Corporate-level strategies for Mitsubishi Corp.
Vertical integration is a tactic that a company such as Mitsubishi can use to improve its cost leadership position (Strategic Management, 2014c, pp. 249-252). This would work well for a company such as Mitsubishi because the company already has experience with this tactic. Due to the fact that Mitsubishi Corporation already forms many of the links in the value chain it likely will be able to continue using this tactic. Mitsubishi operates throughout industries which include raw material procurement, chemical refinery, transportation and logistics and even real estate sales and financing (Marketline, 2014, p. 4) this company is in a uniquely advantageous position to control its own supply chain. Vertical integration gives Mitsubishi Corporation the ability to add value to its products every step of the way in the form of reduced costs, expedited delivery or even quality control standards. One way that Mitsubishi limits the risk of complacency by vertical integration is by not having complete ownership of the process. One example being, the fact that Mitsubishi only owns 60% of the steel business company Metal One, because of this the company’s split ownership it will help ensure the standards of products sold to other companies will also be created to high standards (Marketline, 2014, p.4). Lastly Mitsubishi’s home country of Japan means the company will likely tailor their production toward customers which have high standards, which could benefit products which are resourced, produced, and transported to Japanese specifications (Strategic Management, 2014a, p. 220). Essentially the more steps in the production process their products are integrated in Japan, the higher quality the end result can be expected.
Concentration strategies are among the other tactics that Mitsubishi could exploit to reach more customers and/or reduce costs (Strategic Management, 2014c, pp. 241-245). Because Mitsubishi operates in so many countries all over the world, the company has the option to pick and choose which products it will emphasize in various locations (Marketline, 2014, p.4). By working to increase their market share in existing markets Mitsubishi would be attempting to improve its market penetration. One reason this is important is because population growth is not occurring uniformly across the world, and it would be smart for Mitsubishi to work to increase their market share of particular items such as frozen foods and confectioneries, pet supplies, and household goods in nations with growing economies, meanwhile limiting the advertising for these products in countries which are seeing a shrinking economy. Meanwhile, Mitsubishi can also attempt a market development strategy by offering incentives to governments of developing countries on its infrastructure services which include water equipment construction and repair, airport services, and power generation (Marketline, 2014, pp. 6-7). This will in-turn lead to more customers having the ability to purchase products and services from Mitsubishi as the economy grows, while exposing them to the brand. Finally, by utilizing a product development approach the company can improve existing products or create new ones to meet the desires of its audiences. For example, as the popularity of “green” technology increases in various circles, Mitsubishi can modify its product development towards utilizing more environmentally friendly energies. By integrating their environmental business division into the production process of more of its product line, the company can begin to embrace the popularity (and growing public appreciation) for green products. Mitsubishi already creates lithium-ion batteries for usage in eco-friendly vehicles, so the company has an opportunity to incorporate these into their Isuzu vehicles (Marketline, 2014, pp. 5-6).
Horizontal integration is another tactic that Mitsubishi can use to get closer to the goal of cost leadership (Strategic Management, 2014c, pp. 245). Because Mitsubishi faces very strong competitors in the general trading sector in Japan, it would be worthwhile to consider attempting to purchase one of these rivals (Marketline, 2014, p. 42). These rivals include ITOCHU, Marubeni, and Mitsui & Company (Marketline, 2014, p. 42). Because they operate in an industry that Mitsubishi has extensive and successful experience in, a merger or acquisition of any one of these companies would likely be a profitable one, while also increasing the market share that Mitsubishi enjoys. If the goal of horizontal integration is to achieve a better economy of scale than this would be an opportunity to make the most of it (Strategic Management, 2014c, p. 245). Although an acquisition would be a good idea in the Japanese general trading segment, Mitsubishi acknowledges that their company is not able to match the regional expertise, stronger business associations and relationships with its customers, suppliers, and business partners that many of their competitors are able to achieve in the living essentials business (Marketline, 2014, p. 42). In this industry it would be wise for Mitsubishi to consider a merger with these better equipped competitors, which would help shore up profits for Mitsubishi by limiting bitter competition.
Diversification is yet another corporate level strategy that could further assist Mitsubishi reach more customers, and their extensive experience in other industries can help make sure the process is successful (Strategic Management, 2014c, pp. 256-262). Although many airlines struggle to maintain a profit (Strategic Management, 2014b, p. 102) by purchasing a struggling airline or more commercial air transportation businesses this would give Mitsubishi the opportunity to further diversify its business. Sturgess (2017) suggests that Asia will soon overtake the rest of the world in terms of GDP (p. 1) which provides evidence that air travel specifically will increase in coming years. Additionally Mitsubishi’s experience building and maintaining airport runways and terminals in Mandalay suggest that the company could assist growing economies build their air infrastructure in exchange for negotiations which would favor air lines owned by Mitsubishi (Marketline, 2014, p. 7). Lastly Mitsubishi’s experience in its machinery segment could better allow this particular diversification attempt to be more successful in that the company already has a strong presence in the production and maintenance of aerospace-related equipment (Marketline, 2014, p. 5), all these considered, further investments in air travel seem like a logical next step as the company moves to diversity itself into other markets where it would have an edge.