Management Policy and Business StrategyCorporate Information

Management Policy and Business Strategy

“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.

From a product vendor to a solution provider

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.

New “Shape of the company”

From closed innovation to open innovation

For prompt commercialization of the next-generation businesses currently under development, JVCKENWOOD will use its internal resources for intensive investments in areas 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

Management Policy ~Toward management that focuses on areas of our strengths~

To achieve the high ROE ~ Business portfolio ~

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.”

Mid-term strategy ~ Fundamental policies for each market and business ~

Market strategy

Based on the abovementioned long-term vision and management policy, JVCKENWOOD will re-focus on developed countries and pursue an aggressive approach to growth in emerging economies. This is based on its recognition that there is still a lot of room to create customer value in both developed countries and emerging economies. At the same time, it will integrate its strengths in order to create new demand in next-generation business areas as a further step in the business strategy.

Business strategy

Aim to achieve this figure by turning businesses necessary to improve their profitability and commercializing next-generation businesses, supported by “profit-base businesses.”
JVCKENWOOD considers Automotive sector as one containing “growth-leading businesses,” and will work to expand market shares of consumer business and accelerate growth in the dealer-installed option business. Regarding Public Service and Media Service sectors as “profit-leading businesses,” JVCKENWOOD will get involved in the total professional radio system business centering on professional digital radio equipment. In addition, JVCKENWOOD will make a full-scale entry into the pathology market in healthcare area and the next-generation content creation (professional camera) Regarding markets in developed countries, JVCKENWOOD will rebuild the industry structure as a solution provider of the automotive sector and develop potential demand in Public Service and Media Service sectors. Regarding markets in emerging economies, JVCKENWOOD aims to break away from low-price competition and continue to develop markets in collaboration with customers, based on firm relationships with them that have been established in developed countries. and imaging device business, expand into the entertainment business for professional purposes, and thus diversify its profit-generation model.
At the same time, JVCKENWOOD needs to manage businesses necessary to improve their profitability, such as radio system business in the US, factory-installed option business, and imaging device business. It is also making an advance investment in the next-generation businesses, such as CAROPTRONICS systems, professional broadband radio system, and healthcare business. JVCKENWOOD aims to achieve the mid-term target by turning the businesses into profitable and commercializing the next-generation businesses.

Automotive Business

The dealer-installed option Business continued to carry out activities to win orders backed by the favorable performance of “Saisoku” Navigation in the Consumer Business. It aims to secure a market share of 40% in the fiscal year ending March 2018.

Automotive Business

Next generation professional radio system

Next generation professional radio system

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