ISHIN2000 is a three-year program of rapid, pervasive business and corporate reformation at Asahi Chemical, directed toward increased assets efficiency and heightened corporate value, and the establishment of a clearer, simpler, more efficient corporate management structure and system. The program, begun in April 1999, will accelerate the business restructuring of the past several years, and build the corporate management structure and system necessary to win in the emerging global era of international competition. It is a clearly defined program of goals and means for implementation of a growth strategy, moving into the early 21st century through an environment of deep, far-reaching changes in business and corporate law.
Basic elements of ISHIN2000
The corporate policy and its structural and operational development
under the ISHIN2000 program, as outlined in Charts
1 to 8, center on reformation of the corporate business
portfolio and management systems, building upon established
leadership and strength.
1. Selection and focus on growth-portfolio operations
1) Focus on competitive-superiority
The business portfolio strategy conceived in 1998
has been refined and its implementation is being further advanced.
It is focused on growth-oriented businesses, businesses with
clear competitive superiority, and related operations. The
strategy has become an integral part of the business unit
planning, with implementation proceeding in accordance with
the related business opportunities and conditions. It is primarily
driven by prioritized resources investment in competitive-superiority
operations and internally developed business growth, but it
also includes the formation of alliances, joint ventures,
and acquisitions where these bring mutual advantages in speed
2) Assets efficiency
For operations currently lacking
a position of competitive superiority, the primary options
are development of operational profitability leading to establishment
of a competitive-superiority position, and transformation
into a strong, stable earnings base. The secondary option
is development as part of an alliance or joint venture, if
the synergies are superior to independent development. If
none of these can be established as a viable option, and development
into a stable earnings base appears impracticable, then the
third option is retrenchment, sell-off, or withdrawal, and
reallocation of the management resources to areas of higher
3) Corporate projects
Thirty-two strategic efforts in critical
areas have been designated key corporate projects and are
now in progress, with corresponding resources allocation priority,
for pursuit of the ISHIN2000 objectives.
2. Reformation of corporate management
1) Independent-based, self-sustaining
Each corporate division is being
assigned the responsibility and the authority to develop the
capability to operate as a corporation within a corporation,
to stand, compete, and grow as a self-sustaining unit, and
to build and maintain a strong, stable operating base that
will permit its ready establishment as a separate and independent
business entity under appropriate conditions.
2) Lean, low-cost corporate management
Effective international competition
demands the elimination of high-cost structures for administrative
functions. The first target for reformation is corporate-level
administration, and the development of a small, high-performance
configuration is in progress. With the potential for transformation
to a holding company configuration, it will focus on its basic,
value-creating functions, take full advantage of market efficiencies
by outsourcing its requirements for specialized functions
and expertise, for high performance and low-cost operation.
3) Reformation of the corporate
The basic paradigm of corporate priorities,
governance, accountability, management structure and systems,
and capital structure is being reformulated and revised, for
enhanced performance, response, and transition in a corporate
environment of far-reaching changes.
4) Performance-based systems and
standards of evaluation
Beginning with FY1999, each business
unit will be evaluated on the basis of its EP (economic profit:
calculated as after-tax operating profit minus cost of capital
in terms of expected shareholder return and interest on debt)
and cash flow, to obtain a clear, broad-based assessment of
its own performance and its contribution to corporate performance.
For board members and corporate executives, the current system
of remunerations will be replaced by a system based on performance
and results, with bonuses linked to the performance of their
business units in the form of allotments from gains in performance.
Key quantitative targets
1. The implementation of this corporate reformation
under the ISHIN2000 program will be solidly based, company-wide,
and rapid. Key quantitative targets, shown here and also in Chart 9,
have been established to measure the progress and ultimate success
of this effort. The amounts are given here in billions of yen.
|Business unit ROA
2. The total capital investment for the three-year
ISHIN2000 program is set at more than ¥400 billion, including
at least ¥200 billion for strategic investment and at
least ¥120 billion for structural reformation.
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