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Evolution From a Low-Quality Product to a Challenge to Caterpillar
Through the leadership of the firms CEO, Ryochi Kawai, Komatsu made deliberate efforts to increase clients satisfaction, vertical integration, and total quality management practices. The firm sought to provide innovative solutions to problems and reduce costs incurred while, at the same time, was focusing on future growth. The institution also explored strategic human resource practices to ward off any predatory tendencies by the rival giants Caterpillar and Mitsubishi, who posed the danger of poaching the best talents from the firm.
According to Hamel and Prahalad (63), the firms programs in research and development programs won many accolades all over the world at the time. The firm also instituted a well-integrated business process that was geared towards efficiency that was also put in place. As such, the firm could cut on any unnecessary cost and optimize on gains.
Deteriorated Performance in the Mid-1980s
In the 1980s the construction sector was hit by contraction of income, occasioned major price wars by the industry players. At the same time, the appreciation of the Japanese yen and the trade frictions of the decade of the eighties were also major setbacks to the income of the company. I think the CEO did well trying to secure the firm other than focusing on the profitability of the firm in the short term.
Problems Solution by Mr. Tanaka
Tetsuya Katadas initial action at Komatsu was to reverse the declining income at the firm. He focused on a strategy that moved away from the traditional way of catching up and surpassing competitors, which he referred to as bureaucratic and one that was anti enterprise. He focused on a non-competitive approach to the market, which geared to dialogue more. He regionalized production and reduced any dangers that could be occasioned by the appreciation of the yen. He further entered into a joint venture with a U.S. Dresser focused on the firms 3G project of growth, global and group-wide. The firm was also able to diversify effectively. Katadas takeover strategy was appropriate to the firm since it decentralized management and production, bringing in new economies of scale (Hamel and Prahalad 67).
New Cultural and Behavioral Objectives
In my view, Tanakas new charge at the firm was above board. His strategy to make Komatsu an intensive technology firm at the time was one of the major pioneer efforts by large companies. His diversification strategy from the construction sector to hardware and software was a prudent approach for the firm (Hamel and Prahalad 68). Engaging in a wide range of business activities is critical for business organizations to avoid detrimental effects in case of a market halt in one line of business.
His cultural objectives and corporate objectives geared towards globalism, and they were, in effect, excellent approaches for the firm to become global. With the level of business integration evident in the current business environment, I would give Tanaka a B+ in his effort to revive the firm at the time.
Works Cited
Hamel, Gary, and Coimbatore Prahalad. To revitalize corporate performance, we need a whole new model of strategy. Harvard Business Review 22.1 (1989): 63-76. Print.
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