Case: Mitsui & Co: The DPF Incident
1. Analyze the strategy Utsuda put in place for Mitsui. What would you change? Why?
Problem definition: Mitsui & Co. is involved in a second corporate scandal, even though the company has tried to change the corporate culture after the first corporate scandal, in order to prevent this from ever happening again.
We can analyze Utsuda’s strategy by using the STAR Model by Edward E. Lawler (1996).
* Mitsui wants to become a global business enabler that meets customer needs.
* Company strategy:
* Who: customers throughout the world (company is present in 79 countries).
* What: a broad array of products and ...view middle of the document...
* Loyal employees with declining morality because of the remuneration system.
* Lack of alignment with new corporate culture.
According to Lawler, the main challenge in changing the culture is to identify what points of the star give the current culture its characteristics and then to figure out how to change them in order to implement a more functional culture. I would advise Utsuda to change the compensation system. The remuneration system should not only be based on quantitative targets such as year-on-year sales growth , but also on qualitative targets such as developing and maintaining trusting relationships with customers and other relevant stakeholders and the company’s reputation.
Second, Utsuda should consider to abolish the lifetime employment. On the one hand, lifetime employment creates employee loyalty. On the other hand, employees might not feel obliged to follow the company’s rules and regulations and behave sincerely, because there is no danger of losing their jobs.
Furthermore, Utsuda needs to explain extensively to management and employees why this change is necessary. He needs to establish a sense of urgency. In the recent past, Mitsui has been involved in a severe corporate scandal; the Kunashiri incident. The company was severely criticized by society, thereby damaging its reputation. Subsequently, Mitsui reformed the company considerably, for example by reshuffling the management, the announcement of a new management philosophy and the introduction of a the management platform focused on internal control and compliance. Despite these reforms and the efforts Utsuda has made to change the company’s culture, Mitsui faces a new scandal.
I believe that not all employees are aligned with the new culture. Therefore, Utsuda needs to create internal consistency as soon as possible. This is particularly important for Mitsui because of its large size and independent structure. Internal alignment and consistency are essential to the successful execution of the company’s strategy.
2. How would you analyze Utsuda as a leader in the context of LCC?
Utsuda has a strong set of beliefs concerning his company and the strategy necessary to become a dynamic value-creating company. He also has strong beliefs about the importance of corporate responsibility. He shows courage, for example by proposing a 20% pay cut for himself, his public announcement about the absence of a strong sense of morality and of high ideals in Mitsui’s management and his intention to deeply reform the company’s culture. I also believe he cares for other people because he actively and directly tries to involve employees in his mission to change the corporate culture. Utsuda recognizes the importance of...