JVC 2005 Annual Report Download - page 8

high-value-added management and high-speed management while continuing to deliver out-
standing products and services that inspire people through the power of music and images.
JVC regards maintaining stable dividends as one of its highest priorities and will pay cash divi-
dends of ¥5 per share for fiscal 2005, remaining unchanged from fiscal 2004.
Factors Contributing to Weak Results
In fiscal 2005, we kicked off our medium-term management plan Leap Ahead 21. Under this new
plan, JVC will accelerate its growth strategy and implement continuous structural reform as well
as work to achieve an operating margin of 5% in fiscal 2007.
In the fiscal year under review, we endeavored to truly “leap ahead,” building on the results of
our previous three-year management plan. However, an economic slowdown entering the latter
half of the year, mainly in Europe, led to a challenging operating environment. In addition, the
advancement of digitization spurred an unprecedented level of competition, which, in turn, led to
a drastic drop in retail prices and shortened product life cycles.
I, however, as a president entrusted with the management of a company, do not believe that
harsh market conditions alone make for poor performance. There have always been corporations
that thrive even when operating conditions are harsh. Thus, we must own up to the fact that
internal factors are primarily responsible for our fiscal 2005 results. We have identified three main
factors contributing to our weak performance.
First, we were counting on launches of new consumer electronics products—including digital
video cameras, DVD recorders, and flat-screen TVs—to bolster performance in the latter half of
the fiscal year. However, we were unable to introduce these products during peak retail periods
as planned due to development delays. Such fundamental problems as incomplete new manu-
facturing processes and core technologies, an increase in the number of man-hours devoted to
software development, and issues with evaluation technologies were to blame.
Second, we were not prepared for fierce competition in digital products, both in terms of
sophistication and price. This reflects a lack of product planning that makes full use of insight into
market needs as well as a need to speed up the development-production-sales cycle.
Third, our mainstay music software business lost ground due to the postponement of releases
by major artists. Amid continued shrinkage in the music CD market due to diversifying tastes in
and delivery options for music, we strove to develop new artists who can produce moderate hits.
However, we remain largely dependent on major hits.
Although the fiscal year under review leaves much for reflection, it also raises expectations for
growth in fiscal 2006. For one, our focus on distinct products that showcase our technological
prowess led to the successful launch in the United States of HD-ILA rear projection TVs contain-
ing our proprietary high definition microdisplay device. In addition, car electronics products
6Victor Company of Japan, Limited
High-speed
management
High-value-added
management
Accelerating
our growth strategy
Implementing continuous
structural reform
Accelerating product-differentiation
strategies based on highly distinct products
Implementing reforms
that promote high-speed management
and increased efficiency
Fiscal 2006 Objectives