JVC 2006 Annual Report Download - page 10

As we move forward with product-differentiation strategies, we will focus on hard disks, high defi-
nition, and networks. Anchored in these three areas, JVC will draw on its roots in high-quality sound
and image technology to bring to the world completely new forms of entertainment.
In addition, we will expand existing sales channels that enable us to clearly communicate to cus-
tomers what makes our products unique and develop new sales channels that are in tune with the
times in order to boost sales of unique products.
3. Overhauling Operations and Developing New Businesses
To thrive amid intensifying competition triggered by the emergence of digital AV products, we need
to reinforce our strategies for securing a position as a top niche player while reworking existing oper-
ations and developing new businesses to make effective use of management resources.
To this end, JVC has realigned its existing operations into five core and non-core businesses—the
consumer electronics, professional electronics, devices, music entertainment, and media.
We have positioned consumer electronics and music entertainment operations, which have exist-
ed since the Company’s very foundation and lie at the heart of our corporate identity, as core busi-
nesses. Serving as the pillars for Companywide operations, these two businesses will work to
enhance corporate value while seeking to collaborate with each other.
At the present time, the consumer electronics business’s growth engine is displays, and a sub-
stantial portion of its revenues is derived from video cameras and car AV systems; however, JVC is
narrowing the focus of these operations and will revise all product categories in the business over the
medium term from the perspective of growth potential and profitability.
In the music entertainment business, we aim to break away from our dependence on major hits
and create a style of management where there are always numerous artists in the pipeline, from tal-
ent that has just been discovered to artists in the mid-career stage and stars at the height of their
careers. In addition, we will seize business opportunities arising from such changes in the market as
digitization and networking by leveraging the contents that we own in various arenas, including the
licensing business, and building new business models and frameworks.
Turning to non-core operations, our first step will be to streamline the product categories within
each business to sharpen the focus of these operations and harness the benefits of synergies with
the two core businesses.
In professional electronics, JVC will target the prosumer market, which bridges the high-end con-
sumer market with the traditional professional electronics market, and focus development activities
on specific markets and products capable of generating synergies with core businesses.
As for device operations, we will identify devices that can be used in in-house products as well as
devices that can be supplied to other companies to form partnerships with vendors—devices like our
motors for hard disk drives—and invest management resources in these devices.
The media business can be classified broadly into pre-recorded software and recordable media.
We will focus on maximizing the synergies stemming from the fulfillment role that pre-recorded soft-
ware plays in the core music entertainment business as well as the synergies between recordable
media and recorders in the consumer electronics business. In this way, we will increase our focus on
key businesses.
The Committee for the Creation of New Businesses, which began operations in November 2005
as part of Companywide organizational reform, is conducting Companywide deliberations pertaining
to the development of new businesses. This committee establishes the direction of Companywide
R&D activities, examines and makes decisions regarding the commercialization of products in line
with the Company’s approach to R&D, and makes efficient use of management resources.
8Victor Company of Japan, Limited