ABSTRACT
Komatsu, Ltd. is one of Japan's largest heavy industrial manufacturers. The company was organized along three major lines of business: construction equipment, industrial machinery, and electronic-applied products. Komatsu was the world's second-largest manufacturer of a complete line of construction equipment. Construction equipment and industrial machinery were considered core businesses while electronics-applied products and other operations were considered new businesses. The firm's product line contained more than 300 models, including bulldozers, hydraulic excavators, wheel loaders, and dump trucks. Product engineers were expected to create several alternative designs for each major subassembly of a new product. Two factors were taken into account when choosing between these alternatives: quality and cost. A new design was adopted only if it achieved the desired levels of both quality and cost. One of the proposed designs was for a higher-quality but more costly product, and the product engineers would explore ways to manufacture it at a lower cost.
