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Business Strategy Business Results Financial Section Journey So Far Journey Ahead Sustainability Konica Minolta’s Konica Minolta’s Platform Supporting Business Strategy Business Results Financial Section Journey So Far Journey Ahead Sustainability Business Strategy Boosting the earning potential of core businesses while further expanding growth businesses and new businesses Business Toshimitsu Taiko Strategy Senior Executive Officer 1 Lead officer responsible for Business Technologies Business Roman Tihelka We will boost the earning potential Managing Director, Cluster East, Boosting Business Technologies of core businesses, with a focus on Konica Minolta developing stronger long-term Business Solutions Europe GmbH relationships with customers. Business Profitability Ramping up our IT services for a greater presence Core Growth in Eastern Europe. Business Hitoshi Kamezawa Douglas Kreysar Strategy 2 Executive Officer Chief Solutions Officer, General Manager, Radiant Vision Systems Sensing Business unit, Industrial Optical System Leveraging the assets of the Business Headquarters Growth Strategies for the Konica Minolta Group, Utilizing technologies for measuring we will continue to provide light and color, Konica Minolta high quality, innovative pursues genre-top strategies for the solutions. Measuring Instruments Business ICT and automotive industries. Core Growth Business Kiyotaka Fujii Strategy Senior Managing Executive Officer 3 General Manager, Healthcare Business Headquarters Jack Hoppin We will build a global business Growth Strategies for the management system and CEO, Invicro LLC accelerate business strategies for the precision medicine field. As a member of the Konica Minolta Group, Bio-Healthcare Business we aim to become a globally peerless New pharmaceutical services company. KONICA MINOLTA, INC. Integrated Report 2018 25 Konica Minolta’s Konica Minolta’s Platform Supporting Business Strategy Business Results Financial Section Journey So Far Journey Ahead Sustainability Business Strategy Boosting the earning potential of core businesses while further expanding growth businesses and new businesses Business Toshimitsu Taiko Strategy Senior Executive Officer 1 Lead officer responsible for Business Technologies Business Roman Tihelka We will boost the earning potential Managing Director, Cluster East, Boosting Business Technologies of core businesses, with a focus on Konica Minolta developing stronger long-term Business Solutions Europe GmbH relationships with customers. Business Profitability Ramping up our IT services for a greater presence Core Growth in Eastern Europe. Business Hitoshi Kamezawa Douglas Kreysar Strategy 2 Executive Officer Chief Solutions Officer, General Manager, Radiant Vision Systems Sensing Business unit, Industrial Optical System Leveraging the assets of the Business Headquarters Growth Strategies for the Konica Minolta Group, Utilizing technologies for measuring we will continue to provide light and color, Konica Minolta high quality, innovative pursues genre-top strategies for the solutions. Measuring Instruments Business ICT and automotive industries. Core Growth Business Kiyotaka Fujii Strategy Senior Managing Executive Officer 3 General Manager, Healthcare Business Headquarters Jack Hoppin We will build a global business Growth Strategies for the management system and CEO, Invicro LLC accelerate business strategies for the precision medicine field. As a member of the Konica Minolta Group, Bio-Healthcare Business we aim to become a globally peerless New pharmaceutical services company. KONICA MINOLTA, INC. Integrated Report 2018 26 Konica Minolta’s Konica Minolta’s Platform Supporting Business Strategy Business Results Financial Section Journey So Far Journey Ahead Sustainability Business Strategy 1 Boosting Business Technologies Business Profitability Konica Minolta is pursuing a strategy focused on growth in both the Office and Professional Print Businesses. The entire Group will focus on expanding earnings by providing added value in sales efforts and reforming the global cost structure. Interview with the Executive Officer responsible for this business We will boost the earning potential of this business as a core businesses, with a focus on developing stronger, long-term relationships with customers. Toshimitsu Taiko Senior Executive Officer Lead officer responsible for Business Technologies Business Steadily generate profits by providing added value in sales efforts and reforming the cost structure Konica Minolta operates the Office Business which provides include optimizing the frequency with which our service solutions through a combination of MFPs and IT services, as engineers visit customers by offering longer-life replacement well as the Professional Print Business, which focuses on parts for MFPs, and building in sensors that collect data on how providing digital printing equipment. The Business these parts are functioning. Technologies Business encompasses these two business Through efforts such as this, the Business Technologies segments and accounts for more than 70% of the company's Business is aiming to achieve continued revenue and profit consolidated revenue. Its customer base of roughly two million growth in fiscal 2018 through a dual focus on raising the companies and global sales and service system that it has built added-value sales and cutting costs. up through years of business are major assets that enable Konica Minolta's growth strategies. Amid difficult market Business Technologies Business operating profit conditions owing to intensifying competition and stagnant Office Professional Print demand for color printers in developed countries, Konica (Billions of yen) Minolta is looking to strengthen its sales capabilities and cut 60 57.5 costs while boosting profits for the entire Group. 54.1 To improve our sales capabilities, we are aiming to 9.2 12.5 strengthen the solutions we offer to help solve our customers' 40 business issues, while at the same time improving sales Generate efficiency. In the U.S. and other countries, we are beginning to ¥8.6 billion of profit undertake efforts to improve the efficiency of our sales in real terms, 45.0 activities. We are doing this by analyzing past business 20 44.9 excluding negotiations, identifying commonalities in negotiations temporary profit involving high contract rate and profit ratios, and comparing Temporary our figures with potential customer data. Through highly 0 profit: 5.2 FY 2017 FY 2018 effective approaches to proposing high added-value products (forecast) and services to customers and through efforts to build greater trust with these customers, we are looking to secure profits for Profit generating measures the long-term. Production costs and service costs are the areas we are Production cost reduction ¥2.5 billion particularly focused on in reducing costs. Examples of measures to cut production costs include automating the Service cost reduction ¥2.6 billion machining, assembly, and inspection processes and reducing downtime by using data to perform predictive maintenance. Impact of structural reform ¥3.1 billion We are also cutting service costs through measures that KONICA MINOLTA, INC. Integrated Report 2018 27 Office Business: Expanding market share in growth markets and conducting hybrid sales Since the 2003 business merger between Konica and Minolta, services, and have provided fine-grained support for the issues we have consistently pursued genre-top strategies in the color faced by each of our customers. MFP segment. This has seen us expand market share in As a result of these efforts, hybrid sales are growing as a potentially growth markets for color MFPs in primarily percentage of total sales around the world while contract emerging nations. In terms of units shipped, we are number renewal rates are rising alongside revenue and profits per one in China and the Central/Eastern Europe region and customer. number two in India (Konica Minolta estimate). This makes us primary driver of market growth in these countries. Hybrid sales ratios in the U.S. and Europe markets As a strategy for providing high added value in the Office North America Europe Business, we are conducting hybrid sales that involve (%) proposing solutions that incorporate both MFPs and IT 27 services. We not only provide single products in the form of 25 MFPs, we also provide solutions that help solve our customers' business issues. Whether by improving business processes, 23 comprehensively managing IT environments and content, or 21 strengthening security, we aim to build long-term relationships with customers. 19 The customers we mainly target for hybrid sales are small 17 and medium-sized enterprises around the world. Since our 15 2011 acquisition of U.S.-based managed IT service company All Covered, we have conducted M&A for multiple IT service 13 companies primarily in the U.S. and Europe, have worked to FY15Q4 FY16Q1 FY16Q2 FY16Q3 FY16Q4 FY17Q1 FY17Q2 FY17Q3 FY17Q4 expand our system for conducting hybrid sales and providing Developing stronger relationships with customers through hybrid sales Conventional Lifetime value model business model Solving IT departments customers' management MFPs General Marketing affairs Human resources services issues departments and general affairs MFPs departments Improving Content and other customer Equipment management input-output management satisfaction departments Business devices Procurement departments Earnings model based on opportunities Expanding individual MFP sales through business hybrid sales Print IT services management Safety and security Business process improvement Marketing
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