Harman Kardon 2011 Annual Report Download - page 24

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We believe our innovative networking and control technologies will provide us with significant growth
opportunities across all of our segments. Our HiQnet technology simplifies the interaction of our products and
provides users with an incentive to purchase complete HiQnet compatible systems. We are also playing a leading
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.
Expansion into emerging markets
We believe significant opportunities exist to grow our business in all three of our business segments in
emerging markets such as China, India, Brazil and Russia. To execute this strategy, we have hired dedicated
regional country managers in China, India and Russia. 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. Selenium, which we acquired in June 2010, has an established market presence and
distribution channel in Brazil and Latin America which is driving new business opportunities across all of our
segments in this region.
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 was to maximize operating flexibility and increase efficiency in our manufacturing, engineering,
procurement and administrative functions. Our STEP Change methodology targeted $400 million in sustainable
cost-savings on an annualized basis over the fiscal year 2008 baseline through the end of fiscal year 2011, and
involved over 200 restructuring actions to improve our global footprint, cost structure, technology portfolio,
human resources and internal processes. These actions have reduced the number of our manufacturing,
engineering and operating locations in high-cost countries, have enabled us to expand our capabilities in low-cost
countries, and have allowed us to take advantage of growth opportunities in emerging markets. We completed
our STEP Change restructuring program in June 2011.
Products
Automotive
We believe that we are a leader in the development and manufacture of 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. In fiscal year 2011, we supplied
infotainment systems for vehicles manufactured by BMW, Audi/Volkswagen, Daimler AG, Toyota, Chrysler,
Hyundai, Porsche and PSA Peugeot Citroën. 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 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 in the U.S. BMW, Daimler AG, Land
Rover, General Motors 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 in Rolls
Royce vehicles and offered as an option in Hyundai’s Genesis luxury coupe. Toyota and PSA Peugeot Citroën
offer our JBL branded audio systems. Hyundai and Kia also offer our JBL branded audio systems in the Korean
market. We also have an exclusive license with Bowers & Wilkins to develop, manufacture, sell and service
premium audio systems under the Bowers & Wilkins brand name.
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