(Bottom Left of College Card)
Professor Ailson J. De Moraes
Question No. & Title:
Individual Assignment 1: Lecture Review
Pacific Multinationals: Lecture Review
next five sections the Asia pacific multinationals, Secom, Mitsubishi
Corporation, Huawei, Toyota, and Samsung will be analyzed in terms of their
individual strategy, corporate organization, core capabilities, and role of
government to decipher the commonalities as well as conflicting themes between
In 1962, Japan established
their first security company known as Secom. Over the years the company has grown
immensely, this year’s net sales totaling $9.21 billion (Amigobulls, 2017).
Secom’s main strategy is having a diverse/comprehensive range of services and
systems in order to make life more convenient and comfortable for their
customers (Secom, 2017a). They’ve diversified from a security company into a
“social system industry” as their services now range from multiple industries (Secom,
2017b). With this diversification and continuous investment into R, Secom
has created a successful strategy thus far.
With operations in more
than 12 countries and nearly 2.7 million customers, a strong organizational
structure is a crucial component of their strategy (Secom,2017c). Secom has a
decentralized structure, having a head office in every country of operation
with its own individual departments, such as marketing, IT, financial, ect. For
each head office, there are plethora of regional offices scattered throughout
the country. This allows Secom to eliminate the cultural block between
themselves and their international customers, as well as increase response time.
Secom’s core capabilities start with their
continuous efforts to innovate and advance their technology through R&D.
Their innovations and knowledge within the security industry has allowed the
corporation to maintain a strong global brand image. Secom has also established
a strong relationship with host governments, establishing joint ventures with
Role of Government:
security company, Secom has the opportunity to provide its services to the
government, therefore creating a strong relationship. Not much is published
regarding numerical values exchanged between the Japanese government and Secom,
other than Japanese owned banks possess a 10% share in the corporation.
Therefore, one can assume that it is in the government’s best interest to
assist Secom in their continual success. Furthermore, historically the Japanese
government would spur demand with subsides, therefore oversaturating the market
and creating incentive for companies to go abroad. Due to the nature of Japan’s
government to create global expansion opportunities for their businesses, companies
like Secom are given the opportunity to grow.
Established in 1954, the
Mitsubishi Corporation is Japan’s largest trading company and one of the 28
companies that independently create the Japanese Mitsubishi Group. As a
collective, Mitsubishi Corporation is considered what the Japanese call “sogo
shosha”, which means general trading company with multifaceted branches with
wide ranging size, scope, and diversity (Fitzgerald & Rowley, 2016). With
1,279 of consolidated subsidiaries and affiliates, Mitsubishi corporation is
able manufacture and market a wide range of products through their domestic and
overseas network (Mitsubishi Corporation, 2017a). This allows them to compete
in nearly any industry, as well as change the level of focus on certain
industries as needed. Recently, the company has released a new 3-year corporate
strategy for 2018, which shifts their focus from investing to managing in the
hopes to generate sustainable business value (Mitsubishi Corporation, 2017b).
Mitsubishi Corporation is decentralized in
structure to maintain their 7 different industry groups. The global
environmental and infrastructure business group is handled in a completely
different manner then their metals group. Each group has its own CEO and
administration department beyond the primary CEO of the company. Therefore,
each groups’ individual needs and decisions can be addressed accordingly.
Mitsubishi Corporation is unique in terms of
their full commitment to diversification. As a “sogo shosha”, the corporation
is truly able to involve themselves in all industries. Their knowledge and
ability to implement different strategies best suited for that particular group
is a key core competency. Also, despite not being directly involved with the
well-known automotive branch of Mitsubishi—name brand recognition is still
highly advantageous. Mitsubishi Corporation has also implemented supply chain
transparency. Previously, they were the “middle man”, going out to seek new
products and services to bring back to Japan. Today, they still buy and sell
products, but their biggest priority is investing in in every part of the value
Role of Government:
mentioned earlier for Secom, the Japanese government are known to lending a
helping hand in order to assist a company in international expansion.
Considering Mitsubishi Corporation is one of the largest companies native to
Japan and generated $57.05 billion in sales by the end of this fiscal year, the
Japanese government are happy to assist (Mitsubishi Corporation, 2017c). With a
company as large and profitable as Mitsubishi Corporation, they’re contributing
immensely in growing Japan’s economy. Overall, it’s I the best interest of the Japanese
government to assist and propel the company forward.
Huawei is a privately-owned
Chinese based company, established in 1987, specializing in providing global
information and communications technology solutions. Huawei operates in over
170 countries and claim to have no technical, resource, or capital advantage
(Huawei, 2016). How is this possible? Huawei strategically targets developing
nations and an older audience to avoid direct competition with the developed
world’s communication giants, Apple and Samsung. Huawei strays away from
opportunism and focuses on improvement of already existing products. Huawei
enters a new market to initially learn about what that particular market needs,
then adapts existing technology to provide it. “Learning by doing” is core
strategy of Huawei’s and enables them to meet specific market needs. Huawei
truly subscribes to the belief that they only exist to serve its customers.
is organized in a centralized top-down formation, with obvious hierarchies
making the decisions at the top. The founder of the company, Ren Zhengfei, is still
the CEO of company to this day, but only owns just over 1% share of the
company, which is drastically different compared to the typical 20-30% of
western based founders. Huawei also encourages their employees to buy shares in
order to increase company loyalty. An employee truly owns nearly as much of the
Huawei shares as the actual founder/CEO which increases employee loyalty.
Huawei claims their “core
values are our core competency”, which are remaining customer-centric and
inspiring dedication. Huawei’s ability of learning by entering and watching a
market for what the consumer needs—truly is their key to success. They also
maintain between 10-15% investment into R&D every year in order to
continuously improve their services. As referred to above, Huawei’s employee
stock ownership plan also ensures Huawei the dedication of their labor force.
Role of Government:
Being a privately-owned
company in China was an initial disadvantage for Huawei. The Chinese government
is more inclined to support a public company, which directly brings accessible
capital into China, than a private business. Therefore, causing Huawei to
create their strategy around developing countries because they would not be
able to compete with the larger electronic brands without government support. After
the the 1970s Chinese economic reform and implementation of open door policy, the
government started to endorse MNCs (Fitzgerald & Rui, 2016).
in 1937, Toyota is a Japanese multinational automotive manufacturer (Toyota,
2017a). Originally, Toyota followed similar methods as other large public
Japanese companies and used large subsidies from the government to help them go
abroad. Eventually, it became evident that the Japanese products weren’t what
the USA consumer was looking for. Therefore, Toyota developed networks of
knowledge between them and their American subsidiaries in order to gain insight
on what their consumers are searching for. This strategy developed and allowed
them to tailor make certain cars for specific countries needs.
2013, Toyota had a highly centralized traditional Japanese global hierarchy,
where all decisions and lines of communications went through the headquarters
in Japan. But, due to delayed response times, the company went through an
organizational restructuring. Toyota maintained their use of a global
hierarchy, but implemented eight geographic divisions with regional heads who
were granted some decision-making capabilities in order to decrease response
time. These geographic divisions also enabled Toyota to modify their products
based on regional market conditions. The final renovation to the organization
was the use of product-based divisions, which creates opportunity to further
develop certain product lines.
Toyota Production System has enabled the company to “empower team members to
improve processes, eliminate unnecessary waste, and build quality into every
vehicle” (Toyota, 2008). The company has been able to redefine the meaning of
efficiency due to the success of their production system. This allows them to
lower costs and increase quality, further strengthening their brand. Already one
of the biggest brand names in the world, their reputation is a crucial factor
in their ability to succeed. Also, their continuous investment into R&D
allows them to stay in the highest rankings for reliability and manufacturing
Role of Government:
Japanese government also enabled Toyota to internationalize by manipulating
their economy. The low value of yen allowed Japan’s automotive industry to be
very competitive and is one of the major reasons Toyota has proven to be a top
global automaker (Amadeo, 2017). At the
end of this fiscal year Toyota made $256.65 billion in net sales (Toyota,
2017b). With a company contributing to Japan’s GDP as largely as Toyota, its
rational to think what is good for Toyota is good for Japan.
Samsung originally started
in 1938 in Korea as a food exporter and developed into a multinational conglomerate
focusing on a wide variety of industries, like electronics (Kovach, 2003). The
strategy of the company is to develop highly innovative and advanced products
marketed towards high-end consumers. Samsung is in constant battle in their
main markets of China, USA, and the UK with Apple to become the market leader.
One strategy Samsung implements, is responding to a county’s current economic
climate and adjusting their prices accordingly in order to promote the
company’s reputation with consumers. For example, Samsung responded to economic
decline of Brexit by lowering prices to increase sales. The primary strategy of
Samsung is 80% of their supply chain is owned by them. Few components of a
Samsung product come from a third-party supplier. This allows Samsung to have
control over nearly every aspect of their product for quality assurance and
eliminate information leaks.
Samsung is a family-owned
company that is centralized with a highly differentiated structure that flows
into the traditional hierarchal structure. Highly bureaucratic, Samsung rewards
attention to detail, discipline, and efficiency amongst their employees. Samsung
is also South Korea’s largest “chaebol” (business conglomerate). Because
Samsung is a chaebol, it’s able to produce its own parts without outsourcing. Due to the structure of the corporation,
Samsung is able to work at extremely high efficiency rates with classified
research, enabling them to hopefully out innovate their competition.
Samsung is the leader of
technological change across Europe, this is due to their ability to keep their
innovations confidential. The chaebol structure allows them to have an
integrated supply chain, and avoid outsourcing. Also, Samsung invests heavily
into R&D to push their technology and analyze consumer needs. The brand’s
reputation attracts a highly skilled and educated workforce. The foundation of
knowledge and talent embedded within the corporation’s employees allows the
company to innovate at higher rate. Finally, the brand’s reputation gives
Samsung the access to sponsor celebrities/athletes/events in order to further
market to the high-end consumer.
Role of Government:
Samsung embarked on their technological endeavors, they were receiving support
from the South Korean government. Once the shift occurred, the government was
initially reluctant to assist Samsung financially or strategically. The owner
of Samsung promised to generate capital for South Korea if the government would
support the company. Today 20% of
Korea’s GDP is brought in by Samsung. They created a mutual benefit situation, the
government now assists in subsidiaries, tax breaks, and licensing of technology
for Samsung in order to keep their capital flowing back into the country. This
relationship proves beneficial for both parties and allows Samsung to continue
down the path of advancement.
these multinationals originating in Japan, China, and Korea there are common
themes as well discrepancies. For strategy, every company eventually creates
differentiated products and services, but some were motivated through listening
to the market while others were innovation driven. For Huawei, Mitsubishi
Corporation, and Secom their strategies revolved around listening to their
target consumer needs. These companies tend to innovate after watching a market
and then adapting or innovating to meet those particular needs. With Samsung
and Toyota, their strategies heavily revolve around constant innovation. Their
consumer needs are still analyzed and considered, but their drive comes from a
competition standpoint with the end goal of achieving market leadership.
all three of these Asian countries would promote traditional highly centralized
organizational structures. This is still accurate for Samsung, Huawei, and
Toyota. These three companies have all found success in strategizing traditional
centralization of power for the international extension of domestic business
models (Fitzgerald & Rowley, 2016). Secom and Mitsubishi went against
traditional business models and implemented decentralized structures. Secom
felt better equipped to tackle their locations with the use of culturally
appropriate employees who understand their clients’ needs in that specific area.
Mitsubishi Corporation had the necessity of decentralization in order to manage
their diverse and plentiful sectors effectively.
capabilities allow these companies to operate at top levels and increase
competitive advantages. All five companies rely heavily on R and brand
reputation. Investment into R allows these companies to continuously
improve through innovation and market research. While some companies share
similar core competencies, others are unique to the brand. Mitsubishi
Corporation differentiates themselves from competition by the extensive diversification in their
products and services. While Toyota has inspired a widely practiced production
system due to their intensive commitment to efficiency. But, the most
interesting core competency of these companies, is Huawei’s for their claim of
their only core competency being customer-centric. They profess no advantage
financially or strategically and solely rely on their ability to read and meet
the role of government is a very prevalent factor in creating a strategy and it
is obvious in these companies why they operate the way the do based on the
level of government support given. The
three Japanese companies, Secom, Mitsubishi, and Toyota all receive huge
governmental support, allowing them to easily increase expansion, therefore
increasing GDP for Japan. Like the Japanese companies, Samsung receives
benefits from the government, but there was a brief period of persuasion with
Korea. For Huawei, the persuasion with China took much longer, therefore they
focused their business strategy on developing countries with little innovation
to make up for their lack of excess capital. Despite the differences in these
companies, they come from similarly run countries, but have had to find
solutions to their business-climate issues individually based on their
resources provided and their ability to think strategically.
Amadeo, K. (2017). 7
Characteristics of Japan’s Economy. online The Balance. Available at:
Accessed 6 Dec. 2017.
Amigobulls (2017). Secom
Annual Revenue, Income Statement, 2017, 2016 – Amigobulls. online
Amigobulls.com. Available at:
https://amigobulls.com/stocks/SOMLY/income-statement/annual Accessed 6 Dec.
Fitzgerald, R. and Rowley, C.
(2016). Multinational companies from Japan. Routledge, pp.3-4.
Fitzgerald, R. and Rui, H.
(2016). Whose fall and whose rise? Lessons of Japanese MNCs for Chinese and
emerging economy MNCs. Asia Pacific Business Review, 22(4),
Forbes (2017). Ren
Zhengfei Profile. online Forbes.com. Available at:
https://www.forbes.com/profile/ren-zhengfei/ Accessed 6 Dec. 2017.
Huawei (2017). Corporate
Information. online huawei. Available at:
http://www.huawei.com/en/about-huawei Accessed 6 Dec. 2016.
Kovach, S. (2003). How
Samsung Went From A Dried Fish Exporter To One Of The Top Names In Tech.
online Business Insider. Available at:
Accessed 6 Dec. 2017.
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Mitsubishi Corporation (2017b). FINANCIAL
RESULTS FOR THE YEAR ENDED MARCH 2017. online Mitsubishicorp.com.
Accessed 6 Dec. 2017.
Mitsubishi Corporation (2017c). Midterm
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Available at: https://www.mitsubishicorp.com/jp/en/about/plan/ Accessed 6 Dec.
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– Historical Highlights. online Secom.co.jp. Available at:
https://www.secom.co.jp/english/ir/kojin03-04-1.html Accessed 6 Dec. 2017.
Secom (2017b). SECOM
/ The Social System Industry. online Secom.co.jp. Available at:
https://www.secom.co.jp/english/vision/ Accessed 6 Dec. 2017.
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by Secom. online Secom.plc.uk. Available at: http://www.secom.plc.uk/wp-content/uploads/2014/10/ink10257_oft_sec_prospect_brochure-online.pdf
Accessed 6 Dec. 2017.
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of Toyota. online Toyotauk.com. Available at:
http://www.toyotauk.com/about-toyota/history-of-toyota.html Accessed 6 Dec.
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Announces Financial Results for Fiscal Year Ended March 31, 2017. online
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Accessed 6 Dec. 2017.