth Efforts
Encouraging the change in geographic mix
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Komatsu’s Business Focus
Globalization - Kunio Noji (2007 - 2010)
Change in Komatsu's Geographic Mix 2004-2008
Percentage
ChangeRegion 2004 2008
Japan 30.2% 15.2% -49.7%
North America 21.2% 15.6% -26.4%
Europe & CIS 16.0% 21.9% 36.9%
Asia & Oceania 12.0% 16.7% 39.2%
China 8.7% 9.3% 6.9%
Middle East & Africa 6.7% 11.6% 73.1%
Latin America 5.2% 9.7% 86.5%

17. Globalization of Komatsu
Strengthening Organizational and Leadership
Capability
o Raising internal awareness
o Conducting presentations of “ the Komatsu Way”
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Komatsu’s Business Focus
Globalization - Kunio Noji (2007 - 2010)

18. Globalization of Komatsu
Strengthening Organizational and Leadership
Capability
18
Komatsu’s Business Focus
Globalization - Kunio Noji (2007 - 2010)
Seven Ways of KomatsuFive Principles
1. Vitalize the functions of 1. Commitment to
the board of directors. quality and reliability
2. Take the initiative in 2. Customer oriented
communicating with all
our stakeholders.
3. Comply with the rules of 3. Defining the root
the business community. cause
4. Never put off responses 4. Workplace (genba)
to risks. philosophy
5. Keep thinking about your 5. Policy deployment
successor.
6. Collaboration with
business partners
7. Human resource
development

19. 19
Komatsu’s Performance

20. Globalization of Komatsu 20
Komatsu’s Performance
Net Sales

21. Globalization of Komatsu 21
Net Income
Komatsu’s Performance

22. Globalization of Komatsu 22
Sales by Region
Komatsu’s Performance

23. Globalization of Komatsu 23
Top 10 Market Share 2009 – Global Construction Machinery Industry
Komatsu’s Performance

24. 24
Strategies for Competing in International Market

25. Globalization of Komatsu 25
Strategies for Competing in International Markets
Five 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

26. Globalization of Komatsu 26
Strategies for Competing in International Markets
Why 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

27. Globalization of Komatsu 27
Strategies for Competing in International Markets
Strategic Options for Entering International Markets
Export Strategies
Licensing Strategies
Franchising Strategies
Acquisition Strategies
Greenfield Venture Strategies
Alliance and Joint Venture Strategies

28. Globalization of Komatsu 28
Strategies for Competing in International Markets
The 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

29. Globalization of Komatsu 29
Strategies for Competing in International Markets
The Three Main Strategic Approach for Competing Internationally

30. 30
Conclusion

31. Globalization of Komatsu
31
Conclusion
Macro environment determine business focus and corporate strategy
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
Komatsu’s strategy could not handle financial crisis and global
recession very well
Lack of diversity on “Senior Leadership Team”
Different leaders had different strategy

32. Globalization of Komatsu 32
Thank You

33. Globalization of Komatsu 33
Strategies for Competing in International Markets
The Diamond of National Advantage
DEMAND
CONDITIONS
Home market
relative size;
domestic
buyers’ needs
FIRM STRATEGY,
STRUCTURE, and
RIVALRY
Different styles of
management and
organization;
degree of local
rivalry
FACTOR
CONDITIONS
Availability and
relative prices
of input (e.g.
labor, materials)
RELATED &
SUPPORTING
INDUSTRIES
Proximity of
Suppliers, end user
and complemen-
tary Industries