Yamaha : PDF (3.41MB/ 24Pages)

MANAGEMENT VISION AND VALUE CREATION STORY

Value Creation Story

Enhance Corporate Value and

Realize Vision by Creating Social Value

Yamaha is strengthening all of its capitals by creating Yamaha value and social value through its business activities. In this way, Yamaha aims to realize its management vision by pursuing a cycle that improves both brand and corporate value. Yamaha's current value creation process is as described in the table below.

 The global COVID-19 pandemic is having a massive impact on our lives and on the global economy. Yamaha, however, sees this adversity as an opportunity to further its evolution. Accordingly, we are endeavoring to respond to the constantly changing social needs and issues with the aim of continuing to help resolve social issues through our businesses, and thereby improving corporate value.

Please refer to the following website for more information on Yamaha's value creation story. https://www.yamaha.com/en/ir/story/

Management Vision

Becoming an Indispensable,

Brilliantly Individual Company

Boost brand power to become a highly profitable enterprise

Corporate value improvement

Customers

Finance Brand Technology

Yamaha by Creation Value

Customers

Finance Brand Technology

People

Culture, Society, and

Environment

Value Creation Process

	Yamaha value creation
Value creation process	Social value creation

Measures for Preventing Erosion of Value

Yamaha is ramping up its sustainability and risk management initiatives to minimize the potential negative impact of its business activities on the environment and society as well as the impacts of risks that could seriously threaten the Company's performance and financial condition.

Please refer to page 42 for more information on sustainability ­management initiatives and page 94 for information on risk management initiatives.

People

Culture, Society, and

Environment

Yamaha Philosophy and Brand Promise

Research and

Production

Sales and Marketing

Development

P.72

P.74

P.68

Musical

Global

Instruments

Craftsmanship

Business

Acoustic technologies

network

P.60

Integration

Sensibilities

Businesses and

Value Chain

pervading Yamaha technologies

Understanding

Technologies

Customer interface

Audio Equipment

of high-quality sound

(Broader, deeper, and longer)

Business

Sales networks and

P.64

Digital

store strategies

Bases for R&D activities,

technologies

artist relationships, and

service center

Industrial

Customer data platform (CDP)

Machinery and

/ Digital marketing

Mass production technologies

Components

Business / Others

and cost strategies

Activities to popularize music

Innovation Center

Overseas base strategies

P.66

Corporate Governance P.84 / Global Business Management Foundation

Products and Services

P.08

Products and Services Centered

on Sound and Music

Musical instruments

Audio equipment

Music schools

Other products and services

Output

Yamaha Value Creation

Achieving the management targets adopted under the Make Waves 1.0 medium-term management plan (2019-2022)

Corporate value (market capitalization):

¥1 trillion +

Financial targets (IFRS)

Core operating profit ratio*: 13.8%

Return on equity (ROE)*: 11.5%

Output		Earnings per share (EPS)*: ¥270
			Non-financial targets
		Corporate brand value: +30%
	Music popularization for learning musical instruments
	in emerging markets (cumulative total):
			1 million people
	Certified timber use: 50% of total use
		Investment and shareholder returns
		Total return ratio: 50%
		Social Value Creation

Contributing to emotionally enriched lifestyles and a more comfortable society through sound and music

10 Yamaha Group Annual Report 2021

* Based on the impacts on the operating environment from the COVID-19 pandemic, the consolidated performance forecasts for fiscal 2022 announced at the financial results briefing for fiscal 2021 held on May 10, 2021, call for a core operating profit ratio of 11.8%, ROE of 10.0%, and EPS of ¥233. These forecasts assume foreign exchange rates of U.S.$1 = ¥105 and €1 = ¥125.

Yamaha Group Annual Report 2021		11

SPECIAL FEATURE:

ENACTMENT OF YAMAHA'S VALUE CREATION STORY

SPECIAL FEATURE: ENACTMENT OF YAMAHA'S VALUE CREATION STORY

Yamaha by Creation Value

New Form of Remote Communication

Remote Meeting System Responding to Rising Social Needs

Proposed through Sound and Network Technologies

The global COVID-19 pandemic transformed how we communicate with other people. This transformation also extended to the environments in which we work as teleworking systems were introduced around the world. It can therefore be expected that workstyles unbound by place will continue to become more commonplace and entrenched going forward.

 Yamaha has long been expanding its lineup of sound environment products that help make teleconferences and web conferences more comfortable as solutions for supporting workstyle reforms. We continue to combine the sound and network technologies and expertise we have accumulated over the years to propose new forms of remote communication that will be indispensable in this new era.

Teleconferences, web conferences, and other forms of remote meetings have become an indispensable form of communication underpinning teleworking and other diverse workstyles.

At the same time, needs pertaining to office meeting rooms are growing increasingly more diverse as companies seek to allow for layouts to be flexibly rearranged in order to ensure appropriate distance is maintained between participants, to utilize meeting rooms more efficiently based on the number of participants and the goals of meetings, and to install more comfortable sound environments. Against this backdrop, Yamaha's remote meeting solutions, which combine its sound and network technologies, are garnering attention.

• One such solution is our ADECIA comprehensive remote conferencing solution. Launched in January 2021, ADECIA is a system for medium-sized meeting rooms comprised of components including ceiling array microphones and proces- sors, which enable it to cater to diverse needs by allowing for easy and flexible introduction and utilization of comfortable, high-quality communication environments. One characteristic of ADECIA is its use of multibeam tracking, a technology that effectively captures the voice of speakers while limiting the transmission of unnecessary noise from the surroundings, to realize high-quality communication. In addition, we released the RM-TT tabletop array microphone in June 2021. The ease of deployment this microphone makes it perfect for support- ing diverse remote meeting styles. These offerings use
  our proprietary sound signal processing technology to

accommodate simultaneous speech by multiple individuals and thereby transmit the on-site atmosphere of meetings to remote locations intact. Moreover, we provide all of the equipment and functions necessary for remote meetings, and are thereby able to resolve any issue faced with this regard, starting with determining the necessary equipment when considering the introduction of remote meeting systems and moving on to the installation of equipment and the adjustment of acoustics.

• Furthermore, Yamaha boasts a robust lineup of products for all meeting sizes and applications, ranging from its YVC-200 and YVC-330 unified communication speakerphones for small

meetings to its YVC-1000 unified communication microphone and speaker systems for medium-sized to large meetings. We are thereby able to propose a multitude of products that realize comfortable, high-quality remote communication, whether in noisy open spaces or in quiet meeting rooms.

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SPECIAL FEATURE: ENACTMENT OF YAMAHA'S VALUE CREATION STORYSPECIAL FEATURE: ENACTMENT OF YAMAHA'S VALUE CREATION STORY

					Verification	Tests for Resolving Office Sound Environment Issues
						Value
					Yamaha is taking part in verification tests together with com-		accessible options. This test was designed to allow for these
					panies from other industries with the goal of developing		needs to be met through the swift supply of optimal web		Creation
					various solutions for resolving social issues.		conference environments to customers and thereby contrib-
					Seeking to address office web conference sound environ-		ute to increased ease of work and productivity for customers.		by
					ment issues, Yamaha partnered with NEC Networks &		We continue to advance cross-industry verification tests of
							Yamaha
					System Integration Corporation and Inaba International Inc. to		solutions merging new office layouts that combine Inaba
					conduct a verification test in December 2020, with custom-		International's high-sound-absorbing movable partitions with
					ers asked to participate. At the moment, the only way to fully		Yamaha's acoustic technologies and the technologies of NEC
					address these sound environment issues is to redesign office		Networks & System Integration, which boasts a robust track
					layouts, an undertaking that is costly and time consuming.		record for proposing office	environments and web confer-
					For this reason, many customers are looking for more		ence systems using Zoom and other venues.
			Meeting space using
			YVC-330 unified communi-
			cation speakerphone
					Merging of Sound and Network Technologies to Broaden Possibilities
					for Remote Communication
					The COVID-19 pandemic impacted business communica-		audiences or for other reasons and people hospitalized due to
					tion along with all other forms of face-to-face communica-		illness or injury.
					tion that used to be a natural part of everyday life. The		At the same time, Yamaha is promoting Distance Viewing,
					pandemic also placed massive restrictions on music and		a next-generation approach toward live viewing that is garner-
					sports events. Yamaha is proposing new solutions for		ing attention from everyone involved in musical events. The
					addressing these restrictions by capitalizing on its remote		most significant characteristic of Distance Viewing is its abil-
					communication technologies.		ity to faithfully reproduce live performances by artists at
					One example is seen in SYNCROOM, an app that allows		remote locations by recording acoustics, video, and lighting
					musicians to enjoy real-time ensemble sessions with		data. Moreover, Distance Viewing can be linked with the
Solutions Made Possible by Yamaha's Expertise in Sound		Yamaha's proprietary NETDUETTO™ remote ensemble tech-		aforementioned Remote Cheerer powered by SoundUD
	nology. This technology limits audio latency, which is unavoid-		remote cheering system to generate the feeling of solidarity
					able with conventional IP telephony and web conference		that is unique to live performances by transmitting the voices
In conjunction with the normalization of remote meetings,		of spoken conversations. This feature makes it more difficult		systems, to a level that is acceptable for musical perfor-		of fans to the performers. Distance Viewing is therefore
		mances. Moreover, it monitors audio latency levels during		anticipated to be a viable means of helping mobilize artists
there has been a proportionally large increase in social needs		to understand the content of conversations leaked into the
		performances to ensure natural and enjoyable ensembles.		and recover their earnings while also preventing the spread
related to the rapidly emerging sound issues faced in relation		surroundings from meeting rooms or from meetings in open
		NETDUETTO™	, the predecessor to SYNCROOM, was used		of COVID-19 even as the pandemic restricts large events and
to important conversations or private conversations that one		spaces, thereby creating a secure environment for remote
		by a growing base of performers to arrange remote ensemble		long-distance traveling.
does not want to be overheard.		conversations while comfortably protecting speech privacy.*
		sessions even before the pandemic. This solution evolved to
Yamaha's VSP-2 Speech Privacy System™ camouflages		* Speech privacy is the concept of preventing conversations from being overhead by
		become the SYNCROOM of today, which is being used by an
conversations with a proprietary "information masking		third parties. Initiatives have been commenced to protect private and confidential
	information from being leaked through conversations at healthcare institutions,		increasingly large number of users seeking to remotely enjoy
sound" synthesized from human speech to hide the content
	offices, financial and government institutions, and welfare facilities.
		a wide range of musical performances through means such
					as online streaming of on-stage performances at school
					­cultural festivals and live broadcasts of remote sessions.
					SYNCROOM is also driving sales of related products.		SYNCROOM online remote ensemble	Distance Viewing next-generation live
					Remote Cheerer powered by SoundUD, another such		performance service	viewing service
					solution, is a remote cheering system that allows for cheers		Remote communication technologies have the power to
					to be transmitted to sports stadiums and other sites from		create new ways of enjoying music and sports together with
					remote locations with the touch of a smartphone or other		comrades and of taking part in events and to therefore forge
					device. By transmitting vocal support and claps through		new connections between a wider range of people. Demand
					sports stadium speakers, this system provides a virtual space		for such technologies is thus expected to grow going for-
Speech privacy system concept				in which fans can interact. Remote Cheerer powered by		ward. In response to this demand, Yamaha will propose vari-
					SoundUD has been used at a range of events, including		ous solutions powered by its robust sound-related insight
					soccer, baseball, basketball, rugby, American football, profes-		and network technologies to contribute to the realization of a
					sional wrestling, and track and field events, to communicate		society that is in step with the ideals of the United Nations (UN)
					expressions of support from spectators, such as fans who		Sustainable Development Goals (SDGs) through its business.
					could not attend events due to them being held without

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M A N A G E M E N T S E C T I O N

II. Management Strategy

Message from the President	20
Make Waves 1.0 Medium-Term Management Plan	28
Review and Progress of the Medium-Term
Management Plan	28
Approach to Formulating the Medium-Term
Management Plan	29
Major Medium-Term Management Plan Measures
for Accomplishing Our Management Vision	30

Corporate Strategies	38
Financial Strategies and Enhancement
of Management Foundations	38
Sustainability Management	42
Environment	44
Human Rights	48
Human Resources	50
Digital Transformation	52	StrategyManagement
Branding	54
Design	56

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MESSAGE FROM THE PRESIDENT

Yamaha is accelerating initiatives in response to social change to accomplish its management vision of "Becoming an Indispensable, Brilliantly Individual Company."

I would like to begin by expressing my condolences for anyone who has lost loved ones to the global COVID-19 pandemic and by extending heartfelt thoughts and prayers to everyone who has been otherwise impacted by this catastrophe.

Operating Environment amid the COVID-19 Pandemic in Fiscal 2021

Management

Yamaha has been unable to escape the heavy impacts of the COVID-19 pandemic, which has continued since 2020. This catastrophe has had a myriad of impacts, both positive and negative, on our products and business activities. For exam- ple, the supply shortages seen in the second half of the fiscal year adversely impacted sales growth, creating a situation in which accomplishing the financial targets set forth by the Make Waves 1.0 medium-term management plan for fiscal 2022-its final year-is now unrealistic. Regardless, I am confident that the path we have taken during this crisis has been the right one. In fact, it could be said that we have been brought closer to the future we envisioned as a result of the pandemic. This realization reaffirms the need to further accelerate the initiatives we have put forth.

• A positive thing to come out of the pandemic was the creation of opportunities for increased focus on the role of music as people were forced to remain at home and suffer from various constraints. This situation led to strong demand for such Yamaha offerings as digital musical instruments, such as digital pianos and portable keyboards, as well as for guitars and acoustic pianos. By capitalizing on this demand, we were

able to help soothe and fulfill people in the midst of this trying reality. As for negative impacts, the area in which we were most affected was our supply chain. Yamaha had decentralized its production and procurement venues as a

precaution based on our experience with the Great East Japan Earthquake. However, we had not anticipated a situation in which a pandemic would simultaneously affect countries across the globe, forcing us to stop all of our factories. As a result, we were unable to furnish a sufficient supply for meeting the growing demand, and this is a shortcoming that we must reflect on. Another factor we had not accounted for was how, unlike earthquakes and other natural disasters, which have large immediate damages but see gradual recoveries thereafter, the COVID-19 pandemic is a disaster that persists, with no clear end currently in sight. The takeaway from this is that we must focus on increasing our resilience going forward, as opposed to merely pursuing cost reductions and efficiency improvements. Increasing resilience will entail a multifaceted approach toward reforming supply chains, including applying more varied inventory policies and installing additional flexibility into production systems. Yamaha felt the impacts of the pandemic more acutely than other companies because the Company deals in such a wide range of instruments. There was thus a need for us to swiftly implement remote work systems and undertake digital trans- formation, which prompted us to adopt development, produc- tion, and sales methodologies that are innovative within the industry a step ahead of our peers.

Strategy

Progress in Second Year of Make Waves 1.0 Medium-Term Management Plan

Takuya Nakata

Director, President and Representative Executive Officer

Yamaha is currently in the process of advancing its medium- term management plan that covers the three years spanning from fiscal 2020 to fiscal 2022. Looking back at past plans, the theme of YMP125 (April 2010-March 2013) was "rebuild business platforms," the theme of YMP2016 (April 2013- March 2016) was "increase profitability," and the theme of NEXT STAGE 12 (April 2016-March 2019) was "increase brand power," which aimed at taking the Company to a new growth stage. These plans were followed by Make Waves 1.0, the current medium-term management plan. Launched in

April 2019 with the goal of furthering us toward the accomplishment of our management vision of "Becoming an Indispensable, Brilliantly Individual Company," this plan positions its period as the stage in which we should develop closer ties with customers and society and boost value creation capabilities.

• As this plan has completed its second year, I would like to take this opportunity to discuss the progress of this plan in relation to Yamaha's principal businesses and the plan's four key strategies.

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