Globalization And Komatsu Essay, Research Paper

Globalization and Komatsu

The advent of computers and information technology over the past 5 years has made it seemingly more accessible for companies to take their vision and products worldwide. In the 21st century, it has become vitally important for these companies wishing to achieve globalization, to harness the capabilities of the Internet to establish or increase their position within the Global Economy. One such company looking to globalize their operations and utilizing this new technology is Komatsu Ltd.

Komatsu s most formidable competitor in today s Global Economy is Caterpillar, Inc. With recorded sales of $16.5 billion in 1996, almost half of Caterpillar s earnings were attributed to sales outside of the United States. This information would appear to indicate that Caterpillar has a firm hold on the Global market. Conversely, Komatsu has had a difficult time establishing itself internationally. Komatsu recorded total sales of $9.4 billion in 1996, with only $3.2 billion of that total, credited to sales outside of Japan. So what is Komatsu s plan to close the gap in international sales with Caterpillar? An examination of Komatsu s Mid-range Management Strategy, G to the 21st clearly outlines their objectives and strategies. Komatsu is focusing on 3 G s : Growth, Global and Group-wide.

One of the ways Komatsu plans on expanding its business worldwide is through e-KOMATSU . With help from the World Wide Web, Komatsu plans on increasing its worldwide presence and focusing on Quality and Reliability . This increased visibility through the Internet will help Komatsu develop into a more accessible company enabling it to reach potential customers and larger target markets worldwide.

Would Komatsu be better off it focused its resources on the Japanese markets? The answer to this question involves not only looking at Komatsu s current objectives worldwide, but also examining the current situation of the Japanese economy and the Global economy. A chart on Komatsu s website indicating Global Trends in Construction and Mining Equipment Demand by Region , does not justify the position that Komatsu should focus its attention on the Japanese markets. According to the chart, which does not include numbers for the Japanese markets, Komatsu would be better suited to focus its attention on the European market. (Please see the attached chart A7) The European market shows the most promise with an increase in demand of 38 thousand units in 1998, to 43 thousand units in 1999. This chart also indicates a drop in half of the units demanded in the Asian region of the world.

Another chart on the Komatsu website outlines the forecasts for Construction Investment in Japan . (Please see the attached chart A4) An overall examination of this chart focusing on the years 1994- 2000, indicates that there has been a steady decline in construction investment for Japan. If Komatsu were to focus all of its resources and attention on the Japanese market, which by all indications is moving in a negative direction, Komatsu would be failing to realize the growth potential in other areas of the world. This position would stagnate Komatsu s desire and intentions to be a Global competitor with companies like Caterpillar.

Komatsu s management plan for the 21st century, has clearly addressed the concerns for increasing its Global position amongst larger companies like Caterpillar. It appears as though Komatsu has evaluated all of their options and have chosen the route that would be most feasible and profitable for the company, at the same time achieving their goal of Globalization. Considering all of these facts, I believe it will be only a matter of time before Komatsu reaches its goals and becomes the World leader in construction equipment.