Caterpillar and Komatsu in 1988

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Prize winner

Case

Reference no. 393-069-1

Subject category: Strategy and General Management

Authors: Stephen A Allen III (Babson College)

Published by: Babson College

Originally published in: 1993

Version: October 1991

Length: 33 pages

Data source: Published sources

Topics: Global strategy; Changing business practices; Competitive moves, countermoves; Floating exchange rates; Profitability drivers

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Abstract

This is the second in a three-case series, (393-068-5 and 393-070-1). This case describes the competitive positioning and performance of Caterpillar and Komatsu during 1985-88. It details a wide range of strategic changes initiated by Caterpillar, including product line expansion, aggressive pricing, changes in international capacity balance, outsourcing, and a program for factory floor redesign and advanced automation (Plant with a Future program). For Komatsu, major themes include adjusting practices to a rapidly appreciating yen and establishing manufacturing facilities in the US and Europe. Data permits students to evaluate impacts of the various initiatives of each company on its recent and prospective profitability. A background note ''393-071-5'' is available to accompany this case series.

Location:

World

Industry:

Construction machinery

Size:

USD10 billion revenues (Caterpillar), USD6 billion revenues (Komatsu)