Komatsu SWOT and PESTLE Analysis

Strength

1. Diversified product and services portfolio: Komatsu Limited has a broad spectrum of product assortment across sectors like ‘Construction, Mining and Utility Equipment’ and ‘Industrial Machinery and others’. The former covers Hydraulic excavator, Wheel loader, Bull dozer, Dump truck, Forklift trucks, recycling equipment, Forest machines and Tunneling machines. The latter division oversees Metal forging and stamping presses, Excimer lasers, Machine tools, Thermo-electric modules and Temperature-control equipment for semiconductor manufacturing. Such a huge diversified portfolio makes Komatsu a one stop solution for OEMs and lends it a great competitive advantage.

2. Globalized sales and operations functions: Komatsu Ltd. is having market presence in many regions along with 203 distributors across North America, Japan, Europe, Latin America, CIS, China, Asia, Oceania, Middle East and Africa. There are 27 assembly & manufacturing plants that are spread across East Asia, North America, Latin America, India, Australia and Europe. Number of Operations in the Manufacturing Operations of Construction, Mining and Utility Equipment amount to 93 and sales Sales Operations of Construction, Mining and Utility Equipment equal to 100. Sales by region to outside customers is very well diversified with sizeable revenue contributions across North America (+59.1%), Latin America(+55.1%), China(+69.2%), Oceania (+72.2%), Africa(+73.4%), Asia (+44.5%) and other like CIS, Middle East and Japan all seeing commendable growth in FY2017. Thus Komatsu has massive market risk hedging opportunities towards regional disturbances and better responsiveness towards market demands as per the requirement of various countries.

3. Komatsu’s connected GEMBA through IOT: This Japanese Multinational Corporation’s objective is to offer growth strategies based on innovation. Komatsu connects its plants, distributors and customers to improve the value generation in its products through innovation, automated and unmanned operation aimed at enhancing safety and environmental performance though solutions like KOMTRAX (Komatsu Machine Tracking system) for construction and utility equipment and the KOMTRAX Plus for mining equipment, SMARTCONSTRUCTION & AUTONOMUS HAULAGE SYSTEM which are basically intelligent Machine Control models designed to streamline and automate construction for driverless dump trucks and other systems. The overall objective of this construction conglomerate is to help customers overcome GEMBA (workplace) related issues. Komatsu nurtured this workplace capability through TQM (Total Quality Management) over the years, thereby enhancing competitive manufacturing.

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Weakness

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Opportunity

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Threat

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Political

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Economic

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Social

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Technological

1. Creating customer value by leveraging technology: The mining and construction equipment industry bases its growth strategies on customer centric innovation. Thus, ICT (Information and Communication Technology) and IoT (Internet of Things) are being widely used by companies within the industry to develop such products, services and solutions. Komatsu is using ICT through its Autonomous Haulage System and SMARTCONSTRUCTION which allows it to “visualize” jobsite information. This is a crucial capability as it gives it the power to understand the data and define the ideal conditions that customers look for in the long run and compare it to the reality that will be faced in the future.

Legal

1. Increasingly stringent environmental laws and regulations: Komatsu has its operations spread out over a number of countries and so it has to follow the varied and stringent environmental laws and regulations of all those countries at all times. The regulations of Japan, the United States and Europe mainly focus on emission reduction and require Komatsu to reduce NOx and PM emission levels by 90%. These regulations are being implemented stage wise since 2013. Komatsu is thus being forced to divert a great amount of management funds towards R&D and develop products that meet these regulations.

Environmental

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