New fleets sail into international waters

In an article that has become a classic, Prahalad and Hamel (1990), to exemplify the meaning of “strategic intent,” describe how Komatsu, the Japanese heavy equipment enterprise, organized itself in order to catch up with and overtake Caterpillar, an icon of the first wave of internationalization and, so far, unquestionable leader in global markets. The authors highlighted that to create strategic intent, Komatsu instituted a logo that consisted of a C within a circle. This was spread all over the firm to convey the idea that the strategy was to “encircle Caterpillar.” As things turned out, Komatsu was highly successful.

The late 1970s and the 1980s were rich in unforeseen events such as this. Probably, the first of these materialized on the social front. May 1968 symbolized social unrest that extended to several countries, Brazil included. On the economic front, financial globalization became stronger, as previously mentioned. However, on the corporate front, two especially weighty events led to structural changes. The first and most visible consisted of the two oil crises, in 1973 and in 1978. The second, subtler and more gradual, was a change in market regimes.

Up to the 1970s, the market regime could be classified as a seller's market. As demand exceeded supply, what was produced was consumed. Thus, producers were the party setting the rules. Corporations' chief challenge was to expand their production capacity.