Mitsui & Co. SWOT & PESTLE Analysis

Strength

1. Strong Management Plan and strategy: Mitsui & Co posted a net loss for the first time since 1947 during the financial year ending 2016. It had a ROE of -2.2%. They attributed the loss to the impairment losses caused mainly by long term price outlooks because of the trends in mineral and energy markets, however by the implementation of mid-Term management plan and strategic initiatives, the company has delivered ROE of 8.6% and 10.9% in the financial years ending 2017 and 2018 respectively. The company decided to enhance its earning strength in its existing strong markets, develop new business areas and following a strict investment discipline. The increase in ROE could be attributed to the results in Iron & Steel products, Machinery & Infrastructure and Resources & Energy sector. Mitsui & Co stood at #183 in Forbes list of world’s largest public listed companies.

2. Global Expansion through acquisitions: As a part of its Mid-term plan Mitsui & Co have taken initiatives to strengthen their existing business. The company has been investing across various industries and acquiring a few in the process. With the latest acquisition of AWE (Australia) Limited for ¥ 49.3 Billion, it has gained access to all the gas and oil projects of the AWE Ltd. With Oil and Gas playing a huge role in the entity’s profit, the acquisition strengthens their position in the sector

3. Innovation and digital technology: The organization has been actively researching on innovative ways of integrating digital technologies into their organization. They are looking forward to leverage the power of AI and Internet if Things (IoT) to improve the business’ profitability. A Digital Transformation (DT) Team headed by the CDO focuses on reducing business cost, increasing sales and business development. Its alliance with OSIsoft has led to implementing the latter’s PI system in Mitsui & Co.’s power plant in Mexico. The system is expected to be implemented across Mitsui and Co.’s portfolio provided the PI System provides the intended benefits. But Mitsui & Co has taken the right steps towards Industry 4.0.

4. Investments to strengthen existing business: Mitsui & Co have invested ¥200 Million in growth areas in order to develop their existing businesses. The returns on most of these investments are expected to boost their profit for the forthcoming financial years. The company is expecting a FID on Mozambique Liquefied Natural Gas (LNG) project. The investment on the Mozambique LNG project is expected to be around ¥2 Trillion and the project will begin during the current fiscal year. The company is determined to strengthen its already solid Resources & Energy, Machinery & Infrastructure and Chemical businesses. Its Moatize coal mine and Nacala Infrastructure projects in Mozambique are expected to be operationally stable and provide solid revenue. Oil projects Tempa Rossa (Italy), Greater Enfield (Australia) and Kaikias (U.S) and Cameron LNG (U.S) are progressing steadily. These projects are expected to contribute to growth in production volume and revenue. Similar projects in Machinery and Infrastructure and Chemicals business have been undertaken to strengthen its core business areas. Further in order to strengthen its capabilities the development of autonomous vehicles, Mitsui has invested in AZAPA, a company involved in R&D for control units for electric vehicles. The accumulated assets would contribute to Mitsui’s earnings and cash flow in the future.

Weakness

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Opportunity

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Threat

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Political

">1. Bioeconomy policies of Europe: In order to address global issues such as climate change and food security, all the countries are devising their bioeconomy strategies. Bioeconomic policies are seen as the means for long-term sustainability. European countries have been leading in framing the bioeconomy policies and with other countries catching up. Currently, there are more than 40 countries that have developed their bioeconomy policy. But every country focuses on different aspects while framing their strategy. There is lack of international coordination. Hence it is important for Mitsui & Co to understand the policies and reframe their business strategies accordingly.

Economical

Social

Technological

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Legal

">1. Adherence to Standards of Occupational Safety: Employee safety is of utmost importance. In Mitsui & Co, various steps are taken to ensure employee safety. Period inspections are conducted by industrial physicians. An effective internal mechanism has been established to ensure proper reporting of accidents. Data on accident frequency, occupational illness and severity is calculated based on the standards of Japanese Ministry of Health, Labour and Welfare Employees.

">2. Strong anti-corruption policy: Mitsui & Co have established their Anti-Corruption Policy which ensures compliance with domestic as well as foreign anti-corruption laws including Criminal Law and the Unfair Competition prevention Act of Japan, the U.S Foreign Corrupt Practices Act and UK Bribery Act.

">3. Anti-Slavery and Human trafficking Statement: In response to Section 54 of the UK Modern Slavery Act 2015, Mitsui & Co have published their statement for FY 2016. It sets forth various policies and procedures directed at human rights. Mitsui & Co pledged its support to the United Nations Global Compact in 2004. It conducts internal surveys to check for compliance with the Global Compact. The policies and procedures are also applicable to their business partners in order to meet the society’s expectations. It strives to remove all forms of discrimination and rectify illegal labour practices in every country. They have taken initiatives as a part of Corporate Social responsibility. “Business Conduct Guidelines for Employees and Officers of Mitsui & Co Ltd” has been developed by Mitsui & Co which serves as a guideline for all its employees to function in a responsible manner. They also take into account the 17 goals and 169 targets of SDGs. ISO 26000, GRI G4 Guidelines and ILO.

Environmental

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