Komatsu Case Study

There were many issues going on in the Komatsu organization. However, the main disputes include changes in leadership, a slow domestic market, global issues, and focusing too heavily on one competitor. Komatsu had 4 different CEO’s (Kawai, Nogawa, Tanaka, and Katada), in a span about 30 years because the changes that occurred in Komatsu and that they wanted to expand globally. Each CEO had his own strengths and weaknesses, but not all proved to be able to handle the problems inherited from the company. A slow domestic market in Japan, also proved to not help Komatsu. At the time the Japanese (YEN) was depreciating causing more (YEN) to equal one U.S. dollar. Ultimately, Komatsu was slowly losing money with the cost of operations not changing at the time. An overall dependence on the domestic market was not the most profitable idea and the need to expand globally was much needed. Many of the CEO’s were reluctant to expand and this led to the reason for many of the changes in leadership. Komatsu spent …show more content…
Uncontrollable factors that affected the company were the decline demand for large construction equipment. In 1963, the Japanese government allowed foreign investors into the industry which prompted Caterpillar to announce its partnership with Mitsubishi. This became precarious situation for Caterpillar because Komatsu held more than 60% of the Japanese market.
Due to this danger Caterpillar decided to penetrate the Japanese market through a joint venture with Mitsubishi. The result of this was that Caterpillar and Mitsubishi Heavy Industries Ltd. formed one of the first joint ventures in Japan to include partial U.S. ownership. Caterpillar Mitsubishi Ltd. started production in 1965, has been renamed Shin Caterpillar Mitsubishi Ltd… (Jao,