| February 20, 2001 |
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Fundamental Reorganization of
Management Systems and Structures |
- Olympus aims to raise business efficiency and speed of responsiveness
in its bid to become a "Global Value Creating Company" - |
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| Olympus Optical Co., Ltd. (President: Masatoshi Kishimoto) has announced that it is to further enhance the efficiency of its corporate management structure through a reorganization of its various business divisions and decision making systems. |
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| Faced with the need to respond quickly to evolving customer demands in a society that has rapidly become increasingly networked over the past few years, Olympus has set its sights on becoming a "Global Value Creating Company." To achieve this goal, Olympus is seeking to enhance the efficiency of its corporate management structures through a reorganization of its various business divisions and the introduction of an internal quasi-holding company system. In addition, by reforming its Board of Directors and bringing in a system of appointing operation officers to different parts of the firm, the company aims to differentiate clearly between the strategic and operational roles and responsibilities of senior managers, thereby undertaking a fundamental reform of its management systems. The new internal company system is scheduled to become effective as of April 1, 2001. It is planned that the changes to the Board of Directors and the introduction of the new operation officer system will be instituted towards the end of June 2001, following their approval at the Annual General Meeting of Shareholders. |
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| Olympus has been running its operations based on a "Social-IN" corporate business philosophy that emphasizes aligning the values of the company with those of society at large in order to facilitate the creation of new value together with the promotion of greater human health and happiness. Faced with rapid, far-reaching change both in society and in the external business environment, Olympus seeks to raise the speed and efficiency of its actions by reorganizing itself through the introduction of a new system that gives its various business divisions greater operational independence and autonomy. |
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| Under the new organizational arrangement, the head office and R&D division will become two separate centers called the Corporate Center and the Corporate R&D Center. Adopting a more customer-centered view, the five existing business divisions will be consolidated into three "internal companies," called groups. The Imaging Systems Group, the Medical Systems Group and the Industrial Systems Group will separately target different market segments. Each will aim to generate consistently higher earnings from their existing businesses while at the same time seeking to extract greater operational synergy from a more rigorously customer-centered approach that promises to foster the creation of new businesses within the enterprise. Following this internal reorganization, the introduction of a new senior management system will aim to formalize the greater delegation of operational responsibilities to each center and group. This latter step promises to usher in a substantial practical shift in power within the organization. |
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| Until now, Olympus has organized its decision-making structure along the lines of management committees at various levels. The new structure promises to make the roles of decision making bodies more specific, thereby raising the speed with which management can respond to change. The new Board of Directors will adopt a role of deciding global business strategy and supervising the company's overall operational status. Below it, the Executive Management Committee will be responsible for decision-making at the operational level. Finally, the newly established Global Committees will be responsible for the execution of global strategy and evaluating the results of such efforts. This last move is designed to help deepen mutual ties, thereby promoting management coherence, speed and efficiency. |
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| 1. Internal Company System Rationale |
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| 1) |
Market responsiveness will be heightened by undertaking an organizational rearrangement that takes a more customer-centered view and focuses clearly on market segments. |
| 2) |
Through the merger of markets, technologies and products, the consolidation of different business divisions promises to make business operations more efficient and raise the speed with which businesses can move forward through the creation of new operations and other initiatives. |
| 3) |
Under the new system, power will shift substantially from the head office to the individual groups. This will help to delineate lines of operational responsibility much more clearly; in addition, by promoting the autonomy of separate parts of the firm, the new system also promises to help the company's business progress faster. |
| 4) |
As a benchmark to measure each group's performance, an evaluation system that judges economic value, brand value and strategy will be implemented. These steps should ensure that each business focuses on long-term growth. |
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| 1.1 New Internal System: Group Overview |
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* Imaging Systems Group
Brings together silver halide camera, digital camera and recorder operations; the merger will produce a significantly strengthened business base; new value will be created by focusing on digital imaging/voice/system technology for high-tech network applications. |
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* Medical Systems Group
Brings together all the company's medical systems operations (endoscope, scientific equipment, diagnostic systems); the merger will strengthen the company's presence in medical equipment markets and unify product/technological development and manufacturing capabilities; promising new growth business areas include genetic medicine and medical information systems. |
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* Industrial Systems Group
Brings together industrial products (liquid crystal and semiconductor inspection equipment, industrial microscopes, industrial endoscopes, etc.) and information products (opto-magnetic disk drives, bar code readers, PDA related products, etc.) operations; merger will aid the creation of a coordinated global response to customer needs in industrial product markets. |
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| 1.2 New Internal System: Center Overview |
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* Corporate Center
The new central operations will have heightened strategic and global management capabilities; based on the principles of greater group autonomy and more efficient business management structures, functions will be transferred to the group level, and operations will be trimmed accordingly. The move merges previous head office functions with central sales management and business planning functions; the new center will be divided into three separate divisions; Planning, Operations and Support. |
| 1) |
Planning Division
Centralized global strategic planning capabilities plus the overseer of the moves to reform business systems. |
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Operations Division
A specialized central corporate team based around existing head office functions which support the overall global business operations. It is also responsible for worldwide risk management. |
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Support Division
A specialized business support division providing specific services to other central functions. |
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* Corporate R&D Center
To support increased group autonomy of action and foster strengthened new business development activities, business support functions will be transferred to the groups. At the same time, aiming to become a company with strong technology foundation, the current Corporate Research Division, Corporate Research Laboratory, Production Engineering Division and New Business Division will be consolidated into one Corporate R&D Center. The Corporate R&D Center will be reorganized into the Advanced Technology Institute, Production Engineering Institute, and New Business Division. |
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Advanced Technology Institute
Enhanced basic research functions, plus advanced technological development, dedicated to promote the development of existing products. |
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Production Engineering Institute
Advanced manufacturing technology development; it will also support the introduction of new manufacturing technology at the group level. |
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New Business Division
Targeting the network society and new lifestyle needs, it will develop new businesses and promote their incorporation at the group level. |
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| 2. New Internal Structure: Management System Overview |
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| * Board of Directors |
| 1) |
The number of directors will be optimized; the business of the board will feature active debate and speedy decision-making. |
| 2) |
The board will decide basic business policies and strategy, supervise the company's operational status and make any decisions as legally required by the Japanese Commercial Code. |
| 3) |
The role of the board will be to make business decisions and supervise operations from a global standpoint, thereby promoting sound corporate governance. |
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| * Executive Management Committee |
| 1) |
Composed of the company president, plus the heads of each of the three groups and the two centers; will address business issues and respond speedily to challenges posed by a rapid external change. |
| 2) |
Through close ties with the Board of Directors, will aim to raise speed of response. |
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To promote the execution of operational initiatives and the independence of each business group, separate executive management committees will be set up within each group. |
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* Global Committees
The Global Committees are composed of the company president, the heads of each of the three groups and the two centers, plus the presidents of sales subsidiaries in Japan, Europe and the United States (the latter two to be locals). There are two committees, the Global Strategy Committee and the Global Performance Evaluation Committee. Their roles will be to strengthen the execution of global strategy and to evaluate business results using selected performance evaluation criteria respectively. The Global Performance Evaluation Committee will maintain transparency and fairness, and reflect results to the rewards. |
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| New Organization (Effective as of April 1, 2001) |
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| Note: |
Trade Compliance Bureau and Corporate Quality Assurance & Environmental Protection Dept. are under the direct control of President. |
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*Olympus Optical Co., Ltd. was changed to OLYMPUS CORPORATION as of October 1, 2003.
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