Part-C
1. How was Komatsu able to evolve from a $169 million company with low-
quality products to become a real challenge to Caterpillar by the early 1980s?
How would you evaluate Mr. Kawai's performance?
Answer- In 1963 when, after the government decided to open the industry to
foreign investors, Cat announced it would enter the market in partnership with
Mitsubishi. At this time, Komatsu’s sales were $168 million and the products were
below world standards.
Komatsu was able to evolve due to following initiatives –
In 1964, Mr. Kawai introduced a new style of management called-
“Management by Policy” –i.e., the basic policy and value of the target must
be clarified so that all the staff members can fully understand what the
company is aiming for in a specific time period.
Implementation of the policy- “Project A” which was launched after Cat’s
one-year existence in the Japenese market. It aimed to raise the quality of
Komatsu’s middle-sized bulldozers to Cat’s level – which in turn instituted a
new system of control, the “Plan, Do, Check, Act” cycle (PDCA) that
ensured constant progress was made towards those objectives and to focus
them on the policy that Kawai established at all levels of the organization.
As soon as any new project was announced, it was ensured to implement the
PDCA cycle.
All these initiatives were in sync with philosophy of Total Quality Control
program set up by Mr. Kawai’s father, which TQC program had raised
awareness of the many different dimensions of quality and had involved all
workers in discussions about how to improve quality.
Further Projects – B, C and D were also focused on improving the
performance of the products to bring them at par with Caterpillar’s.
Therefore, by following these initiatives the company focused on attaining the
broad policy objective and sales significantly increased from 50% to 65% by 1970
and by 1982- Komatsu was able to dethrone Cat.
Coming to Mr. Kawai’s performance- By going through a series of initiatives
taken by him, it can be said that Mr. Kawai was a leader with vision
(foresightedness). He believed in participatory style of leadership where
everyone’s decision was heard
2. Why did performance deteriorate so rapidly in the mid-1980s? What grade
would you give to Mr. Nogawa's term as CEO?
Answer- The construction industry was in crisis in mid 1980s, the value of yen
depreciated from ¥239 per dollar to ¥169 per dollar. Due to the crisis, Mr. Nogawa
focused on the short term strategy to focus more on cost-cutting and aggressive
sales tactics and also reduced dependence on the construction industry. Instead of
focusing on internationalization.
Lowest possible grade would be given to Mr. Nogawa because he was a resistant to
change and was an autocratic leader. He focused on cutting costs and lowered
price by making massive capital investment, research and testing activities but
none of it was effective. That resulted in poor performance and profits dropped. It
also led to his dismissal from the position.
3. How appropriately did Mr. Tanaka deal with the problems he inherited?
What is your evaluation of his brief tenure as CEO?
Answer- Mr. Tanaka responded quickly to the crisis competitive situation in the
domestic market before turning to the larger strategic goals of internationalization
and product diversification. He emphasized that his most pressing policy goal was
“restoring order to the domestic marketplace.” Instead of price wars he reduced
the production. So, Mr. Tanaka ended the practices of price discounting and high-
pressure sales. He laid the groundwork for more rational, fair and orderly
competition in the domestic market which led to increase in the bottom line.
Mr. Tanaka also pursued internationalization much more aggressively than his
predecessor and focused more on establishing autonomous bases. The results of
this were that profits increased but the market share decreased.
Evaluation of Mr. Tanaka’s performance- A good strategic thinker as he pulled
the company out of the problems. Diplomatic Leadership Style was followed by
him and management style was stable and transparent.
4. How effectively did Mr. Katada take charge? How would you assess his new
vision for the company? His new strategy? His new cultural and behavioral
objectives? What grade would you give him for his performance?
Answer-
Mr. Katada took charge - Mr. Katada in true sense was the most innovative
leader out of all the leaders. He challenged the company’s decade old processes
and philosophies. He took charge effectively through participatory style of
management, wherein he encouraged offsite meetings.
His new vision of the company, including new company goals and culture,
affected the entire company. The new mission of employees Top Down Effective
strategy through the change in new management style which helped managers
participate in shaping Komatsu’s new mission. The slogan of the organization was
changed to “Growth, Global, Groupwide” or “Project G: globalization which
supported the new culture and it was less dependent on traditional policy like Total
Quality Control. Though all this was abstract in nature, the employees supported
and responded creatively.
Grade for his performance- It was due to Mr. Katada’s new strategic initiative of
Project G that the company rose again and gave competition to their competitor
CAT. The company transformed itself from construction equipment company to “a
total technology enterprise” under his leadership. Therefore, his performance was
exemplary and imperative for the overall success of the company.