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ANNUAL REPORT 2 0 0 2
30
The major factor behind our operating loss was the continued decline in selling prices. In re-
sponse, we are taking initiatives to significantly lower the company’s breakeven point. The aim is to
create a resilient corporate structure capable of absorbing further declines in selling prices while
generating profits. We have already taken a number of steps toward achieving a non-consolidated
breakeven point of ¥500 billion in sales by fiscal 2003. These steps included realigning our manu-
facturing facilities in conjunction with a review of unprofitable businesses, including withdrawal from
the magnetic head business. We have also reduced the number of our facilities, from 37 at the end of
fiscal 2001 to 30 by the end of fiscal 2002, and our domestic workforce from 9,969 to 9,399 during
the same time frame. These initiatives helped the company to generate operating income in the
second half of the year. In the current year there will be more of the same, as we strive to create a
highly cost-competitive corporate structure. The workforce will be pared back further to 8,200 through
an early retirement program, and we will target a 20% reduction in procurement costs by focusing on
Value Engineering (VE) at the design stage.
CHANGING CORPORATE CULTURE: CHANGING JVC
At JVC we face another critical issue: how to create a corporate culture that binds together our entire
organization so we can effectively implement our growth strategy. Past JVC growth strategies have not
stood the test of being applied in core business processes, such as product development, manufac-
turing or in the sales frontline. The result was a lack of focus on factors that really mattered to the
big picture—keeping a tight reign on inventory levels, developing products that consumers really want
and maximizing earnings. Put simply, organizations within the company weren’t strong enough to
support strategy implementation. This resulted in a negative mindset. Our people were convinced
that there was no panacea for the company’s problems, no matter how hard they worked. Motivating our
people is therefore vital, by convincing them that their actions directly affect the profitability of JVC.
AN INNOVATIVE SPIRIT
Our powerful lineup of proprietary technology lies at the heart
of our competitiveness. This technology is supporting our ef-
forts to develop market-leading products as we strive to real-
ize an earnings recovery in our Consumer electronics business.
See page 08 for more