JVC 2004 Annual Report Download - page 6

4. Victor Company of Japan, Limited
JVC’s higher earnings in fiscal 2004 resulted from a more robust operating structure yielded
by three key reforms executed over the past three years—reengineering our business structure,
changing our product lineup, and revitalizing our corporate culture. In particular, we rebuilt
key elements of our day-to-day operations, such as purchasing, manufacturing and logistics,
to create a core manufacturing cycle capable of operating more productively and efficiently.
It is this crucial change that has underpinned our improved profitability. As a result of these
reforms, we are confident we now have a robust business structure in place to support our
growth strategy. Consequently, from fiscal 2005, we will shift our focus to accelerating this
strategy to reverse the decline in net sales in fiscal 2004 and drive earnings even higher.
At the same time, we must respond to key issues in our operating environment: primarily
how to remain competitive in the global consumer electronics market amid the shift to the
digital age and the dwindling numbers of manufacturers and retailers in the industry. Either
overwhelming size or the ability to create products that stand out in the market will be vital
to taking on the competition in this challenging environment. At JVC, we aim to continue
leveraging our unique products, but also use our size as a strength to take us to the next
stage of growth.
Leveraging JVC’s Uniqueness
We have identified five priority business areas that are forecast to grow: high-definition
displays, digital high-density storage, network audiovisual systems, Components & Devices,
and Software & Media. Because of their promising growth prospects, we also anticipate
competition in these markets will intensify. In response to this challenge, we aim to build
mutually beneficial partnerships with companies involved in product development, produc-
tion, purchasing and other areas of our business. In this way, we will create a horizontally
integrated structure to reduce lead times and increase efficiency, while at the same time
consistently launching “Only One” products that demonstrate JVC’s reputation for innova-
tive technologies, distinct design and ease-of-use, to put clear water between ourselves and
our rivals.
Looking further ahead, we will remain focused on a horizontally integrated manufactur-
ing approach, which allows us to make up for whatever we lack in resources with speed.
Moreover, by strengthening our financial structure, we will also be able to drive forward the
vertical integration of our strategic products. In this way, we aim to enhance the overall
performance of the company to inject added value into our product lineup and improve
asset efficiency.
Growing the Display and Optical Disk Businesses
Anchored by this fundamental thinking, we plan to boost the ratio of net sales generated by
new and growth products to 30% in fiscal 2005, and 60% in fiscal 2007. In our five priority
business areas, we will focus particularly on strengthening our display and optical disk busi-
nesses by channeling resources into these product categories. We are targeting these products
for two key reasons: both promise real growth in the years ahead, and JVC boasts a reservoir