Mitsubishi Shame's Problem Solving

Case Study
Company Profile


Name Mitsubishi Motors Corporation

Established April 22, 1970

Head office 33-8, Shiba 5-chome, Minato-ku, Tokyo 108-8410 Japan

Number of employees Consolidated 33,202 ; Non-consolidated 12,761

Capitalization JPY 657,349 million

Purposes of incorporation 1. Development, design, manufacture, assembly, sales and purchase, importing and other transactions relating to automobiles and to component parts and replacement parts of said automobiles.
2. Development, design, manufacture, assembly, sales and purchase, importing and other transactions relating to agricultural machinery and industrial engines and to component parts and replacement parts of said agricultural machinery and industrial engines
3. Sales and purchase of used automobiles as well as component parts, replacement parts and accessories of said used automobiles
4. Sales of measuring equipment
5. Acting as insurance agents in accordance with laws relating to property damage insurance and to automobile damage indemnity insurance.
6. Financing business
7. Any other business related to the purposes set out above
Note: MMC is not currently engaged in agricultural machinery related business


Shareholders Outstanding common stock totaled 5,537,897,840 shares
Outstanding preferred stock totaled 437,593 shares
Mitsubishi group: Mitsubishi Heavy Industries, Ltd., Mitsubishi Corporation and The Bank of Tokyo-Mitsubishi Ltd., hold 34% of outstanding common stock.

Chairman of the Board
[ Representative Director ] Takashi Nishioka (As of 19 June, 2008)

President
[ Representative Director ] Osamu Masuko (As of 19 June, 2008)

Board of Management Consists of 14 members (As of 19 June, 2008)

Net Sales JPY 2682.1 billion (in FY2007, consolidated)

Automotive Sales 1,360 thousands units

Products Sold in More than 160 countries

Car Manufacturing Facilities 7 facilities in 5 countries
(Plus more than 12 business partner’s facilities in about 11 countries)

Engine / Transmission /
Parts Manufacturing Facilities 7 facilities in 4 countries

Research & Development /
Design 5 facilities in 4 countries

Subsidiaries and affiliates 50 consolidated subsidiaries more >>>
(Plus 4 equity method subsidiaries and 21 equity method affiliates)

Global Brand Mitsubishi Motors



Case
Mitsubishi's Shame
By Michael Schuman | Tokyo Monday, Jun. 28, 2004

Every week for the past 10 years, one contestant on the Japanese TV game show Tokyo Friend Park 2 got a chance to win the grand prize a Pajero sport utility vehicle made by Mitsubishi Motors by tossing darts at a spinning wheel while audience members clapped and cheered an encouraging "Pa-je-ro! Pa-je-ro!" But when the taped program aired on June 17, the customary end-of-show ritual had undergone an important change. Instead of the "Pajero!" chant, producers had dubbed in a different cheer: "Ku-ru-ma! Ku-ru-ma!" meaning simply "Car! Car!" Starting in July, the show is likely to replace the Pajero with another award entirely. "The prize is supposed to be this wonderful thing that makes everyone happy," says Shigeyuki Tsuruoka, the show's producer. "If we continued to present the Pajero, the audience would probably object."
Why would the Pajero, a popular SUV in Asia, suddenly become a booby prize? Because in recent months, Mitsubishi's former truck unit admitted to covering up a potentially lethal mechanical defect in its trucks; separately, Mitsubishi Motors launched a massive recall of its cars, including the Pajero, to fix defects that it had kept secret for more than a decade. As the scandal has widened, Japan's fifth largest carmaker has come to be seen as a case study of a self-serving corporation that systematically concealed safety problems to protect its brand. Mitsubishi's reputation has become so tarnished in Japan that industry executives and analysts now openly question its ability to stay in business. "The probability of survival is quite small," says Kunihiko Shiohara, a managing director at Goldman Sachs in Tokyo.
The scandal broke in March, when executives at Mitsubishi Fuso Truck and Bus, until last year a Mitsubishi Motors division, admitted after discussions with government regulators that a defect in wheel hubs on its heavy trucks could result in wheels suddenly coming off the vehicles. (Mitsubishi Fuso had previously maintained the problem was due to poor maintenance.) Later, the truck unit acknowledged it had hidden a problem with fractured clutch housings that could cause a transmission part to fall off vehicles. According to regulators, these two flaws are suspected to have caused or contributed to 73 accidents and two fatalities, including one in 2002 when a woman was killed by a wheel flying off a moving Mitsubishi truck. The truck unit says it is still investigating the accidents. But Mitsubishi Fuso has admitted an estimated 450,000 vehicles have defects that the company knew about but didn't report publicly.
Safety and reliability issues aren't confined to the truckmaker. In early June, Mitsubishi Motors dropped a new bombshell, announcing it would recall 155,000 cars in Japan to repair 26 mechanical defects it had failed to report since 1993, despite its obligation to do so under Japanese law. The bugs ranged from defective air bags to faulty hoses that caused breakdowns and included a glitch linked to at least two vehicle fires. Management also admitted issuing memos to dealers asking them to quietly fix these flaws if customers brought their cars in for other repairs. Shortly after the disclosures, police arrested former Mitsubishi Motors president Katsuhiko Kawasoe on charges of professional negligence for failing to report one of the potentially lethal truck defects.
The automaker's disregard for customer safety has turned consumers and bureaucrats alike against the company. Kazuya Akutsu, a 38-year-old systems engineer and member of a 600-strong Pajero fan club, says his parents, coworkers and friends are all pleading with him to replace his ride with something more respectable, but he is reluctant to do so. "I can't trust the company," Akutsu says, "but I like the car. At least the tires haven't come off." Others are less forgiving. Shoichi Nakagawa, Japan's Minister of Economy, Trade and Industry, recently said he was "speechless from disgust" over the company's "malicious" behavior. Public goodwill is dissipating at a critical juncture: Mitsubishi lost $1.9 billion in its 2003 fiscal year, and management is forecasting similarly dismal results for 2004 due to plummeting sales. Since April, its stock has fallen 50%.
To make matters worse, the company's international partner, DaimlerChrysler, has refused to provide it with new financial support. In April, DaimlerChrysler Chairman Jurgen Schrempp asked banks linked to Mitsubishi to forgive some of its $9 billion in debt as a precondition for the German-U.S. auto giant's participation in any bailout. But he was turned down. Soon after, Rolf Eckrodt, the DaimlerChrysler-appointed president of Mitsubishi Motors, resigned. DaimlerChrysler, which has already invested $3.5 billion in Mitsubishi's auto and truck businesses, says it has no intention of selling its 37% stake in Mitsubishi Motors but, warns Standard & Poor's credit analyst Chizuko Satsukawa, DaimlerChrysler's refusal to offer more assistance certainly bodes ill "for the creditworthiness of Mitsubishi."
The beleaguered automaker has instead turned for help to sister companies within the Mitsubishi Group, one of Japan's most powerful business conglomerates. Mitsubishi affiliates have agreed to provide $2.5 billion by buying new stock and converting some debt to equity. Another $1.6 billion is coming from investment bank J.P. Morgan and Japan-based private equity fund Phoenix Capital, which will become Mitsubishi Motors' largest shareholder when the investment is complete.
Meanwhile, in April, the Mitsubishi Group dispatched a new CEO, Yoichiro Okazaki, from Mitsubishi Heavy Industries. He quickly announced a restructuring plan that includes cutting 22% of Mitsubishi Motors' 49,000 employees, the closure of a factory in Japan, a revitalized car line with 44 new models to be introduced over the next three years, and a focus on boosting sales in China. Okazaki has also promised to overhaul the corporate culture by forming a business-ethics committee consisting of lawyers, academics and other outsiders to monitor senior management.
Okazaki admits this is Mitsubishi's "last chance." Analysts say it may already be too late. Japan has 11 companies making cars and trucks, while the total market has shrunk by about a quarter since its 1990 peak. Mitsubishi's market share in passenger- and mini-cars has sunk to a meager 3.8%. The company "could disappear tomorrow, and no one would miss it," says John Harris, a Tokyo-based auto consultant.
Indeed, even otherwise stalwart supporters are wondering if the company, having persisted in a long history of deceptive behavior, now deserves to be hauled away to the scrapyard. Asks one executive at a Mitsubishi company participating in the bailout: "If they did something against society, why should we support them?" It's a question that even the most loyal Pajero drivers will be asking themselves when trade-in time rolls around.



Press Release
PRESS REALEASE
Statement on Mitsubishi Motors' Handling of Past Recalls

Tokyo, June 2, 2004 — In Mitsubishi Motors' business revitalization plan announced on May 21, the company made a public pledge to turn itself into a trustworthy corporation by returning to the basics of placing top priority on customers, safety, and quality while also reforming its corporate culture and increasing transparency.
As part of upholding this pledge and implementing its principles, the company formed an investigative team to ensure traffic safety and dispel concerns held by customers over the company's vehicles. The team conducted a thorough investigation of "repair directives," known within the company as shiji-kaishu, issued to dealers to carry out repairs before any decision had been made as to the necessity for notifying the authorities about a recall or other matter. The investigation covered all repair directives stretching back to December 1993, the earliest possible date at which it is now possible to ascertain when such directives were issued.
As a result of the investigation, the company has decided to implement the measures outlined below. Mitsubishi Motors deeply apologizes for having to carry out these measures, including recalls, now for problems that occurred in the past, thereby considerably damaging public and consumer trust in the recall law.
1.
Mitsubishi Motors has not issued any repair directives since July 2000 when the company's recall problems came to light. The company is taking this opportunity to rid itself of all past problems and mistakes and take the first step towards becoming a renewed Mitsubishi Motors.
2.
Since October 2000, Mitsubishi Motors has appropriately processed its product information reports and promptly implemented post-market measures when necessary. The company will conduct even stricter auditing of these processes in future.
3.
The investigation discovered that repair directives issued as far back as December 1993 totaled 91, including 56 that fall under the area of service campaigns as outlined by Japan's Ministry of Land, Infrastructure and Transport. In addition to this, another case was pointed out by a media report in May 1993, bringing the overall total to 92.
4.1
Thirty of the repair directives fall under the scope of recalls as outlined by the Ministry. However, after checking the product information reports for the past three years, the company has confirmed that no accidents involving damage to property or personal injury have occurred.
4.2
Post-market measures were implemented following the correct procedures for four of the cases mentioned in 4.1 (two before July 2000 and two after August 2000).
4.3
Receiving guidance from the Ministry, Mitsubishi Motors has decided to carry out post-market measures for the remaining 26 cases to mark the start of its business revitalization. Of these 26 cases, the company will submit a recall for the airbag in its Galant sedan on Friday June 4. Post-market measures for the other cases will be implemented promptly.
4.4
Fifteen of the remaining 26 cases relate to defects that only occur in early production models and as more than seven years have passed since manufacture, it can be assumed that no defects will occur. However, the company has decided to implement post-market measures for these vehicles too.
5.1
Six of the repair directives fall under the scope of improvement measures as outlined by the Ministry. However, after checking the product information reports for the past three years, the company has confirmed that no accidents involving damage to property or personal injury have occurred.
5.2
Post-market measures were implemented following the correct procedures for two of the six cases mentioned in 5.1 in November 1997.
5.3
The remaining four cases of the six mentioned above include models in which improvement measures have already been completed on all vehicles and cases related to defects that only occur in early production models where it can be assumed that no defects will occur.
6.
A total of 56 cases that come under the scope of service campaigns exist, including four cases in which post-market measures have been carried out following the correct procedures (one in March 1993 and three in May 2002). To put customers first, the company will implement service campaigns or inform customers and take appropriate steps for the remaining 52 cases.
7.
The results of the company's investigation into repair directives are as outlined above. However, Mitsubishi Motors will continue investigations with the Ministry and take the appropriate steps.



PRESS REALEASE
Mitsubishi Motors Future Head of Quality Speaks on Extended In-Depth Investigation into Past Repair Directives
— Mitsuo Hashimoto, head of quality assurance from June 29, speaks at Ministry of Land, Infrastructure and Transport —
Tokyo, June 18, 2004 — I would like to take a few moments of your time to outline the progress of our investigation into past repair directives for passenger cars announced on June 2 and explain why we have decided to extend the investigation even further.
Mitsubishi Motors started submitting regular reports to the Ministry of Land, Infrastructure and Transport from June 16 on recalls stemming from past repair directives. We have once again revised the details of the recalls outlined on June 2 and I would like to inform you of how we are currently dealing with this matter. I will also give you a brief overview of additional steps we are taking in our organization to keep a check on quality issues and detail our action plan.
Our announcement on June 2 can be divided into two main points:
1. In July 2000, we investigated repair directives back to April 1998, but this time we extended our investigation back to December 1993. Our investigation found 92 cases of repair directives, 26 of which should have been submitted as recalls.

2. We said we would reinvestigate some 55,000 product information reports issued over the past three years to make sure there is no information on serious product defects.
On June 2, I also explained how the new chairman and president of Mitsubishi Motors, Yoichiro Okazaki, ordered me to recheck the product information reports from our customers’ point of view to see if there was any information other than that relating to repair directives that may point to defects. To make this investigation as thorough as possible, we brought forward our plans to set up a system within the Corporate Social Responsibility (CSR) Promotion Office to audit quality issues within the company. On June 6, we started preparations to get the CSR Promotion Office up and running by the end of June.
The CSR Promotion Office has already started looking into whether there is any information on our products that may exist inside or outside the company. The Office is checking to see if any related information is stored at dealers, going through the minutes of internal meetings on quality and recall related meetings, and examining customer complaints received by the Customer Relations Department. The Office is using all the people and resources it can from not only the Quality Management Office but also the whole company to ensure that nothing slips through. Further, clear targets have been set out along with a detailed timeline. Progress of the investigations will be watched both internally and externally.
In addition, under the directions of our president, I checked with dealers to see of there any information on accidents related to the 11 recalls reported on June 16. I am still checking with our dealers. However, last night I received word that a fire occurred in of the vehicles subject to recall. Thankfully, no one was injured in the fire. We are now looking to see if there is a link between the fire and the part subject to recall.
Today, we submitted recalls following the relevant procedures to the Ministry of Land, Infrastructure and Transport for these 11 cases, including the one in which a fire has been confirmed.



PRESS REALEASE
Concerning the first public hearings over the hub problem
I wish to apologize for the great troubles caused by the accident in which a wheel detached from a heavy truck due to hub failure in January 2002.
Three of our former executives have been indicted for making false reports in violation of the Road Trucking Safety Law, with penalties imposable against both employees and employer, and as such, our company is liable to be prosecuted.
As for the punishments for both employee and employer, since we cannot deny the wrong doing of these three accused men and our company has also been charged with blame, there is no independent statement that our company can make. Consequently, at today's first public hearings, in line with the facts surrounding the case, we made statements similar to the three other persons apart from those accused.
With the view that our company is also a defendant, at this point in time with the above comment in mind, we will keep watch for the final verdict.
Although the above comments pertain to our legal viewpoint, this does not change the feelings of remorse that we extend to the deceased, who perished due to this incident, or to their survivors. Once again, I solemnly reflect on this matter, and dedicate myself completely to the continuous pursuit of compliance enforcement and quality improvement.
September 1, 2004
Hideyasu Tagaya
President
Mitsubishi Motors Corporation



PRESS REALEASE
Progress of the investigation into the causes of the past recalls
Tokyo, December 13, 2004
1. Outline
In the process of achieving the goal of business revitalization under Mitsubishi Motors Corporation's new management, it was determined that it was essential to investigate the reasons for the past recall problems, and to take disciplinary measures as necessary. To achieve this, a team of lawyers from outside the company is in the process of carrying out this investigation.
This investigation began on July 6th this year, and a progress report was issued on October 6th, and although the investigation was scheduled to be completed within this year, unfortunately, we must sincerely apologize as it appears that we will not be able to meet that deadline.
2. Progress
The team of outside lawyers has since July 6th studied relevant trial documents and stored archive materials, as well as heard testimony mainly from those persons closely involved with case in 2000.
This November the company received a progress report from the team of outside lawyers, and afterward at the November 25th meeting of the Business Ethics Committee, the summary of the progress of the investigation was presented. The contents of the report covered the background for the 2000 recall, and the reasons why the defects related to the hub and clutch housing case of the Truck and Bus business were not recalled, which were the main contents of the investigation.
The purpose of the investigation was to clarify the facts of concealment during the 2000 recall problem, however based on the Business Ethics Committee's suggestion, in order to deepen the investigation, we therefore decided to carry out the reinforced investigation by observing the facts that were being gathered in the process of the extended investigation.
3. Reinforced investigation
Based on the received indications, the company will continue the investigation by the external lawyers, and will reinforce the investigation, into the following matters.
i. The role of the management and those who assisted them regarding the fact that the recall problem remained.
ii. The recall problem in the eyes of non-executive, rank-and-file employees.
iii. The corporate culture and company quality which are the background of the passenger car recall concealment and the hub and clutch housing problem of the truck and bus business.
4. Future steps
In as much as it is possible, we will promptly conclude the reinforced investigation by the team of outside lawyers, receive their final report and, reporting to the Business Ethics Committee, we will clarify where responsibility lies and deal with this strictly. In terms of the reinforced investigation by the team of outside lawyers, the company cooperation team will promote and cooperate fully with the investigation.
Although it will be after reporting to the Business Ethics Committee, the company is considering to complete the reinforced investigation within the fiscal year. After this the company will determine the appropriate disciplinary measures to take.



Problem Solving

• Time Context : tahun 2002. Kasus yang terjadi ialah salah satu roda dari truk produksi dari Mitsubishi Motors Corporation lepas dan mengenai seorang wanita hamil yang menyebabkan wanita tersebut meninggal dunia.
• View Point : Mitsubishi Motors Corporation
• Central Problem : Mitsubishi Motors Corporation mengabaikan faktor keselamatan dalam mobil-mobil yang mereka produksi demi meraup keuntungan dari penjualan.
• Objective
Must : memperbaiki image Mitsubishi Motors Corporation di mata publik dan mengembalikan kepercayaan konsumen.
Want : kepercayaan konsumen terhadap produk-produk dari Mitsubishi Motors Corporation kembali dan penjualan kembali meningkat.
• Area of Consideration
Internal : membenahi manajemen dari Mitsubishi Motors Corporation.
Eksternal : tetap mengadakan event-event yang sebelumnya telah dilaksanakan oleh Mitsubishi Motors Corporation guna meningkatkan kembali image Mitsubishi Motors Company di mata publik.
• Alternative Course of Action
1. Mengembalikan image dan kepercayaan Mitsubishi Motors Corporation di mata publik dengan merecall seluruh mobil produksi Mitsubishi Motors Corporation, melakukan investigasi mendalam terhadap mobil-mobil produksi Mitsubishi Motors Corporation, menjelaskan keseluruhan permasalahan yang terdapat pada mobil-mobil produksi Mitsubishi Motors Company serta meminta maaf dan bertanggung jawab terhadap seluruh konsumen yang telah dirugikan oleh Mitsubishi Motors Corporation.
2. Menghentikan sementara produksi mobil-mobil Mitsubishi Motors Corporation yang sedang berjalan guna kepentingan investigasi.
3. Melelang sisa raw materials yang belum diproduksi oleh Mitsubishi Motors Corporation kepada perusahaan-perusahaan kecil.
Alternative Course of Action # 1.
• Action Plan
1. Meluncurkan produk-produk baru dari Mitsubishi Motors Corporation yang telah memenuhi standar kualitas dan keamanan internasional.
2. Menjalin kerja sama dengan perusahaan-perusahaan otomotif besar dunia dalam rangka pengembangan teknologi kendaraan.
3. Menjalankan strategi marketing yang baru, misalnya dengan memperluas jaringan distribusi.

Kesimpulan:
Dari contoh kasus diatas, kita dapat menarik kesimpulan bahwa faktor kepuasan konsumen memang berpengaruh terhadap keputusan konsumen yang bersangkutan untuk membeli suatu produk. Apabila konsumen merasa bahwa kebutuhannya terpuaskan oleh suatu produk, maka konsumen tersebut akan menjadi loyal terhadap produk kita bahkan bukan tidak mungkin mereka akan menjadi advcators bagi produk-produk kita. Hal ini dapat dibuktikan pula dengan melihat kepada branded product. Hampir dipastikan bahwa produk-produk yang menjadi branded product ialah produk-produk yang selalu konsisten menjaga kualitas produk mereka dan mampu memuaskan kebutuhan konsumen mereka.