Sample Management Paper on A Strategic Analysis of Mitsubishi Corporation

A Strategic Analysis of Mitsubishi Corporation

Introduction

Mitsubishi Company was established in 1870 by Yataro Iwasaki, its founder. Originally, the company was a shipping entity composed of three old steamships which later morphed into Mitsubishi Motors Corporation in 1950 (Mitsubishi, 2020). Mitsubishi Motors Corporation specializes in the manufacturing of automobiles ranging from passenger vehicles, mini-vehicles, sports car, to trucks (Mitsubishi, 2020). The company is equally involved in the development, design, and manufacture of automobile accessories (Mitsubishi, 2020). The service portfolio of Mitsubishi also embodies the leasing, financial, automobile sales, and insurance arrangement for damaged vehicles (Mitsubishi, 2020). The notable vehicles manufactured by the company include Lancer, Triton, Pajero, and Outlander (Mitsubishi, 2020). Mitsubishi Motors is present in more than 222 locations including regions in Asia, Europe, Oceania, North America, Middle East, and Africa (Mitsubishi, 2020). The company has approximately 79,900 employees distributed across its global factories and offices (Mitsubishi, 2020). The financial report released in 2019 showed that the net sales increased by 14.7 percent demonstrating an annual sale of 2,514.6 billion and a profit of 111.8 billion Yen (Automotive World, 2019). The global sales for the company’s automobile units were 1,244,000 translating to an increase of 13 percent (Automotive World, 2019). The company projects an increase in the sale of its automobile units by 5 percent annually. Additionally, Mitsubishi Motors Corporation aims to achieve sustainable growth by leveraging on sales anchored on its brand value and sales’ networks.

 

SWOT Analysis

Strengths embody what Mitsubishi is doing that helps it gain a competitive advantage against its competitors. Customer-focused and positioning of the company’s products constitutes the two notable strengths. Mitsubishi Motors Corporation (MMC) manufactures products that delight their customers upon incorporating customers’ feedback in their manufacturing processes. For example, the production of the Mitsubishi Eclipse Cross, Outlander PHEV and Delica assisted the company boost its sales volume by 5 percent in 2018 (Automotive World, 2019). Furthermore, Mitsubishi Motors Corporation positions its manufactured automobiles as both safe and durable. The Outlander PHEV and Delica are rated by MMC as top rated performance vehicles (Automotive World, 2019). The positioning of the top rated performance vehicles are necessitated through engaging and top-notch advertising techniques. Thus, costumer-focus and positioning of products by MMC is essential in sustaining a recovery trend with regard to the Company’s automobiles demand.

Weaknesses are the core areas or sections that a company needs to improve if it is to favorably compete with its competitors. The recall of the company’s numerous models and ethics issues in its operations constitute the two primary weaknesses of the Mitsubishi Motors Corporation. In 2020, Mitsubishi Motors North America subsidiary was forced to recall 141,200 units of Lancer, Lancer Sportback, Outlander, and Outlander Sport because of defects in its front suspensions (Linkov, 2020). The front suspension could corrode due to salt water exposure (Linkov, 2020). The corroded parts would cause the suspension to detach leading to loss of control and ultimately causing accidents (Linkov, 2020). The recalling of vehicles inflicted financial losses to the company and tarnished the image of particular automobile brands. Moreover, MMC has had to deal with ethical issues raised regarding its operations. In 2016, the company was accused of falsifying fuel economy test data to make emission levels look favorable (Newman, 2016). The falsification of data tarnished the image of the company resulting in a slump of sales volume by 15 percent (Newman, 2016). The company is struggling to improve its image relating to the protection of the environment.

Opportunities envisage the avenues within the environment that a company can capitalize on to yield more profits and foster growth. The demand for hybrid cars and smaller cars represents the two opportunities that MMC can capitalize on. Customers desire hybrid and environmental conscious cars in the wake of global warming and environmental concerns (Kapustin & Grushevenko, 2020). Mitsubishi Motors Corporation has manufactured the Outlander PHEV in an attempt to demonstrate the company’s ability to manufacture a modest and superior environmental performance hybrid electric car (Kapustin & Grushevenko, 2020). Mitsubishi also capitalizes on the rising demand for small cars by its customers. The increase in the number of working women is presenting an opportunity to automobile companies to manufacture smaller cars since families can purchase due to increase in disposable income. There are broad ranges of more private family cars like Lancer and Outlander that families can select from MMC.

Threats include the factors hindering the prosperity and growth of a business or company. Competition and increasing manufacturing and operation costs are the two notable threats encountered by Mitsubishi Motors Corporation. The company is up against competition from Nissan, Chevrolets, Toyota, Hyundai, among other companies (Ephraim, 2016). Specifically, Mitsubishi’s Outlander faces competition from Toyota RAV 4, Honda CR-V while Mitsubishi Eclipse Cross competes against Nissan Rogue (Kapustin & Grushevenko, 2020). This means that there are broad arrays of cars that consumers can pick from. Mitsubishi prioritizes innovation, pricing, and efficiency to outdo the rest of its competitors. Mitsubishi Motors also confronts threats resulting from increasing costs of manufacturing the recent models and hybrid automobiles. The modern models come with enhanced functionalities that require the company to incur ancillary costs to customize to delight their consumers.

Competitive Advantage

Product renewal represents one strategy that Mitsubishi Motors Corporation can utilize to achieve competitive advantage. In the next three years, Mitsubishi should launch new automobile models. In the launching of the innovative models, a considerable percentage should be entirely new models while the rest should be important updates to existing vehicles. The recall of recall 141,200 units of Lancer, Lancer Sportback, Outlander, and Outlander Sport in 2020 was devastating to the company (Linkov, 2020). Therefore, the aim of product renewal strategy is to address the defects that existing models exhibit while also manufacturing new models that delight customers and favorably compete with similar models from other companies. This strategy entails the manufacturing of best-selling models including SUVs, 4WD and hybrid electric cars and aiming for the new models to constitute 70 percent of sales volume. The product renewal strategy will also assist the company to address its environmental emission problem. Therefore, the company can shift to the production of lower emission models as part of its growth strategy.

Cost optimization represents another strategy than can help Mitsubishi Motors Corporation to tackle threats occasioned by competition and increasing costs of manufacturing and operations. Mitsubishi will favorably manage its production with the initial intention of reducing its manufacturing costs by 1.3 percent annually. The company will be expected to invest in research and development to identify ways of reducing costs while also addressing environmental concerns while positioning its models as top-notch performers. The company will equally benefit from cost reduction anchored on the synergies involving the alliance of Mitsubishi, Nissan, and Renault (Ephraim, 2016). The synergies that Mitsubishi will be seeking to save will average 100 billion Yen and is likely to come from the efficiencies in procurement of raw materials and costs avoided through extensive research and development on products.

 

References

Automotive World. (2019). Mitsubishi Motors reports financial results for FY2018. Automotive World. Retrieved from https://www.automotiveworld.com/news-releases/mitsubishi-motors-reports-financial-results-for-fy2018/.

Ephraim, P. (2016). Transparency and ethical considerations in business: A comparative case study of crisis relations strategies of Volkswagen and Mitsubishi motors. International Journal of Marketing Research, 2(2), 1-9.

Kapustin, N., & Grushevenko, D. (2020). Long-term electric vehicles outlook and their potential impact on electric grid. Energy Policy, 137, 111103.

Linkov, J. (2020). Mitsubishi recalls cars and SUVs in Northeast and Midwest states for suspension problems. Consumer Reports. Retrieved from https://www.consumerreports.org/car-recalls-defects/mitsubishi-recalls-cars-and-suvs-for-suspension-problems/.

Mitsubishi. (2020). About Mitsubishi. Mitsubishi. Retrieved from https://www.mitsubishi.com/en/profile/.

Newman, R. (2016). What companies can learn from Mitsubishi’s fuel-efficiency scandal. Fortune. Retrieved from https://fortune.com/2016/05/03/mitsubishi-vw-takata-scandal/.