Strategies of Japanese Firms
in the Brazilian Market
Brazil is another thriving emerging economy with a sizable popu-
lation and a vast natural resource basis. Among the emerging
economies, Brazil is experiencing phenomenal growth. is chap-
ter focuses on Japanese rms in Brazil, such as Komatsu (construc-
tion equipment rm), Toyota (auto manufacturer), Bridgestone (tire
manufacturer), and Epson (personal computer rm).
is book presents (1) three types of competence that form network capa-
bility—technology competence, customer competence, and linkage compe-
tence; and (2) the concept of product architecture as a critical dimension of
product strategy. Chapter 8 focused on the cases of Japanese global rms
in India. is chapter examines the practices of Japanese global rms in
Brazil—particularly the cases of Komatsu, Toyota, Bridgestone, and Epson.
9.2.1 A Brief Overview
e Komatsu case in Chapter 7 indicated that the large portion of its global
market sales is from emerging markets. e Chinese market is the largest
(21%), the Latin American market is also sizable (14%), and the prospect
138 • Building Network Capabilities
of growth is great. Here, we consider the case of Komatsu Brazil (Park and
Shintaku, 2014). In Brazil, the company has two plants, one marketing
business unit, and ten distribution centers. Komatsu do Brazil Ltda. (KDB)
was established in 1970 in response to “the home-made tractor law of 1969”
by the Brazilian government. However, with no real sales record and no
actual production plant, the Brazilian government rejected KDB’s “home-
made bulldozer” proposal. us, KDB decided to form a strategic alliance
with Franco-Nevada Corporation FNV, an indigenous Brazilian heavy
machinery maker. Komatsu FNV (KFNV) was formed in 1973. From 1975
on, the large scale of production, marketing, and aer-sales services were
achieved. Subsequently, it was recognized as a Brazilian home-based man-
ufacturer. Its main product lines are construction and mining equipment.
In the Brazilian market, KFNV reports more than 80% of market share
for heavy construction equipment. Mining equipment is mostly imported
from the United States, Japan, and Germany. KFNV’s aer-sales services
network is extended to 23 states of Brazil. Distribution centers keep ade-
quate inventory of key component parts and services agents handle minor
expendable parts. e key point is that KFNV is prepared to assume all
aspects of aer-sales services needed through KOMTRAX, which reduces
the response time in case of any maintenance needs or performance fail-
ures. “Domestic rms rst” by Brazilian government’s protection policy
denes the nature of the Brazilian construction machinery/equipment
market. us, customers’ choice options are limited as well. e vast land
area dictates very high demand for huge construction equipment with
large tires; a small number of protable coal mines hardly require large-
scale shovels or dump trucks. e market leaders are Caterpillar (United
States), New Holland (United States), Case (United States), and Volvo
(Germany). e market share details of construction equipment makers
are Komatsu (20%+), Caterpillar (30%+), and others (15%). Other makers
are Hyundai Heavy Industries and Doosan Infra Core (Korea) and SANY
(China) that appeal through their production facilities in Brazil.
9.2.2 Construction Equipment Usage Patterns
in Brazil and Komatsu’s Response
e ratio between urban and rural areas is 9:1 (Figure9.1). rough the infra-
structure expansion, more rapid growth is expected in rural areas. Even with
the same types of construction equipment, the usage patterns in cities and farm
lands are quite dierent. In rural areas, the construction equipment needed to
Strategies of Japanese Firms in the Brazilian Market 139
Major business center cities of India and Brazil.

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