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Management Direction
Basic Business Philosophy
Along with the more ubiquitous and sophisticated use of the Internet as part of the social infrastructure in such fields as B2B e-commerce, medicine, education and e-government, the broadband era is taking shape as transmission of ever-larger amounts of data at faster speeds - and the related shift towards always-on connectivity, interactivity and mobile usage - becomes possible.
Against the backdrop of such sweeping societal changes, and as a new stage in Fujitsu's "Everything on the Internet" business strategy adopted the year before last, we are focusing our business activity on the broadband Internet. As a leading IT business group in this new era, Fujitsu offers a comprehensive range of technologies - from the platforms that form the core of the broadband Internet (including photonic networks, next-generation mobile communication systems and high-performance servers) and leading-edge electronic device technology to high-level security and systems operation know-how. In addition to offering total solutions utilizing these technologies, we are aggressively pursuing new business opportunities in such fields as e-Japan, an e-government scheme now being promoted by the authorities in Japan, and global-scale outsourcing services.
Challenges and Business Strategy
The Fujitsu Group faces a severe economic environment, marked by restrained corporate IT investment in such key markets as Europe and the U.S. and continued global stagnation in consumer demand. A market recovery is not anticipated before the second half of fiscal 2002. Moreover, we must also contend with the challenge of responding to significant qualitative changes in customer needs, such as the trend for companies to outsource the management of their IT systems, and the overall push to make global business more efficient. To respond to such challenges, Fujitsu has announced a major restructuring and new growth strategy, positioning fiscal 2001 as "the year of fundamental structural reform." Specifics of the new strategy are outlined below.
- Pursuit of higher added value through software and services
We are committed to seeking greater added value by expanding our software and services business and increasing the software and service aspects of all of our business areas, thereby countering the effect of product areas where added value has declined. With respect to data storage and appliance servers for specialized uses, we are working to improve profitability by providing operations management, backup and other types of services. For the telecommunications carrier market, we are working to strengthen our competitiveness by moving beyond simply supplying equipment to providing comprehensive services in such areas as system design, operation, maintenance and installation. In the area of System LSI, or system-on-chip, we are seeking to differentiate ourselves by developing extensive middleware and applications. Moreover, we are making structural changes in our services business, including integrating and reforming existing operations, utilizing Internet data centers, and putting special emphasis on infrastructure services in order to provide broadband Internet-delivered services.
- Greater concentration on core technologies and products
We are concentrating our resources on technologies and products where we are globally competitive, for example, in such areas as advanced electronic devices, optical technology, including DWDM, and high-reliability servers and storage systems. In addition, by forging strategic alliances with other companies, we are working to optimize the allocation of our resources and enhance efficiency.
- Strengthening group-wide competitiveness
We are moving ahead with restructuring and consolidating our domestic and international affiliates in order to further clarify the direction of the Fujitsu Group as a whole and fully mobilize the Group's combined strengths. In software and services, we are clarifying and realigning the operational and geographic responsibilities of our overseas subsidiaries ICL and DMR Consulting under the common "Fujitsu" corporate brand, with ICL to focus on infrastructure services and DMR on IT consulting services. This reorganization is intended to help strengthen and expand our global services business.
In information processing, we are reorganizing our development and manufacturing structure for the core business areas of servers and storage systems, for example, consolidating responsibility for development of all Intel architecture servers at Fujitsu Siemens Computers, our joint venture with Siemens of Germany. In telecommunications, we have positioned photonics, 3G mobile, IP and broadband access as core product areas, and by strengthening relationships with our affiliates Fujitsu Network Communications in the U.S. and Fujitsu Networks Europe, we are building an organization capable of delivering global solutions. In electronic devices, we are concentrating advanced technology development at our Akiruno Technology Center and striving to strengthen our worldwide manufacturing structure and make it more efficient through streamlining of domestic and overseas production facilities and other measures.
- Management reforms in other areas
We initiated the Qfinity program in May of this year with the goal of not only improving product quality and reliability but also quality issues relating to customer service, delivery time and cost. As part of this activity, we are also working to reduce inventory and significantly trim costs. In order to revitalize our human resources, we are reworking our results-based approach and pursuing advanced training for managers, including the establishment of a Global Knowledge Institute (GKI) that aims to cultivate next-generation management leadership able to operate successfully anywhere in the world.
- Protecting the global environment
We have been putting emphasis on environmental protection activities in keeping with our Third Environmental Activities Plan, announced in April. In particular, we have set a goal of strengthening our ability to provide recyclable products and are working to develop "green" products for markets around the world.
Based on these measures, and with the expectation of a mild market recovery, we are making utmost efforts to reduce our fixed costs and build a business structure that, even in an environment of zero growth, will produce profits. Looking further ahead to a full-fledged market recovery, we are working on a group-wide basis to develop new products and technologies and thereby make a significant contribution as a global enterprise that provides optimal solutions to businesses and society.
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