Feb.
25, 2000
Management
Reforms for Fiscal 2000
| Victor
Company of Japan, Ltd. (JVC) launched a major
management reform program in fiscal 1999, and
will be adding new reform initiatives during
fiscal 2000. The key development this year is a
reorganization of JVC into "companies."
The new organization will reduce fixed costs,
facilitate the shift of production offshore,
enable the reorganization of domestic production
systems, and promote "selection and
concentration" in businesses undertaken. JVC
also looks to the reorganization as a means of
focusing its development strengths on high
value-added digital and networking products, and
of speeding up its operations and
decision-making. |
The
end result of these reforms will be to normalize
JVC's accounts and accelerate its shift into
digital and networking areas.
|
As
part of programs to cut its fixed costs, JVC
targeted the elimination of 1,500 positions
during 1999, but recent projections indicate that
1,900 will be shed. JVC has already begun to
shift production of conventional television sets
to other countries, as well as much of its parts
production. In addition, it has been reorganizing
its movie business, HJT (Hughes JVC Technology; a
company producing professional projectors), JMUK
(JVC Manufacturing UK Ltd.; producing television
sets) JBR (JVC do Brazil Ltda.; Brazilian sales
subsidiary), and other affiliates, and
jettisoning unprofitable areas.
Below are
the highlights of fiscal 2000 reforms.
|
1. Management reforms
(1)
10.0 billion yen cut in parent-level fixed costs
Staffing cuts will give JVC an estimated
total of 11,000 workers on its payroll at the end
of fiscal 1999. The company previously had a
target of slimming itself to 10,000 by the end of
fiscal 2001, but will be accelerating this effort
with a package of early retirement benefits,
outplacement support, and personnel loans for
management-level employees.
JVC looks for a total of more than
10.0billion yen in fixed cost savings from
staffing cuts, reductions in management bonuses
and wages, and the sale of facilities rendered
idle by reorganization.
(2) Offshore production, reorganization
of domestic production
JVC will expand its efforts to relocate
production offshore. Products newly slated for
offshore production include VHS-C camcorders,
professional camcorders, and other professional
systems and equipment. The company has a target
of increasing its overseas production ratio from
the current 50% to approximately 60%. In
conjunction with this it will also be
reorganizing its domestic operations for greater
efficiency.
JVC looks for a total of approximately 10.0
billion yen in improvements from these efforts to
build an exchange rate-neutral system.
(3) Reorganization of television
division
JVC began to shift production of conventional
television sets offshore in fiscal 1999. It will
be continuing and expanding these efforts in
fiscal 2000, and reorienting domestic capacity
towards ILA and other high value-added products.
For European television production, it will
utilize more outsourcing, allocating half of its
supply to Europe for this. These efforts will
bring cost savings and also facilitate the
reorientation of domestic development resources
towards high value-added products. As
broadcasting goes digital, JVC will consolidate
its television and video divisions to develop and
market new visual products better suited to the
new forms of broadcasting.
(4) Acceleration of reforms
JVC is transforming itself into a
"digital, networked company." To
accelerate this transformation, it is delegating
greater authority to its division heads,
overhauling the product-by-product structures
within its divisions, bringing direct links
between the R&D and business divisions, and
overhauling its head office functions. These
reforms are embodied in the new "companies
system" that will be introduced on April 1
as a means of restructuring profits and
accelerating operations and decision-making.
JVC will create four "business
companies" within its organization: the AVM
(AV & Multimedia) Company, C&D
(Components and Devices) Company, Media Company,
and Software Company. It will also create three
"regional companies:" the Americas
Company, European Company, and Asia, Middle East
and Africa Company.
2. Strategy for digital, networked markets
JVC sees the shift to digital and networked
products and businesses as the key to higher
added value and profits. It will be developing
new products and services using digital and
networking technologies, and will be
concentrating its resources on these areas.
During fiscal 1999, digital and networked
products accounted for approximately 40% of
parent-level sales. JVC will be raising that to
approximately 50% during fiscal 2000. It expects
core products such as DVC (consumer and
professional), disc audio, and digital media, and
also strategic products such as ILA, D-VHS,
high-resolution digital still camera printers,
VIL circuit boards, optical wireless LANs, and
broadcasting encoder/decoder equipment to bring a
10.0 yen billion increase in profits in fiscal
2000 compared to fiscal 1999.
Over the next two or three years it will be
expanding its offerings in these product
categories as it transforms itself into a high
value-added company.
Below is an overview of JVC's
product strategy.
(1) Within the content of digitalization and
networking, JVC's development strategy will focus
on expanding the application of its proprietary
"ILA" display technology from
large-screen equipment to small, portable
home-use equipment. It will also embark on more
aggressive sales of ILA elements to outside firms
as it widens its product line. JVC will adapt its
ILA televisions for high-definition broadcasting,
and will, in addition, market them as "new
network displays" worthy of a position at
the center of the digital and networked age. This
product development initiative will be the core
strategy for the "home audio-visual
network" business.
(2) In light of the intermingling of
audio-visual information and data and the
increasing diversity and volume of information
being processed, JVC will concentrate on a
"New Network Strategy" that will create
new products and systems for the digital,
networked age. This strategy will include D-VHS,
DVD, and the rewritable optical disc applications
that will be a driving force in this market.
(3) JVC will promote the integration of
computer and information technologies with
audio-visual technologies through such products
as digital video cameras, Internet cameras, and
mobile computers. Its goal for the "digital
network mobile" business will be to create a
unique world of consumer information electronics
that will make audio-visual spaces both more
personal and more mobile.
(4) For the "network information
services" business, JVC will use its
expertise and technology in the music and content
areas to develop and expand music and video
distribution services already in operation.
(5) For the "network media device"
business, JVC will develop BIOSs and OSs suited
to networked, digital audio-visual equipment, and
expand sales of its proprietary optical wireless
LAN technology, its digital recording discs and
other media, and its VIL circuit boards (which
are a key component in compact, high-performance
digital mobile terminals).# # #
|
�@
|
