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May 12, 2010

Olympus announces its 100th Anniversary Vision
and a New Five-Year medium-term Plan
-Management Slogan: Advancing to the Next Stage of Globalization-

Olympus Corporation (President: Tsuyoshi Kikukawa,) announced today the 2010 Corporate Strategic Plan ("2010 CSP"). This new medium-term management plan covers the five-year fiscal period ending March 2015. Olympus has also introduced a Centenary Vision for the Olympus Group, which will symbolize the vision and the commitment to social responsibility of the Olympus Group toward its 100th anniversary in 2019.

Centenary Vision-The Olympus Group in 10 Years

  • We will bring innovation to peoples’ lives and society with our world leading imaging, medical and life science technologies. We seek to be admired in international society through all of our activities.
  • We will promise to make peoples’ lives healthier, safer, more secure and more fulfilling by supplying products and services that are supportive of people, society, and the earth.
  • We will strongly commit to environmental management and will continue to be one of the most environmentally efficient companies in the world.

2010 Corporate Strategic Plan

Our medium-term business activities will be based on our long-term goal, which is defined in our Centenary Vision. The slogan for the new medium-term management plan will be "Advancing to the Next Stage of Globalization." More specifically, we aim to accelerate the transformation of Olympus into a more globally competitive company, to continue to strengthen our business presence in the emerging markets, and to maximize our corporate value. Our targets for fiscal period ending March 2015, the final year of the plan, are net sales of ¥1.5 trillion and operating income of ¥150 billion. These figures are about 1.7 times and 2.5 times higher than the results for fiscal period ended March 2010, respectively.

Group-wide initiatives will include the expansion of our business presence in the China/Asia market, and the reinforcement of our business structure, especially our global production systems and other critical elements of our business infrastructure. Referring to each business segment, our priorities are to expand the surgical endoscope business and its peripheral products to the same size as in the Medical Systems endoscope business, as well as to establish a robust and sustainable business foundation for digital SLR cameras based on the Micro Four Thirds standard in the Imaging Systems business.

Summary

Specific Initiatives under the 2010 Corporate Strategic Plan ("2010 CSP")

Corporate-Level Strategies

  1. China/Asia Strategy
    We will raise the position of the China/Asia market to a level of sales and share comparable to our three existing areas of major operations, North America, Europe and Japan. We will divide this China/Asia region into three blocks: China, Southeast Asia and India, and we will strengthen and expand our business foundation in these three blocks. We expect that China will be the most promising block for future growth. Our aggregate sales target for these three blocks is to achieve ¥250 billion within the 5 years of this 2010 CSP. To reach this goal, we will create a new business division to provide comprehensive support to each of the three blocks.
  2. Building Infrastructure for Global Management
    During the first and second year of 2010 CSP, we will concentrate on refining our preexisting business structure, so that we can focus on profitably, growing our sales and market share in the latter half of 2010 CSP.
    By expanding overseas production, we will soften and naturally hedge the impact of foreign currency fluctuations. Specifically, we will increase the number of multi-segment plants covering multiple business areas. Other priorities will include the establishment of plants near the areas of highest consumption, especially for our surgical products.
    We will strengthen our corporate-level business infrastructure by establishing efficient, flexible global management systems that transcend regions and business segments. We will achieve this by developing a group infrastructure, including clear and well communicated expectations, standards, rules, organizations and chains of command.
  3. Environmental Management
    Olympus aims to be a leading company from an environmental perspective. Our action target is expressed in the slogan "Carbon Half," which means that we aim to reduce by one-half our CO2 emissions from the 2007 level by 2020. Production-related initiatives will include the use of micro-factories and the establishment of energy and resource conservation technologies. We will also develop cyclical environmental technologies, including recycling technologies, as part of our transition to environmentally-friendly manufacturing. In addition to the reduction of manufacturing and distribution costs, the focus on environmental responsibility also will be a management priority.

Segment Management Strategies

  • Imaging Systems
    Digital SLR Cameras—Cultivating Business Foundation, Achieving High Growth

    In our digital SLR camera business, we aim to establish a foundation for the Micro Four Thirds standard and to achieve high growth in this important product segment. To achieve these goals, we will concentrate our investment in technology and product development based on the Micro Four Thirds standard, with a view to achieve a 20% market share within the five years of the 2010 CSP period.

    In the compact digital camera category, we will maintain the expected level of profitability by enhancing our R"D capabilities and by reinforcing relationships with our distribution channels on a global scale. We will also differentiate our products by introducing new services based on the provision of comprehensive solutions through the use of digital networks. We aim to achieve a market share of 15% within the five years of the 2010 CSP period.
    Through these initiatives, we aim to achieve an operating profit ("OP") margin of 10% within the next five years.

  • Medical Systems Business
    Development of a Business Foundation to Support the Achievement of Sales of ¥1 Trillion within 10 Years

    We will set a clear target in the surgical area where we will concentrate our resources during the 2010 CSP and beyond. There will be a clear focus in the field of energy devices and endo-therapy devices. We will expand our surgical business to the same size as the endoscope business. We regard the China/Asia market as a key to this growth, and expect it to rank alongside Europe and America in terms of our total business portfolio. We aim to increase our medical business sales in the three blocks of the China/Asia region to at least ¥100 billion within five years.

    In the digestive and respiratory fields, we will continue to further differentiate our products through enhancements to our next-generation systems, including improvements in insertability, as well as the accuracy of diagnosis using high-resolution images. In the respiratory field, we will significantly expand this area of our business by focusing on both non-cancerous and cancerous diseases. Another goal is the further growth of the capsule endoscope business, including the expansion of sales of capsule endoscopes for use in the small intestine, and studies concerning the development of new technologies to allow the use of capsule endoscopes in the stomach.

    Goals for the surgical field include the introduction of new products made possible by synergies with Gyrus, and the expansion of our training centers. We aim to achieve a global market share of 30% in the field of energy devices. We also aim to achieve a 30% share in the imaging technology field by establishing early diagnosis systems based on the use of optical technologies, and by expanding our operating room ("OR") business.

    Our goal for endo-therapy devices is to be number one in the world with a market share of 30% within the next five years. We aim to achieve this goal by expanding our product lineup, and by strengthening our global network of doctors that utilize our products for treatment and training.

    We will further strengthen our after-sales service systems by developing a global repair service infrastructure, by increasing our service work force, and by actively and efficiently expanding our network of service sites.

  • Life Sciences and Industrial Systems
    Building Our Business Foundation through the Reinforcement of Existing Business

    In the microscope category, we will strengthen our income base and business structures in the three basic fields (biological microscopes, live-cell imaging systems, industrial systems). We already hold the top market share in the biological microscope area, and we will further expand our business by creating new markets through product innovations and training. Target areas will include the automated pathology field, which is expected to expand in the future. We will also review our production structure to strengthen our ability to cope with demand and foreign exchange rate fluctuations.

    In the non-destructive testing field, we will strengthen and expand our existing business fields. We also aim to expand our business domain to encompass a full range of industrial testing technologies, including the measurement and analysis markets, while carefully analyzing investment efficiency and exploring opportunity in all business areas.

    Through these initiatives, we aim to achieve an OP margin of 17% within the next five years.

  • Information and Communication/New Business Activities
    Reinforcement of Competitiveness of Information and Communication Business and Capacity to Develop New Businesses through Restructuring of Group

    In the Information and Communication field, we will concentrate the management resources of our subsidiary, ITX, into the information and communication technology business with the aim of strengthening our competitiveness in that area.

    We will accelerate the development of new business activities by integrating the new business activities of Olympus and ITX. Management resources relating to new business creation will be shared within the Olympus Group in order to strengthen our total group-level potential. We will effectively reform management systems to accelerate the exploration and development of new business activities.

Reference Information

Financial Targets

(in Billions of yen)

    Year Ending
March 2011
Year Ending
March 2013
Year Ending
March 2015
Net Sales Imaging systems 195 320 370
Medical systems 365 460 550
Life sciences, Industrial 103 120 155
Information and Communication 202 255 300
New businesses 55 95 125
Total 920 1,250 1,500
Operating
Income
Imaging systems 6.0 23.0 36.0
Medical systems 76.0 95.0 118.0
Life sciences, Industrial 11.0 14.0 26.0
Information and Communication 4.5 6.5 8.0
New businesses (3.5) 3.5 9.0
Eliminations and Corporate (31.0) (42.0) (47.0)
Total 63.0 100.0 150.0
OP margin 6.8% 8.0% 10.0%

Currency conversions are based on exchange rates of 90 yen to the US Dollar and 120 yen to the Euro.

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