The business environment in which Komatsu is operating, appears to be worst because the competition is increasing and the demand for the products is decreasing. On the other hand the biggest player in the industry is generating great losses which might indicate the poor environment of the industry. The major construction work in developed countries after the World War II is about to complete while the construction work in developing countries seems to be slow as compare to the developed country. The business environment of Komatsu has seen some major mergers and acquisitions primarily due to the increase in competition and reduction in demands for the products.
The internal business environment of Komatsu seems to be quite positive and satisfying. The management has taken some serious steps in improving the quality of the products; along with this the management has also taken several measures to reduce the costs of their products. On the other hand the senior management of the company has also launched a new project named Efficient Production Oriented Choice Specifications “EPOCHS”, the project aims to increase the production without decreasing the quality of the products. The new project will also allow Komatsu to cater the requirements of the international demand of the products.
The research and development department of Komatsu is also proactive and keen to develop the products which are aligned with the latest technologies. The R&D department of Komatsu is also expandingwhich can play a vital role in increasing the revenues of the company in future. The R&D department of Komatsu is has a major role to bring innovation in the products. The products of Komatsu arealso greatly welcomed by the customers, many of its customers are very satisfied with the products of Komatsu and after sales services are also very improved as compared to its competitors.
Issues/Problems in the business of Komatsu:
There are many issues and problems in the business environment of Komatsu. The main issue pertaining to Komatsu is the manufacturing of the products; the case study scenario suggests that Komatsu is manufacturing its products in only three countries. Every country has its own specific requirements regarding the EME products and restriction of manufacturing process will have some implications. Firstly, Komatsu might fails to recognize the specific needs of the products in a particular country; this may cause reduction in the potential revenue of the company. On the other hand, the distribution costs may be increased as a result of this limited manufacturing; it is clearly evident from the case study scenario that the distribution cost is increasing drastically.A part from the costs, fewer production lines will also increase the time requirement for the dispatch of the machinery, the nature of the products of Komatsu is heavy and bulky, it usually took long to deliver the products and if the distance is also increased it may take more time to deliver.
The second issue with Komatsu is the little presence in the American market; it is clearly evident from the case study scenario that American market accounts for only approximately 5% of total revenue of Komatsu. It can be said that the U.S. market is one of the biggest markets in EME industry and Komatsu is paying little consideration to this market…………………..
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