Kenwood 2004 Annual Report Download - page 8

Three core businesses
In pursuit of further value creation by integrality our three core business segments
and establish "Mobile & Home Multimedia System" business
Development of digital and network technologies for automobiles has
opened remarkable possibilities in the fields of car audio and
navigation systems. Since its entry into the automotive electronics
market in 1980, the Company has built a high brand presence
worldwide, utilizing the capability to cultivate potential needs of the
market and the ability to plan and develop products, while emphasizing
a consumer business based on the high fidelity technology it has
accumulated over the years.
In the consumer business, we are selling new proposal-oriented
products that combine high tone quality technique with advanced
technology, in the car multimedia field, which continues to grow.
Among others there is an audio-visual hard disc navigation system that
focuses on entertainment and convenience, tuners for digital satellite
broadcasting and the first civilian use of tuners for terrestrial digital
broadcasting. To further solidify its global presence in the traditional
automotive audio field, the Company is increasing its product lineups
by commercializing flagship models bringing together the essence of
the most advanced tone quality technologies, while raising its
presence in emerging regions through the use of global networks.
As for the OEM business, the Company is rapidly expanding
operations not only in Japan but also in north America, Europe and
elsewhere in Asia, by taking advantage of its high grade technologies,
which consistently receive high marks for the consumer business, the
ability to plan and develop products, as well as reliability and brand
presence. In April 2004, the OEM section became independent of the
Car Electronics Division and has been increasing its presence in
components for automotive electronics as well as in car multimedia
and audio systems.
Currently, the Company is launching large projects and proactively
investing in them to commercialize car multimedia products that are
more attractive and competitive, aiming to enhance competitiveness in
the field of car navigation systems, the use of which is expected to
fully spread in Europe and China. The Company is also working hard to
boost business competitiveness and profitability, by vertically
integrating plants at home and abroad in the consumer and OEM
businesses, separately.
Communications BusinessCar Electronics Business
Since its foundation, the Company has operated the radio equipment
business using the high-frequency technology, developing proprietary
techniques and high know-how in the field of wireless communications,
which is not included in the Car Electronics and Home Electronics
businesses. The Company has increased its market share of commercial
communications systems, becoming the world's second largest supplier.
To achieve this, the Company has speedily complied not only with various
countries' laws and regulations on radio waves but also with
digitalization of radio equipment, which requires cutting-edge
technologies. The Company has supplied radio systems that require
extremely high reliability, privacy and security, durability and operability
to the West McLaren-Mercedes Formula One (F1) auto-racing team-
referred to "Olympic Games of technologies"-as an official supplier, for
more than 10 years. This is indicative of our equipment's high
performance and reliability.
In recent years, the Company has entered the mobile communications
field, introducing PDC, PHS and GSM terminals in the domestic market.
However, we pulled out of this sector in November 2002, as profitability
weakened due to the maturing of the market and heightened competition
in development. Against this backdrop, the Company endeavored to
strengthen operations and improve profitability by focusing on the
businesses of radio equipment, including commercial radio systems,
amateur radios and specially-designated low power transceivers, from
which stable profits are expected.
The Company has moved the division headquarters to the U.S., the
largest market for Kenwood, where it is enhancing the cooperative
system of marketing, sales, development and production, digital radio
equipment and further shifting from being a terminal manufacturer to
becoming a system provider.
Kenwood is expanding operations in Asia, particularly China, where
spectacular growth is forecasted, and the regions, in which growth is
projected, including East Europe, particularly Russia, the Middle East,
Latin America and Africa. Meanwhile, in mature markets, the Company
is carrying out a growth strategy for expanding the size of operations by
increasing its presence through strategic M&As. As part of this strategy,
the Company acquired the radio operations of Toyo Communication
Equipment Co., Ltd. in June 2004. With this acquisition, the Company
now can supply a large number of products to public agencies and power
utilities, as well as utilize networks and huge resources or technologies
relating to radio equipment operations. It is now expanding its radio
equipment business in Japan.
Annual Report 2004
08