Nikon 1999 Annual Report Download - page 5

focus on our core competencies, while also concentrating on
developing product areas with the most strategic potential. Our
ground rule in this process is that continuing businesses must
be able to expand and grow profitably. With this in mind, we are
merging and closing subsidiaries, concluding tie-ups with
other firms, and eliminating unprofitable businesses. An inter-
nal project team is leading such efforts while evaluating plans
to move to an in–house company system for the Nikon Group.
As one of the first moves to restore profitability in our
ophthalmic lens business, in May 1999 we reached to an
agreement to form a 50:50 joint venture with the French firm
Essilor. Commencing operations by the end of 1999, this
cooperative endeavor promises to build on the strengths of
both companies, with the mutual expectation of contributing
substantially to our ophthalmic lens business.
With regard to unprofitable businesses, we are eliminating
excess costs and targeting operational synergies. For example,
sales of our inspection equipment have been hit hard by the
cyclical downturn in the semiconductor industry, resulting in
negative financial results. Nevertheless, the future potential of
many of these products remains considerable. In view of such
prospects, from the beginning of 1999 we rearranged the
business, transferring many of the products to the IC and LCD
Business Headquarters and Instruments Division.
(3) Global Business
At Nikon, we have come a long way in internationalizing our
market presence. We have cultivated the Nikon brand name to
the point where it commands worldwide recognition. However,
our management perspective and methods have been based on
those used in Japan, our home country of origin. Our mindset
has tended to be one of a Japanese firm supplying the world.
Competition between companies is now becoming global.
We must therefore benchmark our management efforts against
global standards. This means that it is essential to move to a
system of Group management based on international financial
accounting standards. Using a similar rationale, we have
worked to gain ISO9000 series accreditation for the quality
control procedures in all of our parent company divisions. In
addition, all Nikon parent company factories have gained
ISO14000 series accreditation, with subsidiary plants on course
to follow this lead and gain certification before the end of the
current fiscal year.
On the technical side as well, we aim to develop products
that use the latest technology common throughout the world.
In doing so, we aim to ensure that all of our production, design
and management standards meet or exceed criteria matching
the best practices used around the world. In short, we are
thinking and acting globally, and fostering a corporate culture
that encourages all our employees to do likewise.
(4) Fairness
One of the critical qualities of truly global management is
fairness not only in the way in which we assess our businesses
but also how we evaluate our employees. Success is measured
by efforts to instill total confidence throughout all operations
based on fair and equitable actions.
As part of the transformation of our business as we move to
an in–house company system, alongside the financial
indicators conventionally used in assessing business progress
an additional emphasis is being placed on cash flow. This will
provide a more rounded impression of overall business
performance and ensure that we judge each segment of the
business fairly. At the same time, we are also instituting
personnel evaluation systems based on merit, including the
use of performance-related compensation methods.
(5) Trust & Brand Value
Over the past 80 years, we have built up a great degree of trust
among our customers. Today, the Nikon brand name is
associated with high-quality products. Our principal task is to
maintain and build on this base of trust through enhancing the
value of our brand. By maximizing brand value, we can better
establish our reputation worldwide–not just in single-lens reflex
and digital cameras, but also in steppers and other advanced
technologies.
OUTLOOK
In the near term the economic outlook remains dim. Private-
sector demand is not forecast to revive sharply in Japan,
preventing the economy from staging any swift recovery.
Economies in the rest of Asia look likely to remain in the
doldrums. In Europe, signs of slowdown are apparent, while in
the United States, numerous concerns exist about the viability
of the current expansion. On a bright note, the semiconductor
industry appears to be heading in the right direction, and prof-
its in this key sector are predicted to improve over the coming
year. In addition, we expect to benefit from the high popularity
of our new range of digital cameras and the planned launch of
a digital camera model for the professional market this autumn.
Earnings are therefore expected to rebound in the current
fiscal year. Raising consolidated profitability will remain the pri-
ority focus of the entire Nikon Group. We will continue to work
to lower the profitability threshold, reducing management-
related and other costs. While focusing efforts on the swift
development of competitive products and their timely introduc-
tion into the market, the process of restructuring inefficient
areas of our operations will continue.
In closing, we would like to summarize our vision for Nikon.
Our core business domain is defined as a combination of
“micro and optics” with systems and electronics. We will
continue to develop the associated core technologies that
have brought success in these chosen fields, and, in doing so,
this will allow the creation of new products and businesses
outside of the framework utilized to date. Moreover, we are
reforming business practices within operations and believe
solid headway is being achieved. We ask our shareholders for
their continued understanding and support as we take up the
challenges before us.
July 1999
Shigeo Ono
Chairman
Shoichiro Yoshida
President 03
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