Winners / Selection Rationale

Mitsubishi Rayon's MMA Business Complex (hereafter, Mitsubishi Rayon) has developed a vertically integrated product value chain ─ a start-to-finish MMA production system that ranges from the production of MMA monomers to polymers and processed products.

It has the largest production capacity for MMA monomers in the world, and supplies MMA monomers to its customers from the nearest overseas production site. It has developed resilience against raw material price fluctuations thanks to the use of three different kinds of proprietary manufacturing process technologies. It can also minimize the impact of fluctuations in demand by flexible planning of a broad asset portfolio. It can thus provide customers with a stable product supply and the convenience of "one-stop shopping," thanks to its broad product line.

In the downstream products (MMA polymers and processed products), Mitsubishi Rayon differentiates itself through technological leadership. Many of these products are ones that only Mitsubishi Rayon can offer.

By setting a target ratio for in-house use of monomers, Mitsubishi Rayon has internally embedded in its strategy the dynamics required for business growth.

Mitsubishi Rayon's MMA product line is the broadest in the industry. It produces MMA monomers, polymers, and processed products. 1) Monomers include: MMA, methacrylic acid and methacrylic esters, which are used in paints, adhesives, and plastic modifiers. 2) Polymers include: a) methacrylic molding materials, b) plastic modifiers, and c) methacrylic sheets ― e.g., the sheets used as light guide panels for LCD backlight units, light emission and diffusion panels for LED light sources, scratch-resistant surface-hardening panels for small LCD screens for mobile phones, d) methacrylic film ― when laminated on the surface of other materials, it improves external appearance, ultraviolet light resistance, and the durability required for outdoor use (applications include the surface of traffic lights, automotive interiors, construction materials), and e) methacrylic coating materials ― e.g., UV curable super-hard coatings for automobiles and the coating material used for optical disks. 3) Processed products include plastic optical fibers and rod lens arrays. Plastic optical fibers are lighter and more flexible than glass fibers. They are not affected by electromagnetic noise, and are used for the in-car wiring of cars (mainly in Europe). Rod lenses are cylindrical-shaped lenses that are used as reading devices for facsimiles, scanners, and multifunction copiers. They are replacing rod lenses made of glass.

Some of the aforementioned products where Mitsubishi Rayon has clear leadership include plastic optical fibers, rod lens arrays, extra-thin methacrylic sheets (0.5-1.2 millimeters thick), and methacrylic sheets for aquarium tanks (extra-thick).

There is a synergistic effect among MMA products. The company can transfer production know-how across products. Also, in R&D, there are economies of scope. Knowledge in monomers helps in the development of new materials downstream.

Mitsubishi Rayon's customers are in such industries as automobiles, coatings and adhesives, construction materials, information technology, and household appliances.

Mitsubishi Rayon's mission is to support the growth of its customers. It has the largest production capacity for MMA monomers and the broadest product line in the industry. It has production sites in Europe, the U.S., and Asia, and is thus able to supply customers with whatever, whenever, and from wherever they want.

Mitsubishi Rayon's value proposition to its customers is: 1) the convenience of one-stop shopping. This is helpful for customers who are working to centralize procurement. The company can also provide information regarding demand forecasts for various products. 2) Global supply. Customers are integrating and relocating production to reduce costs. It is often less expensive to supply from the bases located closer to the customer's production sites. 3) Supply of unique products that other players can't offer. 4) Having broad technological knowledge in-house allows Mitsubishi Rayon to propose technological solutions to customers.

Mitsubishi Rayon has two autonomous value chains. One value chain is comprised of Mitsubishi Rayon's traditional operations, and the other is Lucite.（※1） Mitsubishi Rayon calls the former the "MMA block" and the latter, the "Lucite block." Both are vertically integrated, with operations ranging from monomer production to polymers. Both blocks have several divisions , and these units are interdependent on each other, as one unit's output is another unit's input. Traditionally Mitsubishi Rayon sets a target ratio for the in-house use of the monomers it produces (a maximum 50% of total production).

Technology development
Mitsubishi Rayon's core technologies are polymerization technology, precision forming technology, and optical design technology.
Although "technology push" is a popular approach in R&D in the chemical industry, Mitsubishi Rayon's technological development has been stimulated by input from sales, which helps researchers to understand customers' needs, especially with regard to cost reductions and other specific functions.

Procurement
By integrating procurement with Lucite, Mitsubishi Rayon has lowered its procurement and logistics costs significantly. According to the company, total cumulative cost reductions since the completion of Lucite's acquisition in May 2009 have reached $76 million. Further cost reductions of $67 million are expected.

Manufacturing
Mitsubishi Rayon has plants in Japan, Thailand, South Korea, China, Indonesia, the U.S., the U.K., and Singapore. It has the largest manufacturing capacity in Asia.

Marketing and sales
Particularly in coating materials, plastics modifiers, and optical products, Mitsubishi Rayon conducts solution sales, supported by its R&D capabilities and extensive market information.

Mitsubishi Rayon has a designated technical service department for each business division, and sales and technical service representatives visit customers in pairs. Although this is a practice broadly conducted in the industry, Mitsubishi Rayon pioneered this practice in the later 1970s, and this practice is now deeply rooted in the organization. The pair input the market-related information they have collected into a database, to which researchers, technical service staff, sales staff, and the management have access. The technical service staff at the company's overseas operations input information into the headquarters' database too. The technology planning department at the headquarters monitors these activities, and ensures that the information will not get lost within the organization.

Firm infrastructure
Mitsubishi Rayon manages its business through the use of Management Responsibility Units (MRUs). Each MRU has its own financial statements (P/L, B/S, and CF/S), which are evaluated in terms of the four key performance indicators (KPIs): EVA (economic value added), Value Added, ROCE (return on capital employed), and VAW (value added over wage).

At the same time, Mitsubishi Rayon works to maximize profit as an MMA Business Complex. It moves production from the less productive factories to the more productive factories, and increases the production of more profitable products. This makes Mitsubishi Rayon more resilient against external changes.

Since 1999, it has been pursuing "US ― Unique and Specialty" as the strategic theme guiding its competitive strategy and R&D activities. In addition, since 2002, it has been conducting company-wide activities to achieve cost reductions in such areas as manufacturing, logistics, inventory control, and working capital. In the MMA block, such activities are called "JK" activities, and in the Lucite block, these activities are called "Manufacturing Excellence" activities.

Human resource management
Although each MRU is measured using several key performance indicators (KPIs), as explained in the Company infrastructure section above, employees are evaluated on their capabilities and division-level performance. At Mitsubishi Rayon, web meetings and teleconferences are frequently held among operations across national borders, to solve problems. The company seeks to develop people who can work in an international context, employing a variety of educational programs offered to employees at different career levels. One such program is the Global Leadership Program. For this program, managers are selected from all of Mitsubishi Rayon's group companies worldwide (including Lucite). These individuals undergo a five-month training program, which is conducted in English and involves periodic meetings. At the end of the program, participants are required to make a presentation in English to the executive management team, which includes the proposal of overall management strategies or specific business strategies.

（※1）Mitsubishi Rayon announced its intention to acquired Lucite, a leading MMA specialist headquartered in the U.K., in November 2008, and finished the acquisition process in May 2009.
（※2）For example, MMA block has Chemicals division, Specialty Resins and Plastics division, and Specialty Chemicals division.

At Mitsubishi Rayon, activities are selected and coordinated around the key strategic choices, namely, differentiated high-value-added products, a broad MMA product line, growth through a balance of up-stream and down-stream products, the global expansion of manufacturing and sales activities, and cost reductions. (Please refer to Mitsubishi Rayon's activity system map, which appears at the end of this report.)

• Conceptualized the various divisions in the MMA Business Complex as individual links in a "chain" and encouraged the creation of synergies among them, while monitoring and managing their individual profitability.
• Process innovation 1: Developed its revolutionary continuous sheet production method in 1971. Although the majority of competitors adopted the extruding machine method (glass-casting method), Mitsubishi Rayon decided to entirely discontinue use of the extruding machine method and instead focused on the continuous sheet production method. Down through history, this technology helped the company to become cost competitive in ICT-related products such as LCD light-guide sheets and methacrylic sheets for mobile phones. It further developed this technology, and now is the only company that can produce extra-thin and extra-large methacrylic sheets. For this achievement, the Mitsubishi Rayon was awarded the Okochi Award in 1978.
• Process innovation 2: Developed a continuous bulk polymerization process in 1977 (a world's first). This process enabled a lower cost and improved purity. This technology also contributed to Mitsubishi Rayon's competitive advantage in optical products.
• Process innovation 3: In 1982, Mitsubishi Rayon became the world's first company to successfully commercialize MMA monomer synthesis for industrial applications, using its new C4 direct oxidation process for synthesis. This innovation freed methacrylic production from a reliance on hydrocyanic acid and simultaneously lowered the production cost. For this achievement, theMitsubishi Rayon was awarded the 1982 technical development prize by the Chemical Society of Japan, as well as the Okochi Special Award in 1983.
• Product innovation 1: In 1984, Mitsubishi Rayon succeeded in commercializing plastic optical fiber (a world's first) by improving the light transmittance ratio, and thereby increasing the transmission distance. This innovation incorporates the continuous bulk polymerization process mentioned above in "process innovation 2" and precision composite spinning technology. Mitsubishi Rayon now has a 70% share in the global market for plastic optical fiber. For this innovation, it was awarded the technical development prize by the Chemical Society of Japan in 1985.
• Product innovation 2: Developed a plastic rod lens and commercialized it in 1989 (a world's first). Mitsubishi Rayon is the only supplier of plastic rod lenses, which currently account for a 30% share of the global market--the rest are glass rod lenses. Rod lenses are used for the reading devices of facsimiles and multifunction printers. Furthermore, it improved chromatic aberration, responding to the evolution of printers from black-and-white to color. It was awarded the Optics Design Award by the Optical Society of Japan in 2010.

Mitsubishi Rayon launched its MMA business in 1943. The current strategy, however, originated when the company conceptualized its MMA monomer operations as a "business chain" consisting of departments that are interdependent on each other, and organized the departments into divisions in order to realize synergies among them.

Global expansion began in the 1990s with the deployment of manufacturing facilities in Asia. In 1999, Mitsubishi Rayon established itself as the MMA leader in Asia. With the acquisition of Lucite in 2009, Mitsubishi Rayon established itself as the global leader in this field.

Another core component of Mitsubishi Rayon's strategy is its proprietary technology. Through technological leadership, the company has succeeded in reducing costs, improving product performance, and commercializing new materials. This has been consistent throughout its history, and is the key component of its differentiation strategy.

• Does not do business where Mitsubishi Rayon can't have "Unique and Specialty." In the latter half of the 1990s and the beginning of the 2000s, it gradually discontinued using the extraction machine method for MMA sheet production to focus on its own innovation, which was a continuous sheet production method. In 1995, it exited from a joint venture with Mitsubishi Petrochemical in methacrylic acid esters after realizing that it would not be able to achieve technological leadership through differentiation.
• Does not spread its business operations geographically if that means losing the benefits afforded by concentrating operations in one region. Although Mitsubishi Rayon is unique for having business operations in the U.S., Europe and Asia, each business unit must be strong in order to remain competitive. In 2002, it exited from a joint venture in plastics modifiers in the U.S. in order to focus on Asia.
• Does not rule out the option of working with others. Although Mitsubishi Rayon's technological leadership is supported by its own R&D activities, where economies of scale work, it works with others. To produce MMA monomers, it formed a joint venture with the Siam Cement Group in Thailand (production began in 1999) and with Honam Petrochemical ― a subsidiary of Lotte ― in South Korea (production began in 2006).

Both return on invested capital and return on sales exceed the industry average

Return on invested capital (ROIC)　　　(Unit = percentage point) Inter quartile range (IQR) = 5.5%P
Return on invested capital = Operating income / Average invested capital

Return on sales (ROS)　　　(Unit = percentage point) IQR = 3.4%P
Return on sales =Operating income / Net sales

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