CATERPILLAR

vs
KOMATSU
Namrata Sharma(48)
 Industry Selected
• Manufacture and sale of construction and
mining equipment, utilities and industrial
machinery.
• Two Global companies selected:
 CATERPILLAR - US
 KOMATSU - Japan
Industry’s Dominant Economic Features

• Industry Size: US $100 billion

• Industry Growth Rate: 20 %
• Capital Intensive
• Highly Cyclical
• Recently: Renewed investment in mining and
industrial sectors
• Weak Housing Market
• Emissions standards
 Selected Industry Players
Caterpillar Komatsu
Industry $51.324 billion $20.422 billion
Share
Product machinery, engines and financial construction and mining
Portfolio products equipment, industrial machinery
and vehicles, logistics, electronics
and other solutions-based
operations
Business setting higher standards by providing safe, innovative
Model maintaining a watchful eye on the products and services that best
ever-changing shift in regional meet the needs and expectations
dynamics and responding with of its customers around the world
new product innovations and
manufacturing flexibility
 Other Competitors

- The Volvo Group

- CNH Global
- Ingersoll Rand
- Terex Corp.
- Deere and Company (John Deere)
- Ford Motor Company
- Kawasaki Heavy Industries, Ltd.
 Scope of Companies
SCOPE CATERPILLAR KOMATSU

construction and mining

equipment, industrial
Earthmovers, Road building machinery and vehicles,
Horizontal machines, mining related logistics, electronics and other
equipments solutions-based operations

Vertical

nearly 500 locations in 50

countries. Over half of the
sales outside the US; global
Geographical dealer network in 200
countries

12/07/2021 SIMSR 6
 Industry Driving Forces
Increasing population hence increasing construction activities
Natural calamities like earthquakes, increase the need for
infrastructure
Industry typically rises and falls with the general economy, currently
slow due to global downturn
Increased dependence on suppliers and supply chains
Growth in overseas operations
Strong Distribution Network
Developments in Information Technology for conducting business,
managing suppliers and customers
Quality, Reliability, and Serviceability
Environmental Regulation, Certification, and Standards
Rise of emerging economies - especially China and India

12/07/2021 SIMSR 7
 Key Success Factors
CATERPILLAR KOMATSU

•Culture •Quality and reliability

•Operations •Emphasis on corporate governance
•Business Opportunities •Reinforcement of manufacturing
•6 Sigma competitiveness
• Cost Reduction •Maintaining good relations with
• Product Support stakeholders
• Rental Leadership •Strength of collaboration (organization,
• Best Distribution technology)
• Quality and Reliability -cross-functional collaboration among
• Best Products, Services, Solutions sections of development, manufacturing,
• Order Fulfillment sales and services
• People •Continuously sensitive character
• Social Responsibility -Industriousness of Japanese people
-Ability to collect and analyze data

SIMSR 8
 INDUSTRY ATTRACTIVENESS (PORTER’S 5 FORCES
MODEL)
Bargaining power of Suppliers- Low
•Supplier concentration-Low
•Differentiation of inputs- Low
•Impact of input - high
•Threat of forward integration - low

Threat of New
Entrants Threat of
•Barriers to Entry – Substitutes- High
High Industry competition •Relative price
•Huge Capital • Rivalry amongst existing players- High
performance of
requirement, • Fixed cost - high
substitutes – low
•Brand Identity – high • Exit Barriers - high
•Switching cost -
•Need of Strong high
Distribution network
•Environmental and
safety regulations
Bargaining power of buyers- Low
•Buyer Concentration-Low
•Switching cost-High
•Brand Identity – high
•Product differences - low
12/07/2021 9
SIMSR
 Product Portfolio - CATERPILLAR
Machines
The Caterpillar equipment product line, consisting of more than 300 machines, sets the standard
for our industry. We plan to help you meet your needs with our equipment, with our distribution
and product support system, and the continual introduction and updating of products

Engines
Caterpillar is the world's largest manufacturer of medium speed engines, as well as one of the
world's largest manufacturers of high speed diesel engines, with ratings available from 54 to
13,600 hp (40 to 10,000 kW).

Work Tools
Work Tools tailor Cat machines to the specific requirements of a customer's working needs.
Caterpillar work tools enhance productivity and utility of Caterpillar machines, equipping them
for a wide range of tasks and operating requirements, and providing total system solutions for any
job application.
 Product Portfolio - KOMATSU
Construction & Mining Equipment
Komatsu, as one of the world's largest manufacturers of construction,
mining and utility equipment, is proud to provide our customers with
leading-edge technology and excellent after-market support, and the
quality you can rely on.
Compact Equipment (Utility)
Three products. Compact Excavators or mini excavators used primarily for
digging in confined spaces. Backhoe Loaders are both loaders and
excavators. Skid steer loaders are used for cargo, snow removal and
farming.

Forest Machines
Designed for mechanized logging. Forwarders,
harvesters, combi machines, tracked machines, etc.
 COMPARATIVE RATIO ANALYSIS FOR THE FINANCIAL YEAR 2009-10
Ratios Nike Adidas Remarks

Profitability Net Profit margin 8.03 % 2.36 % •Premium pricing

•Greater operational efficiency

Nike – liberal dividend policy,

Payout Ratio 35.6% 16.67% paid every quarter

Current ratio 3.5 1.6 Better working capital

management by Adidas

Financial Condition Adidas took over Reebok in

Debt Equity ratio 0.06 0.47 2005 for 3.8 bn USD cash

Book value/share 18.92 24.47 Adidas- higher reserves

Easier for Nike to generate cash

Return on Equity 16.7 6.9
internally
Investment Returns
Return on Capital 14.5 4.1 Efficiency of capital investments
– greater shareholders earnings

Dividend Rate 1.08 0.35

EPS $ 3.03 $ 2.1 Nike Dividend rate 0.25

Risen for both after directs

Management Efficiency Inventory Turnover 4.4 3.3
selling - lower inventory

P/E ratio ( as on 11th Adidas - greater growth

Price Ratio 23 31.3
March 2010) prospects for future

reflective of market’s 12
Market Capitalization 34.06 billion USD 10.53 billion USD
perception of the company
CATERPILLAR’S SWOT

STRENGTHS
Caterpillar dominates the WEAKNESSES
market
Growth through Lack of good
production not management
acquisition Tied to a finite resource
Distribution System High debt structure
High brand recognition Dealers’ low confidence
Employee relations are of Caterpillar’s
awesome forecasting system
6 sigma

OPPORTUNITIES THREATS
Leverage distribution
channels Lack of qualified
Expansion in third world management
countries
Competitors getting much
Increasing construction
better at copying technology
activities due to growing
Rise in raw material prices
population
Mining dependent on coal
Tax breaks for better
prices and world GDP
emissions
Economic recession
Hydrogen fuel and solar
Tougher emission laws
turbine
KOMATSU’S SWOT
STRENGTHS
Strength of collaboration
(organization, technology) WEAKNESSES
-cross-functional collaboration
among section of development,
manufacturing, sales and
service.
Difficulty to enter
Strengthening corporate foreign markets
governance
Continuously sensitive by one company
character -Industriousness
of Japanese people -Ability to
without suppliers
collect and analyze data

OPPORTUNITIES
Expansion in third world THREATS
countries Competitors getting much
Increasing construction better at copying
technology
activities due to growing
Rise in raw material prices
population Mining dependent on coal
Tax breaks for better prices and world GDP
emissions Economic recession
Hydrogen fuel and solar Tougher emission laws
turbine
 CHALLENGES

CATERPILLAR KOMATSU

• To deliver innovative new

products and experiences in a
more sustainable way •Increase market share
• Focus on getting close to •Making capacity cost more
market, to create new, digital efficient
solutions and to customize
products for consumers more
quickly than ever before

12/07/2021 SIMSR 15
 RECOMMENDATIONS
CATERPILLAR KOMATSU

• SHORT-TERM •Differentiate its products through improving it

product mix by further implementation of
-Recruiting highly qualified technical people “Future and Frontiers” projects.
-More efficient new product introductions
•Further investment into R&D into “Future and
-Improve company image Frontier” project used in construction and EME
• LONG-TERM will enhance company’s product mix adding
- Team up with other competitors to gain specialized equipment to the previously
created full-range of earth moving machinery.
market share
- Leverage distribution channels to remain •New and differentiated product mix will
competitive attract independent dealers who would be
- Improve Union Deals interested in selling extended range of
- Promote service contracts equipment.
- Biodiesel
- Introduce new lines of alternative fuel heavy •Low prices and reliability of specialized
machinery equipment will attract consumers.
12/07/2021 SIMSR 16