Harman Kardon 2009 Annual Report Download - page 25

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role in developing the emerging Ethernet AV standard, which we believe will be the basis for the next generation
infotainment bus technology. This technology will allow higher audio and video bandwidth and transport
capabilities, and we believe it will open up significant new market opportunities for our Company.
Expansion into emerging markets
We believe significant opportunities exist to grow our business in all four of our segments in emerging
markets such as China, India and Russia. To execute this strategy, we have hired dedicated regional presidents in
China and India, both of whom have successfully opened up new markets for high-technology companies in
Asia. We also are repositioning our research and development and production capabilities, and are developing
distribution channels to be able to meet the demand for our products in these markets.
STEP Change sustainable cost savings program
We announced our STEP Change restructuring program in the first quarter of fiscal year 2009. The goal of
this program is to maximize operating flexibility and increase efficiency in our manufacturing, engineering,
procurement and administrative functions. Our STEP Change methodology targets $400 million in sustainable
cost-savings on an annualized basis over the fiscal year 2008 baseline by the end of fiscal year 2011, and
involves over 200 restructuring actions to improve our global footprint, cost structure, technology portfolio,
human resources and internal processes. These actions will also reduce the number of our manufacturing,
engineering and operating locations in high-cost countries, enable us to expand our capabilities in low-cost
countries, and allow us to take advantage of growth opportunities in emerging markets.
Products
Automotive
We believe that we are a leader in developing and manufacturing high-quality, high fidelity, digitally-
integrated infotainment systems and premium branded audio systems for automobiles. In recent years, the
automotive industry experienced increased demand for information and entertainment in automotive vehicles.
We have developed leading technical competencies to address this demand. Our infotainment systems are a
combination of information and entertainment components that may include or control GPS navigation, traffic
information, voice-activated telephone and climate control, rear seat entertainment, wireless Internet access, hard
disk recording, MP3 playback and a high-end branded audio system. In fiscal year 2009, we supplied
infotainment systems for vehicles manufactured by Audi/Volkswagen, BMW, Daimler, Chrysler, Hyundai,
Porsche, PSA Peugeot Citroën and SsangYong Motor. Our business objective is to maintain our leadership
position in the infotainment business.
We continue to leverage our expertise in the design and manufacture of premium branded audio systems, as
well as the reputation for quality associated with our JBL, Infinity, Harman/Kardon, Mark Levinson, Logic 7,
Becker and Lexicon brand names. As a result of our well-established relationships with automobile
manufacturers, our engineers are engaged early in the vehicle design process to develop systems that optimize
acoustic performance and minimize weight and space requirements. Our Infinity branded car audio systems are
offered by Chrysler, Hyundai and Kia. BMW, Daimler, Land Rover GM and Saab provide Harman/Kardon
branded audio systems in their vehicles. Our premium Mark Levinson digital audio system is offered by Lexus.
Lexicon branded audio systems are standard on Rolls Royce vehicles and offered as an option in Hyundai Motor
Company’s new Genesis luxury coupe. Toyota and PSA Peugeot Citroën offer our JBL branded audio systems.
Hyundai Motor Company and Kia Motor Company also offer our JBL and Infinity branded audio systems in the
Korean and United States markets, respectively. We also sell PNDs, primarily in Europe.
Consumer
We manufacture loudspeakers under the Harman/Kardon, Infinity and JBL brand names for the consumer
home audio market. These loudspeaker lines include models designed for two- channel stereo and multi-channel
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