The competitive environment of Komatsu Ltd.

The competitive environment is the dynamic external system in which a business contest and operates, where there is more than one seller selling the homogeneous products, due to which business faces many challenges as abuyer of the product of the business, have options available in the market. Competitive market broadly includes two types of competitors i.e. direct competitor are competitors that are providing same types of products and services and indirect competitors who although are providing different products or services but are alternative options for customer to meet their need thus included in competition loop.

Komatsu Ltd. was dealing in thehigh competitive environment. It looked like the business involved in any sort of indirect competition. Komatsu however was one of the largest heavy industrial equipment manufacturers with their core business from which they yield 80% of the revenues consisting of three product line i.e. industrial machinery, construction equipment and electronic-applied product. Komatsu was thesecond largest manufacturer of complete line of construction equipment.

Negotiation power to thesupplier is high, since Komatsu Ltd. is not dependent on any mining company as it is the separate part of Takeuchi Mining Company. The firm set a target cost for its supplier and expected thesupplier to agree and find awayto achieving it. Management also feels that these negotiations were one-sided.
Komatsu Ltd. Harvard Case Solution & Analysis

Negotiation power of Customer is high, since the customers have other options available in the market providing the same products.

External analysis on industry’s competitive environment of Komatsu Ltd.

The threat of new entrant is low for the business as this sector required high-techresources, investment and market consists of only four market holders.

Competition in the market is very high,although Komatsu Ltd. competing as a second largest manufacturer with a complete line of construction equipment contained more than three hundred items including abulldozer, hydraulic excavators, wheel loaders and dump trucks. Komatsu had 30% of the domestic market share reflecting although as the largest player in the market in the key item of construction sector .i.e. Excavator, which is an essential component for every construction company as it could perform multiple applications like digging, carrying, moving and loading.

The threat of substitute in the business of low as the buyer normally don’t have analternative available in replacements of the industrial equipment.

It seems that other factors like political situation and economic conditionsare in favour of Komatsu Ltd. Although Komatsu mayhave to take into account following factors;

Komatsu has to comply with health and safety legal requirements, environmental aspect as both their processes and productsmay have an impact on the environment.

Komatsu is dealing in the business where there is regular innovation in industrial machines and construction equipment. Komatsu hasconsideredTechnological aspect.

Adoption of “3g” strategy would also assist the company to expand aggressively.

Although Komatsu Ltd.20% of corporate revenues pertains with different newbusiness including construction and unit housing andproducts like chemical and plastic..................................

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