Corporate Strategy May 2012 Contents 1. Corporate Mission 9. Strengthening Management Foundation 2. Corporate Governance 10. Improve Financial Standing 3. Management Policy: Balanced Corporate Management 11. Strengthen Environmental Management/Environment- 4. Management Framework Oriented Businesses 5. Essential Growth Strategies 12. Forecast for FY2012 6. Direction of Growth Strategies 13. Management Targets 7. Strengthening the Global Strategy Notes: 8. Technological Development: FY2007: April 1, 2007 – March 31, 2008 Strong Businesses Stronger FY2008: April 1, 2008 – March 31, 2009 FY2009: April 1, 2009 – March 31, 2010 FY2010: April 1, 2010 – March 31, 2011 FY2011: April 1, 2011－March 31, 2012 FY2012: April 1, 2012 – March 31, 2013 11 1. Corporate Mission Encourage Fulfillment of Social Responsibility through Our Business Activities QualityQuality TrustTrust TechnologyTechnology Seven Guiding Principles Corporate Mission GrowthGrowth The Mitsubishi Electric Group will continually improve its technologies CitizenshipCitizenship and services by applying creativity to all aspects of its business. By doing so, we enhance the quality of life in our society. EnvironmentEnvironment EthicsEthics 22 2. Corporate Governance Increased Flexibility and Transparency of the Management, Reinforced Supervisory Function over the Management General Shareholders’ Meeting Actual practices at Mitsubishi Electric Reporting to Reporting to Appointment • Thorough separation of execution and supervision Execution Supervision Appointment / • Majority of board of directors NOT assuming Executive Officers Dismissal / Supervision Board of Directors responsibility as executive officer Business Execution Authorization Transfer Chairperson • Minimal number of executive officers (21 members) President & CEO responsible for day-to-day operation of each business Nomination division and corporate administrative sections Committee Executive Officers Reporting to Auditing • Multi-phase risk management by executive officers Committee meeting Compensation Directors Each Business and Committee • Implement global internal control system to ensure Management Division *More than 50% of members compliance with the Corporation Law and J-SOX Act composing each of the three (Financial Instruments and Exchange Law) committees shall be outside directors. • Maintaining systems to respond to companywide risks Appropriate response to revisions of legislation Appropriate disclosure to shareholders and other external factors and other stakeholders Increase Corporate Value 3 3. Management Policy: Balanced Corporate Management Soundness, Profitability/Efficiency, Growth Growth Growth strategies Victory (VI) & Advance (AD) Agility to changes in the business environment Profitability/Efficiency Soundness Persistently strengthening the business Financial standing foundation: ・“Manufacturing Craftsmanship” Ethics and compliance ・Sales and services CSR ・Human resources Robust management foundation and sustainable growth Increase Corporate Value 4 4. Management Framework GrowthGrowth ProfitabilityProfitability SoundnessSoundness Two Frameworks for Implementing Balanced Corporate ManagementEfficiencyEfficiency “Manufacturing Craftsmanship” Two Front-lines (Quality, costs, manufacturing technologies, R&D, IP) Sales and services Business Customers Four Synergistic Overseas bases Mitsubishi Corporate division A Electric Networks Sales Production Group Integration synergies between Domestic bases Production and Sales Corporate Business divisions Productionsupport Sales Business divisions and Corporate Sales Production Global Business Business division B division C 5 GrowthGrowth ProfitabilityProfitability SoundnessSoundness 5. Essential Growth Strategies EfficiencyEfficiency DisplayDisplay && ImagingImaging InformationInformation OpticalOptical && ElectricalElectrical CommunicationsCommunications EnergyEnergy TechnologyTechnology MediaMedia TechnologyTechnology TechnologyTechnology TechnologyTechnology WaveWave TechnologyTechnology TechnologyTechnology PowerPower ElectronicsElectronics ElectricElectric TechnologyTechnology MechanicalMechanical TechnologyTechnology DeviceDevice TechnologyTechnology MaterialsMaterials TechnologyTechnology SensorSensor TechnologyTechnology TechnologyTechnology platforms QualityQuality Engineering,Engineering, EMCEMC Technology,Technology, SimuSimulationlation Technology,Technology, SystemizationSystemization Technology,Technology, DesignDesign Technology,Technology, IntellectualIntellectual PropertyProperty Rights,Rights, StandardizationStandardization Technology Product competitiveness Ex. DeviceDevice TechnologyTechnology Air conditioners with through technological SiC inverters Motor systems with synergy PowerPower ElectronicsElectronics Next-generation SiC inverter built-in SiC inverters TechnologyTechnology for railcars Information & Communication EnergyEnergy && ElectricElectric SystemsSystems IndustrialIndustrial AutomationAutomation SystemsSystems Information & Communication ElectronicElectronic DevicesDevices HomeHome AppliancesAppliances SystemsSystems Power Systems (Power generation, Transmission Factory Automation Systems Satellites/Satellite Communication Power Devices (IGBT/IPM) Air Conditioners/Heaters/ & Distribution) (PLCs/Display equipment, servomotors Systems High-Frequency and Coolers/Compressors Transportation Systems /Inverters, NC equipment) Radar/Antennas Optical Devices Housing products Water Environment System Processing machines Electronic Systems (ventilation, etc.) Automotive/Industrial-use Photovoltaic systems Disaster Prevention Systems (EDM/ lasers) Wireless Communications Systems LCD Panels Large Display Devices Alternators/Starters Optical Broadband Access Systems Household Equipment Building Systems ECU Information System Equipment Digital Media Equipment (Elevators and Escalators, Security, Electric Power Steering SI (LCD TVs, DLPs, BDs) Building Management Systems) Car Multimedia Particle Beam EV/HEV automotive Small Quantum LCD system Air-to-Water VI GrowthStrategy High-speed Cell production Cryptography SiC Treatment Systems elevators electrical equipment satellites solution robots Recycling PON MEMS Femtocell wireless Laser TVs base-station 40G LD/PD Solution businesses through product synergy SmartSmart GridGrid Total Security EnergyEnergy AD Total Security Solutions ConservationConservation SmartSmart CommunityCommunity ImagingImaging SolutionsSolutions Solutions SolutionsSolutions Growth Strategy EMC: Electro-Magnetic Compatibility, NC: Numeric Controller, ECU: Engine Control Unit, DLP: Digital Light Processing, BD: Blu-ray Disc, MSC: Micro Spark Coating, EV/HEV: Electric Vehicle/Hybrid Electric Vehicle, NGN: Next Generation Network, SiC: Silicon Carbide, 6 MEMS: Micro Electro Mechanical Systems, LD/PD: Laser Diode/Photo Diode, 5. Essential Growth Strategies GrowthGrowth ProfitabilityProfitability SoundnessSoundness Victory (VI) and Advance (AD) Growth Strategies EfficiencyEfficiency VIVI GrowthGrowth StrategyStrategy Transportation Systems “Make strong businesses stronger” Productivity and Factory Optical Broadband Productivity and Satellites Automation Access Systems QualityQuality Products R&DR&D andand Network Security IPIP Elevators and Escalators Systems Power Devices ProcurementProcurement Marketing and Automotive Air Conditioning Marketing and Equipment Equipment and Housing Products ServicesServices Power Systems and Housing Products FinancialsFinancials ADAD GrowthGrowth StrategyStrategy “Reinforce solutions business centered on HumanHuman ResourcesResources strong businesses through internal/external cooperation” Total Security Smart Grid Imaging Solutions Solutions Energy Conservation Smart Solutions Community 7 6. Direction of Growth Strategies GrowthGrowth ProfitabilityProfitability SoundnessSoundness Aiming to become a global, leading green company EfficiencyEfficiency that contributes to the creation of a prosperous society Environment and Energy Social Infrastructure Systems Eco-friendly power systems High degree of reliability supporting social safety and security R&D for effective utilization of natural System development utilizing varied resources technological platforms Power electronics technology High degree of linkage between image/ information communication and machinery controls Global Development Make strong businesses stronger globally Product development meeting regional needs Promote cross-business regional strategies Pursue ever Higher Growth 8 7. Strengthening the Global Strategy GrowthGrowth ProfitabilityProfitability SoundnessSoundness Make strong businesses stronger globally EfficiencyEfficiency Power Systems Transportation Systems Building Systems Factory Automation Systems Increasing global demand and Expanding demand in emerging Cyclical business model: Strengthen sales/service structure “eco-friendly” needs countries and broaden business new installation maintenance and reallocate resources to become domains in the Japanese market modernization No. 1 globally Increase turbine generator Penetrating into newly emerging New installation businesses in Solutions based on collaboration production capacity countries China and emerging markets Continuous investments in China New transformer plant in U.S. Partnerships and collaboration with Surging demand for modernization rail car manufacturers 400 500 600 Overseas 200 Net sales Net sales Japan (Billions of Yen)(Billions (Billions of Yen)(Billions (Billions of Yen)(Billions 0 of Yen)(Billions 0 0 0 08 09 10 11 … 15 (FY) 08