JVC 2008 Annual Report Download - page 6

Establishing a World leading specialized manufacturer
by evolution and realization of synergies, thus
allowing a new foundation for corporate survival
Management integration will expand the scope of previous
cooperative efforts to other existing business segments, previously
limited to aspects of operations such as development, production
and procurement. This applies to common business segments of car
electronics and home audio. It will also facilitate expansion into new
domains and reinforce business activities such as marketing and sales.
For common businesses, the companies plan to grow the car
electronics business into a strong profit center by expanding the
role of J&K Technologies to include general procurement and
manufacturing. This will ultimately, position J&K Technologies as
an operating company standing shoulder to shoulder with JVC and
Kenwood and also it will increase the profitability of the home audio
business through the effects of integration.
Through management integration, we will retain the corporate
infrastructures of both companies built to evolve a new foundation for
corporate survival, and make it possible to survive in the digital era,
and strive to enhance our competitiveness and profitability. By adding
synergies from management integration, we will grow and build
corporate value and secure our status as a world leading specialized
manufacturer.
Management Integration after Seeing Through
Structural Reforms of Each Company
Given such an environment, on July 24, 2007 JVC and Kenwood
entered into a capital alliance agreement in a spirit of equality,
with the ultimate goal to integrate management. Both companies
consider this the first step toward realigning the Japanese AV specialty
manufacturing industry. JVC is already implementing structural
reforms supported by the August 10, 2007, capital increase through
third-party allocation from Kenwood and several investment funds
managed by SPARX International (Hong Kong).
The companies established J&K Technologies Corp., a joint
venture in the car electronics and home audio business, to work on
technological development and enhance product competitiveness.
In parallel to this, both companies established the joint
Management Integration Review Committee to consider and prepare
Toward life as a Specialized Manufacturer
In recent years, the consumer electronics industry witnessed the
appearance of new rivals in such countries as South Korea, Taiwan
and China. There are increasingly fierce battles over market share
and heightened price competition in the global market. Parallel
progress in digitization precipitated higher capital investment and
saddled companies with heavier software development burdens.
This also prompted the development of products based on universal
components that make product differentiation increasingly difficult.
The entry of competitors from the information technology (IT) industry
also raised the level of competition.
JVC and Kenwood consider the restructuring of Japan’s audio-
visual (AV) specialty manufacturing industry to be absolutely necessary
to survive such a fiercely competitive environment and continue to
generate and enhance corporate value.
for management integration. This is the second step toward industry
realignment.
Both companies agreed to implement the proposed management
integration on October 1, 2008.
(i) This enables JVC to complete major structural reforms of its display
business aimed at stabilizing its management infrastructure. It enables
Kenwood to complete its own structural reforms, which target the
car electronics original equipment manufacturing business and will
underpin profitability in its consumer electronics business.
(ii) This generates greater synergy by integrating management
resources and provides a new perspective on growth strategies.
Becoming a World Leading Specialized Manufacturer
Background to Management Integration
Progress of Management Integration
Purpose of Management Integration
Outline of Management Integration
JVC KENWOOD Holdings, Inc.
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