A mid-term strategy that swaps out the business portfolio (2020)

Not scale, but which mix of businesses lets its strengths work

The heart of this decision lies not in the skill of any single disposal or acquisition but in reworking the yardstick by which businesses were judged. Since the 1990 merger, Mitsubishi Materials had expanded under the banner of scale into a comprehensive materials maker, and that expansion had bred two distortions at once — earnings that swung with commodity markets, and control that did not extend to the edges. The quality scandal was the crisis that pushed those distortions out into the open, and the mid-term strategy can be read as the moment the company switched to choosing businesses by capital efficiency and manageability rather than by size. In that the crisis catalysed the reform, misconduct response and growth strategy were inseparable in this decision.

The swap was not painless. Diamet, the sintered-parts subsidiary it exited, filed for civil rehabilitation shortly after the sale, and the fact that the buyer was an investment fund said something about the weight of the aftermath. Aluminium and cement meant handing outside businesses run for nearly half a century, or acquired in the merger itself, with real consequences for customers and employees. Even so, the posture of narrowing to focus businesses and asking what capital efficiency they earn carried forward into “Mid-term Management Strategy 2030,” the shift to an in-house company system, and the convergence toward a specialist firm built on metals, copper processing and electronic materials. Rather than chase scale, ask which composition of businesses actually lets your strengths work — the significance of this decision is that it stepped into that question from a starting point of crisis.