“Vision 2020,” Mid- to Long-term Business Plan
There have been structural changes in the external environment, such as the rapid depreciation of the yen; a shrinking consumer electronics market due to the widespread use of smartphones; and innovations in digital and optical technologies such as clouds and big data. In view of these, JVCKENWOOD launched a new mid- to long-term business plan, “Vision 2020,” focusing on fiscal year 2020 in May 2015, and is taking steps based on the Vision.
Evolution into a company capable of creating customer value ～Long-term vision for 2020～
From a product vendor to a solution provider
JVCKENWOOD is to take a step forward and go from being a traditional manufacturing and sales company to being a company that creates customer value by providing solutions to their problems through focusing on the following initiatives.
JVCKENWOOD will change existing business operations oriented to product development under an operating unit system. Instead, it aims to become a partner for individual customers, an organization able to fully understand their problems, and provide specific solutions by employing business operation oriented to the markets and customers.
New “Shape of the company”
Direct sales businesses are expanding based on dialogues between business units at the headquarters and customers in such businesses as factory-installed option products in the automotive sector and system business for industrial wireless communication. In response to such a trend, JVCKENWOOD has restructured the business units at the headquarters into three organizations by customer industry sectors — the Automotive Sector, which contains growth-leading businesses; and the Public Service Sector and Media Service Sector, which are profit-base businesses. At the same time, it has also established the new “Shape of the company.” In addition, the roles of individual regional COOs and sales companies have been broadened to be able to provide functions for product planning and marketing, and support for customer services in the direct sales businesses.
From closed innovation to open innovation
For prompt commercialization of the next-generation businesses currently under development, JVCKENWOOD will use its internal resources for investments in cutting-edge solutions such as digital cockpits and B-to-B broadband wireless, while closely cooperating with outside partners that include venture companies to accelerate development of a solution-oriented model.
Management Policy ～Toward management that focuses on areas of our strengths～
Under “Vision 2020” JVCKENWOOD is promoting its businesses, spotlighting fields where it can capitalize its strengths, by carrying out performance evaluations and business portfolio management using return on equity (ROE*1) as a major business indicator and return on invested capital (ROIC*2) as an internal management indicator.
*1 Return On Equity
*2 Return On Invested Capital
To achieve the high ROE ～ Business portfolio ～
JVCKENWOOD will promote management that no longer puts emphasis on business scale, such as expansion of sales or market share, but on areas where its strengths will resonate. Specifically, JVCKENWOOD will perform achievement evaluations and business portfolio management based on ROE as a publicized indicator as well as ROIC as an internal management indicator.
With regard to business portfolio management, JVCKENWOOD will allocate managerial resources and perform strategic M&As according to the characteristics of respective businesses, considering their consistency with the long-term vision and capital profitability. By doing so, JVCKENWOOD aims to establish a business structure in which the stable income from the Public Service Sector and Media Service Sector, the profit-base businesses, supports the investment for future growth of the Automotive Sector, the growth-leading business.
Investment and financial strategy
Investment will be overweighed in the Automotive sector as a “growth-leading business.” Also an optimal capital structure will be pursued to improve capital profitability, keeping in mind the need for a balance between reducing net interest-bearing debt and investing in “growth-leading businesses.” For dividends, As a result, in the long-term, Automotive sector will contribute approximately half of the profit, supported by Public Service and Media Service sectors, thereby transforming into a business structure which will enable JVCKENWOOD to realize significant profit growth. a target dividend payout ratio on a consolidated basis will be 30%, considering the balance between a stable shareholder return and the need to ensure investment funds for “growth-leading businesses.”