Management Policy
"Changes for the Better," our corporate statement, encapsulates all that we stand for and aspire to—a brighter future for society, industry and everyday life through innovation.
Supporting this commitment to innovation and sustainable operations is a solid management structure backed by balanced management initiatives that stem from three key viewpoints: Growth; Profitability and Efficiency; and Soundness.
In terms of its corporate social responsibility (CSR) initiatives, the entire Mitsubishi Electric Group is steered by its Corporate Mission and Seven Guiding Principles. Putting particular emphasis on the area of ethical and legal compliance, we are committed to strengthening internal controls to ensure legal compliance Group-wide, as well as thoroughly implementing education and training. In addition, we continue to work diligently to safeguard the environment. Among a host of initiatives, we are striving to create a low-carbon, recycling-based society as part of our Environmental Vision 2021 program.
To ensure that we continue to meet the expectations of shareholders, we have undertaken reforms that are guiding our ongoing evolution into a network of highly competitive, electric-electronic businesses while leveraging synergies to further enhance corporate value.
Pursuing Ever Higher Growth
In fiscal 2011, the Mitsubishi Electric Group recorded an operating income ratio of 6.4%, return on equity (ROE) of 12.4% and a ratio of interest-bearing debt to total assets of 14.5%. Consequently, the Group achieved its management targets (which must be continuously and stably achieved) for the operating income ratio, ROE and the ratio of interest-bearing debt to total assets (above 5%, above 10% and below 15%, respectively).
Guided by its overarching policy of Balanced Corporate Management, the Mitsubishi Electric Group will strive to continuously and stably achieve the above indicators set as its management targets, and aim to become a global, leading green company, enriching society with technology. With these two objectives in mind, the Group shall strengthen its growth strategies in each business in order to pursue ever higher growth from three viewpoints: the environment and energy, social infrastructure systems and global business development.
| Operating income ratio: | 5% or more |
| ROE: | 10% or more |
| Ratio of interest-bearing debt to total assets: | 15% or less |
Framework for Implementing Balanced Corporate Management
The Mitsubishi Electric Group undertakes management operations based on its Front-line Priority framework in the two areas of customer contact and production. In the first front-line area of customer contact, the Group enhances its competitiveness in marketing and services. In the latter front-line area of production, the objective of the Front-line Priority works to bolster the Group's "craftsmanship" in the areas of quality, costs, production engineering technologies, research and development, and intellectual property (IP). In addition, by implementing its Strong Synergistic Corporate Network framework, the Group is pursuing integration synergies. Such synergies are achieved by strengthening four collaborative links—(1) between production and sales divisions, (2) between business segments, (3) between business segments and corporate divisions, and (4) globally, between parent factories in Japan and overseas facilities—as well as by harmonizing business, product and regional strategies.
Through the two aspects of the Front-line Priority framework and the four collaborative links within the Strong Synergistic Corporate Network framework, the Group is implementing Balanced Corporate Management that involves promoting growth strategies, strengthening its management foundation, improving its financial standing and undertaking CSR- and corporate governance-related initiatives.
Growth Strategies
The Mitsubishi Electric Group promotes the VI Strategy, which aims to make strong businesses stronger, and the AD Strategy, which is designed to reinforce solutions centered on strong businesses. In line with these growth strategies, in order to realize the objective of ensuring growth compatible with profitability by making strong businesses stronger globally, the Group is promoting individual business strategies and bolstering regional strategies with a priority on Asia. Aiming at further growth, the Group is working to develop technologies that continuously enable our strong businesses to become even stronger, promoting compatibility between a low-carbon society and prosperous lifestyles. As it moves forward, the Group is also pressing ahead in all aspects of its efforts to strengthen global strategies with the purpose of maintaining sustainable growth as it strives for further global success.
Essential Growth Strategies: Promoting the VI Strategy and the AD Strategy
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- "VI" derives from "VICTORY"
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- "AD" derives from "ADVANCE"
Direction of Growth Strategies: Pursuing ever higher growth through ongoing efforts to strengthen businesses
Growth Strategy: Strengthening Global Strategies
As part of its efforts to fortify its business systems to make strong businesses stronger globally, the Mitsubishi Electric Group continues to invest capital in existing business bases, for example, building a new transformer plant in the United States. In addition, the Group is establishing manufacturing companies—such as factory automation systems and automotive equipment makers in China—to serve rapidly growing markets, and setting up new sales companies to tap into new markets in India and Vietnam. Beyond this, the Group will continue to carry out M&A to create synergies and expand its businesses, as seen in the acquisition of the power device-related business, Vincotech Holdings S.a.r.l., in November 2010.
Growth Strategy: Promoting Individual Business Strategies
Regarding the businesses within the Group that possess noteworthy growth potential (power systems, transportation systems, building systems, factory automation systems, automotive equipment, space systems, power devices, air-conditioning systems and photovoltaic systems), the Mitsubishi Electric Group will expand such businesses to be a driving force of Group-wide performance, by implementing and augmenting global business promotion systems, while reinforcing market strategies in priority markets. Through such actions, the Group is contributing to the improvement of corporate value.
Growth Strategy: Bolstering Regional Strategies with a Priority on Asia
The Mitsubishi Electric Group will bolster cross-business regional strategies with a priority on Asia in response to newly emerging markets, which are anticipated to experience high growth rates. In the Chinese market, where it has already established numerous businesses and built a solid foundation, the Group will apply its overall strength to the further expansion of its operations by strengthening collaborative links between its operating bases as well as its businesses. The Group will also take steps to augment partnerships between leading business groups in China. In India, where the time is ripe for a full-scale entry, the Group will tap into growing markets by leveraging strong global businesses, particularly within the Energy and Electric Systems and Industrial Automation Systems business segments.
Growth Strategy: Compatibility between a Low-carbon Society and Prosperous Lifestyles
The Mitsubishi Electric Group is actively working to realize an "eco-electricity community," one that aims to foster compatibility between a low-carbon society and safe, prosperous lifestyles. To that end, the Group is combining its business expertise in all areas, from power systems to home appliances, to optimize energy usage communitywide based on the best possible mix of energy sources, which includes maximizing the use of natural sources of energy. Turning to future-oriented research and technological development measures, the Group is, in coordination with its Amagasaki, Wakayama and Ofuna facilities, constructing experimental smart grid equipment internally that anticipates the distribution networks to be developed in the future. In the Ofuna region, the Group will take steps to verify the concept of "painless electricity conservation" by building a "smart house" equipped with a photovoltaic system, all-electric-powered home equipment and a Home Energy Management System (HEMS), in order to demonstrate the concurrent viability of zero-emission, energy-saving residential housing that is comfortable, safe and secure.
The Mitsubishi Electric Group has developed power devices that use silicon carbide (SiC); these energy-saving key devices efficiently regulate power usage and help contribute to the realization of a low-carbon society. Consequently, the Group became the first in the world to successfully develop the Full SiC-IPM in February 2011, which achieves both low power loss and high reliability. By continuing to utilize the capabilities of its devices to the utmost extent while ensuring performance and reliability, the Group will strengthen the applications of its technologies in a wide array of power electronics products. Such products range from air-conditioners, refrigerators and other home appliances to photovoltaic systems, industrial equipment, electric/hybrid automobiles, railcars, and power equipment.
Strengthening Our Management Foundation
The Mitsubishi Electric Group consistently promotes Group-wide operational improvement measures, taking active steps to further solidify its operational structure.
To this end, we constantly strive to reinforce the "craftsmanship" that is integral to our foundations as a manufacturer. In order to achieve this objective, we are always looking to enhance productivity and quality, to promote prioritized development rooted in growth strategies, to strengthen our R&D capabilities and the development of strategic IP activities by promoting such initiatives as the development of key components, and to improve material procurement by bolstering value analysis (VA) and other activities. Furthermore, we are working to improve our financial standing through measures that include inventory reduction and striving to allocate human resources effectively, underpinned by the aim to make strong businesses stronger.
The Mitsubishi Electric Group will continuously and resolutely promote these initiatives and make every effort to strengthen quality, cost efficiencies, production technology capabilities, development capabilities, IP activities, and sales and services, with the goal of further boosting profitability.
Improving Our Financial Standing
As of March 31, 2011, total interest-bearing debt, including bonds, stood at ¥484.4 billion for a ratio of interest-bearing debt to total assets of 14.5%.
The Mitsubishi Electric Group is implementing comprehensive structural reforms to increase the competitiveness and earnings of all Group businesses. To raise overall profitability, we are striving to boost competitiveness in the areas of quality, costs, production technology capabilities, development capabilities, IP, marketing and services. In addition, in order to streamline asset turnover and the efficiency of funding operations, we are reducing inventories, primarily through "just in time" activities, while expanding our global cash management system. These initiatives are aimed at generating stable cash flow.
With accumulated cash flow, we are taking a balanced approach to reduce interest-bearing debt, provide returns to shareholders through increased dividends, and invest in growth areas.
Striving for Constant Improvement
Based on its Balanced Corporate Management Policy, the Mitsubishi Electric Group is steadily implementing the aforementioned management strategies, which are designed to enhance the formidable competitiveness of its individual businesses. At the same time, we continue to implement reforms intended to guide our ongoing evolution into a network of highly competitive, electric-electronic businesses while leveraging synergies to further enhance corporate value and ensure sustainable growth.
To accomplish these goals, it is increasingly important that we strive for constant improvement, which puts into practice the spirit that is embodied in our corporate statement, "Changes for the Better." The Mitsubishi Electric Group will continue to change in order to create new value. We are confident these efforts will yield even greater corporate value in the future.