Management Strategy | Integrated Report 2017

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Management Strategy | Integrated Report 2017 Management Strategy CEO Commitment Kenzo Tsujimoto Chairman and Chief Executive Officer (CEO) 19 CAPCOM INTEGRATED REPORT 2017 To Create the World’s Most Entertaining Games With a Solid Management Foundation and Capabilities, We Aim to Enhance Corporate Value through Content Branding Five Elements Required for Sustainable Corporate Value Enhancement I think a manager’s corporate social responsibility is ambitions and values set out at our founding, human exceedingly simple: by setting up a business and resources that are passionate about growing the employing people, you grow your company, earn profit, Company, business advantages that leverages the pay taxes and then provide dividends; this allows you Company’s competitiveness, management to build a relationship of co-existence and co-prosperity strategy that quickly responds to market changes and with stakeholders, and allows the Company to continue on. governance (ESG) that facilitates risk control. I believe the perpetuation of this cycle leads to the On the following pages, I will explain to our sustainable enhancement of corporate value. However, shareholders how we are favorably positioned in each of this requires the incorporation of five elements: a these five elements that facilitate sustainably enhancing corporate philosophy and culture that fosters the corporate value. Management Foundation Management Capabilities 3 Business advantages 5 Governance (ESG) Enhanced corporate value 2 Human resource capabilities Create the world’s most 4 Management entertaining games 1 Corporate philosophy and culture strategy Provide shareholders with dividends Contribute value to society CAPCOM INTEGRATED REPORT 2017 20 Management Strategy CEO Commitment 1 Corporate philosophy and culture our content across multiple mediums. As for Executive world over. For details, please refer to "Capcom Management Elements for Enhancing Corporate Value Corporate Officer Egawa, who joined Capcom right Resource VRIO Analysis and Evaluation/Measures" on page 76 2 Human resource capabilities 3 Business advantages after its founding, he has a track record of delivering Combining these strengths with our capital and results: from working on the development of CP system the relationships of trust we have with hardware Our Three-Tier Management Foundation is the Bedrock boards to establishing the Pachinko & Pachislo and manufacturers creates significant competitive advantages Mobile businesses, he has led R&D with an attitude of (profitability) in the Consumer sub-segment. Against of our Competitive Advantage never running away, never giving up—no matter how this backdrop, in the consumer market, technological tough the circumstances. standards and development costs rise with each hardware Corporate Philosophy and Culture— Human Resource Capabilities— These two distinct individuals were also thoroughly cycle, while the life of major titles has grown longer We Value the Ambition to be the Best A Sincere and Unwavering Spirit trained by me, and when combined with the corporate and models for capturing user time and spending have in the World Within corporate management, people’s character and culture we have cultivated over many years with the come to predominate. For details, please refer to page 44 Capcom’s basic philosophy is to create an entertainment spirit are important management resources that have aforementioned approach to visualizing management, Furthermore, while strictly speaking not a competitive culture though the medium of games by developing a substantial impact on corporate value. In last year’s I think we have in place a robust team in whose advantage per se, in sub-segments other than Consumer highly creative content that excites and stimulates the integrated report, I discussed my management philosophy management style long-term investors can place their trust. our rollout of popular IP across multiple mediums senses. In other words, we help build an emotionally and capabilities as founder, demonstrated by: (1) realizing contributes to stable earnings. Moreover, if we make rich society by creating entertainment culture with the the ambitions I had for Capcom at its founding to create use of our strengths in the Mobile Contents sub-segment, world’s most entertaining games. multiple worldwide major hit titles and (2) persevering there is a potential for it to become a core business in the For details, please refer to “Corporate Philosophy” on page 02 until we succeed, establishing both earnings growth and Capcom’s strengths are (1) the development and future, thus we will continue to treat it as a management In 1983, I founded Capcom under the motto of earnings volatility control since our founding. technological capabilities to create world-class, high-quality priority issue. For details, please refer to “Growth Strategy” “originality and ingenuity” with the vision of developing For details, please refer to "Capcom Management Resource games and (2) numerous popular branded IP known the on page 29 games people would find entertaining; in a word, VRIO Analysis and Evaluation/Measures" on page 76 I wanted to create games of world-class quality. At present, one of the concerns among our Underpinning this was my belief that increasingly investors is the thinness of our management team as a sophisticated graphics and more immersive worlds would founder-run company; in other words, have we prepared eventually make games as moving and impressive as a a management structure for the next-generation? Disney film. Key people for the next-generation are President 34 years later, I have amassed more than 2,800 Haruhiro Tsujimoto and Executive Corporate Officer colleagues who share this vision. These values have Yoichi Egawa. Both have the qualities necessary for become our corporate culture and DNA, with (1) a spirit management. For example, even when Capcom was that is always eager to take on new challenges and (2) a small business, President Tsujimoto was on hand as a sense of pride to constantly strive to be world-class a member of the founding family, working with the deeply ingrained in every Capcom employee. sense of responsibility and self-awareness inherent in Again and again, we have been able to produce a family-run operation. Even after becoming president, unique series, including Street Fighter, Resident Evil and he never rested on his laurels: leveraging his diligence Monster Hunter because of the fertile soil of a corporate and sincerity, he went on to establish the Arcade culture cultivated over many years. Operations business, while also taking pains to utilize Diagram 01 Three-Tier Management Foundation Corporate philosophy Human Resource Business Advantage and culture Capabilities Basic philosophy: Development that Stimulates the Senses Solid management that faces Capcom strengths challenges head on in the game industry Help build an emotionally rich society by creating the world’s (1) Philosophy and leadership of (1) Development and technological most entertaining games the founder capabilities creating games with (2) Growth of next-generation world-class high quality Capcom DNA key persons (2) Possession of numerous popular IP known the world over (1) Spirit of taking on challenges (2) Taking pride in striving to be world-class 21 CAPCOM INTEGRATED REPORT 2017 Get to Know Capcom Management Strategy Business Activity Achievements ESG-based Value Creation Financial and Corporate Data our content across multiple mediums. As for Executive world over. For details, please refer to "Capcom Management operating income target by 9.0 billion yen. [Diagram 02] 100 new graduates each year (lower productivity) a specific rate of increase, but we are considering a growth drivers as we (1) release approximately three Corporate Officer Egawa, who joined Capcom right Resource VRIO Analysis and Evaluation/Measures" on page 76 Breaking down causal factors by business impacts current margins, these were positioned as profit growth rate between 5%–10%. [Diagram 05] major titles each year, (2) extend the sales life of the after its founding, he has a track record of delivering Combining these strengths with our capital and segment [Diagram 03], in the Amusement Equipments upfront investments executed to increase profits stably full game and additional digital downloads to 3–4 years, results: from working on the development of CP system the relationships of trust we have with hardware business, by expanding our pachislo lineup and in the future. (3) Management Strategy and (3) strengthen our presence overseas, which boards to establishing the Pachinko & Pachislo and manufacturers creates significant competitive advantages strengthening our sales structure, we were able to In summation, we have made significant strides We are currently in the fourth stage (beginning in fiscal comprises approximately 85% of the market. Mobile businesses, he has led R&D with an attitude of (profitability) in the Consumer sub-segment. Against significantly exceed the profit level (1.6 billion yen over toward establishing the foundation for our core Consumer year ended March 31, 2017), which is the culmination Next, in terms of catalog titles [Diagram 05-B], we will never running away, never giving up—no matter how this backdrop, in the consumer market, technological the target) of the previous ten years when we focused business to be a future driver of growth. This leaves of my experience as a manager. The main theme now generate profits on a recurring revenue basis through tough the circumstances. standards and development
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