Formulation of Mid-Term Plan 2016 (3D-III)
Misao Fudaba
President and CEO
11 July 2016
1. Introduction
All of you are performing your day to day work with the 3D-II Mid-Term Plan and Grand Vision 2020 in mind. As a completion of the Grand Vision 2020, we have started to formulate the “Mid-Term plan (3D-III) which begins from FY2017.
We are all going to do planning work in the midst of major changes brought about by movements in exchange rates and the world economy. However we need to regard these changes in the external environment as opportunities to make innovative changes and take on challenge. Throughout the Group, while offering solutions to customers and companies, we will at the same time grow and taking on exciting challenges.
As before, we have overall issues related to Selection and Focus, overall optimization, and resource allocation in our business. In 3D-III, concerning these issues, discuss strategy which corresponds to each role by strategic business unit. Also, before putting together the final overall plan, I would like each division, each business unit, to have honest conversations with everyone about being able to “SEE, SPEAK, LISTEN”. Through these discussions, I would like us to formulate the Mid-Term plan with everyone’s agreement.
“Challenge, Change, and Courage” are the key words, but there are some things that should not be changed. As I often say, “Securing Safety and Quality” is the highest priority, and I would like you to continue standardization, stabilization, with “Daicel Production Innovation” and all worksites to keep following “Notice”, “Discover”, “Improve”.
2. Positioning of 3D-III
The 3D-III has two aspects: firstly, serving as the final stage of the Grand Vision 2020 and secondly, planting seeds for the next ten years.
The Grand Vision 2020 has set the following long-term goals:
(a) For each business segment to have strengths acknowledged by customers and society as being No. 1 in the world
(b) To create five new business segments, each capable of targeting ¥10.0 billion in net sales
Please first focus on accomplishing these goals set in the long-term vision.
At the same time, please also be aware that even if we cannot get immediate results during the course of 3D-III, it is a phase in which we plant seeds that will eventually produce fruit in the next decade.
3. Basic Concept
In 3D-II, due to exchange rates and inexpensive raw materials, business was favourable, however, when we take a look at the results, we cannot necessarily say that we have actually achieved the growth we intended to achieve in 3D-II. We are concerned that if we continue to do business in the same manner as we have done thus far, we might be unable to achieve growth and end up with the same results in 3D-III as in 3D-II.
In formulating 3D-II, we set our ideal vision for ourselves by FY2020 from the perspective of future optimization. Not an extension of business development of that time, the vision was supposed to be realized only when we would take on new challenges. If we have the courage to continue to face challenges such as by stepping into unfamiliar territories, we believe we can break out of the status quo and achieve great results and significant growth.
Accordingly, in formulating 3D-III, we once again express the spirit we would like you to have as the “3C (Challenge, Change and Courage) Spirit,” taking the initial letter from each of the composing elements.
4. Goal for 3D-III
The goal for 3D-III is Growth.
Growth = Increase number of solutions × Market expansion
Growth means to increase the number of solutions offered to customers and expand the market. For instance, solutions include new technologies, new products which put the technologies into practice and new grades of application development. Meanwhile, physical expansion of the market (expansion of sales regions around the world and increase in the number of customers and sales volume) is not possible until we provide customers with solutions. However, the term “Growth” here must be “Sustainable Growth.”
Sustainable Growth means expanding business through the cycle. In other words, solutions we offer to customers must be ones in which they can find fair added value. Sustainable Growth is possible only if the cyclical process of an increase in those solutions and generation of a reasonable profit continues.
To achieve Sustainable Growth, operating profit ratio is set as a companywide objective.
Management goal: Operating profit ratio of 12% or higher
We ask that in order to achieve sustainable growth, you formulate and carry out an aggressive action plan for 3D-III with the 3C spirit as its base.
5. Guidelines for the Development of Business Strategies
In order to attain the goals for 3D-III, i.e. growth, we need to invest in and allocate resources to, growth areas (technologies, products, busine