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March 14, 2005
NEWS RELEASE

Announcement of Organizational and Personnel Changes Effective April 1, 2005

KENWOOD will accelerate its "new leap forward" growth strategy with Establishment of Car Multimedia (CEMM) Division and Value Creation Division (VCD).
Further, It will complete "Production Innovation" initiative, and lead to building a concurrent and "manufacturing-oriented" system that will integrate planning, design and production processes.



KENWOOD Corporation (President & CEO : Haruo Kawahara; Head Office: Hachioji, Tokyo) is pleased to announce that it will implement the following organizational and personnel changes effective April 1, 2005 in order to accelerate its growth strategy aimed at a "new leap forward."


1.  Purpose of Organizational Change Taking Effective on April 1, 2005

In May 2003, the KENWOOD Group formulated the "Excellent KENWOOD Plan," a medium-term management plan aimed at a "new leap forward." During fiscal year 2003 (ended March 2004), the first year under the Plan, KENWOOD generated excellent results from its foray into reinforcement of the consolidated business structure and from focusing on "Production Innovation" which is aimed at achieving fundamental improvements in profitability and cash flows. Throughout fiscal year 2004 (ended March 2005), the second year under the Plan, KENWOOD has aggressively sought to enhance its competitiveness with "Strategic Investments" and through promotion of its growth strategy, while simultaneously rebuilding its financial basis through execution of its "New Financial Strategy."

For the coming fiscal year 2005 (to end March 2006), the final year under the "Excellent KENWOOD Plan," KENWOOD plans to make yet another fresh start on the next stage of its growth by leveraging the fruits of its efforts in the first and second years to the fullest extent possible. At this juncture, KENWOOD reaffirms that it will strive to drive its growth strategy aimed at operating its "Mobile & Home Multimedia System" business even more aggressively, based on the belief that the rapidly progressing shift toward multimedia in the consumer electronics market, innovations in music media, and the coming convergence of car electronics and home electronics will offer new business opportunities. To this end, effective April 1, KENWOOD will realign its consumer business segments, will build a concurrent and manufacturing-oriented product planning and launch system integrating planning, design and production processes, and will establish an operating structure to enable the launch of high-quality, cost-competitive products capable of commanding high market acceptance.

2.  Principal Organizational Changes

(1)  Establishment of Car Multimedia (CEMM)Division as a full-scale division, and launch of Value Creation Division (VCD) to accelerate KENWOOD’s growth strategy
With the development of digital, IT and networking technologies, the consumer electronics market is currently undergoing major transformations. In the car electronics retail sector, the multimedia field represented mainly by car navigation systems continues to grow but prices have declined sharply. In the home electronics sector, the home theater systems field is turning stagnant as the prices of DVD-related equipment continue to drop. Innovations in music media have caused digital media systems to start replacing CDs and MDs, with flash memory-type and HDD-type digital audio systems emerging and growing rapidly into the car electronics and home electronics systems areas.

With the goal of capitalizing on these market transformations, the KENWOOD Group will implement the following realignments of its Consumer Business Sector:

 
(a)  Establishment of Car Multimedia Division as a full-scale division (Level 1 Unit)
Effective April 1, 2004, the KENWOOD Group established the Car Electronics OEM(CE-OEM) Division Multimedia Division as part of its growth strategy aimed at a new leap forward, and has expanded sales in this segment dramatically by 1.5 times over the past year. In addition, KENWOOD has completed commercialization of its in-house developed car navigation systems and will start shipping them to the retail market this week with the objective of enhancing its competitive position in the car multimedia segment.

An independent Car Multimedia Division (a Level 1 unit) will now be established from within the Car Electronics Consumer Division in order to achieve significant business growth by marketing these new car navigation systems on a full-scale basis, and by stepping up endeavors to promote visual products that are gaining a global footing and multimedia products including terrestrial digital broadcast compliant systems worldwide that are expected to grow popular in the near future.

In step with this organizational change, the Car Electronics Consumer Division will dedicate itself exclusively to the car audio business and focus on maintaining and expanding profits through implementation of a high value-added product strategy and cultivation of emerging markets mainly in BRICs.


(b)  Creation of the Value Creation Operation (Level 1.5 Unit)
Given the progress of digital, wireless and multimedia technologies, KENWOOD will create a Value Creation Operation (a Level 1.5 unit), a new organization that would organically operate across these three core businesses, with the objective of exerting KENWOOD’s strength as the sole manufacturer simultaneously operating car electronics, home electronics and communications businesses. With the new VCD, KENWOOD will strive to develop new business by blending the AV technology that has been continually developed over many years with state-of-the-art digital, IT and networking technologies under the aegis of the Consumer Business Development Center, KENWOOD’s cross-sectional R&D platform for consumer business segments.

By blending state-of-the-art digital, networking, wireless and multimedia technologies, KENWOOD plans to further advance the seamless integration of car electronics, home and portable audio systems, and networking with personal computers and the Internet, and will strive to open up new horizons that, as the best possible model for its "Mobile & Home Multimedia System" business, will enable KENWOOD to offer new added value to the marketplace.

The KENWOOD Group will thus carry out a major shift to a new operating structure including five profit centers comprising the CE Consumer Division, CEMM Division, CE-OEM Division, COM Division and Home Electronics Division, and including two cost centers comprising Speaker System Division and CB Development Center, with the newly established Value Creation Division attached to it.

(2)  Completing the "Production Innovation" Initiative and Building a New "Manufacturing-Oriented" System
In March 2005, KENWOOD will be bringing to its scheduled completion the "Production Innovation" initiative that it has been implementing since March 2003. KENWOOD will now build a concurrent system of technological development and product launches that integrates planning, design and production processes as discussed below, and, based on a renewed awareness of the importance of manufacturing, a manufacturing structure will be established to enable on-site engineers to expedite the development of cost-competitive and high-quality products.

 
(a)  Creating the Production Control Operation (Level 1.5 Unit)
With the completion of KENWOOD's "Manufacturing Innovation" initiative, the Production Innovation Division (a Level 1 unit) and the Manufacturing Innovation Project (a Level 2 unit) will be dissolved in favor of a newly evolved "Production Control Operation" (a Level 1.5 unit), which will be charged with the tasks of the oversight of all production bases, production technologies, promotion of reform in the supply chain management system, and other responsibilities. Through this new initiative, KENWOOD intends for "Production Innovation" to take root and develop further through promotion of a Company-wide awareness, strengthening of manufacturing capabilities through continuous upgrading of production bases, and realization of a globally optimal production system linking production bases under the operating principle of "the right products for the right spots."

Concurrently with the abovementioned organizational changes, the PSI Innovation Project (a Level 2 unit) which has been operating under the aegis of the Production Innovation Division, will be placed under the authority of the Strategic Business Planning Division (a Level 1 unit).

(b)  Overhaul of Product Management Operation (Level 1.5 Unit) and Product Design Operation (Level 1.5 Unit)
In order to build a concurrent system of technological development and product launches that integrates planning, design and production processes, KENWOOD will overhaul its Product Management Operation (a Level 1.5 unit), which has operated under the CE Consumer Division and the CE-OEM Division, and its Product Design Operation (a Level 1.5 unit). There will be a major shift from a structure in which product planning and design segments were divided and the design segment itself was split into different functional units such as mechanisms, circuits, etc., to a new, unified product management structure in which each project can be consistently held accountable for integrated processes of planning, technology, production and quality. In the new structure, the General Manager in charge of product management will control these unified projects.

KENWOOD will also will consolidate and realign the Product Planning Department (a Level 2 unit) and the System Engineering Department (a Level 2 unit) operating under Product Management Operation into Product Planning & System Engineering Department (a Level 2 unit). At the same time, we will consolidate Engineering Departments (Level 2 units) and Mass Production Engineering Departments (Level 2 units) operating under the Product Design Operation. These newly realigned operations will be incorporated into a new structure that will base its main office in KENWOOD Nagano Corporation with branch offices in Hachioji and KENWOOD Yamagata Corporation.


3.  Changes in Executive Officers' Posts

Name New Duties Previous Duties
Shuntaro Tanaka Vice Executive
General Executive; Chief Engineer of Car Multimedia Div.
Vice Executive
Chief Engineer; Car Multimedia System Development Project Leader of Car Electronics Consumer Div.
Chief Engineer of Consumer Business Development Center


4.  Personnel Transfers

Name New Duties Previous Duties
Junji Kobayashi Deputy General Executive; Operation Manager, Product Management Operation of Car Electronics Consumer Div.
General Executive of Home Electronics Div.
General Executive; General Manager, Business Management Dept. of Home Electronics Div.
Yoichi Ohyama Deputy General Executive; Senior Manager, Domestic Sales & Marketing Dept. of Home Electronics Div. Senior Manager, Domestic sales & Marketing Dept. of Home Electronics Div.
Hiromichi Wasai Opratioal Manager, Value Creation Div. of Consumer Business Development Center (newly joined to the company)  
Tadao Bessho Chief Engineer of Car Electronics OEM Div.
Chief Engineer of Consumer Business Development Center
Chief Engineer of Car Electronics Consumer Div.
Chief Engineer of Car Electronics OEM Div.
Chief Engineer of Consumer Business Development Center
Yoshiro Kasuga Operation Manager of Production Control Operation. Project Leader; Production Innovation Project; Project Leader, PSI Innovation Project of Production Innovation Div.



The KENWOOD Corporation is "Reaching out to discover, inspire and enhance the enjoyment of life" as part of its bold, new vision for the future.  A leader in "Mobile & Home Multimedia Systems", KENWOOD comprises three business units (Car Electronics, Communications and Home Electronics) and 36 subsidiaries around the world.

For queries regarding this article, please contact:

Investor & Public Relations Office
KENWOOD Corporation (Japan)
Tel: +81-426-46-6724
Fax: +81-426-46-1440
Email: pr.qa@pr.kenwood.co.jp


Updated 05/03/14 (C) 2005 KENWOOD Corporation

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