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Manage R&D, production, marketing and sales vertically under an internal company system. |
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Speed decision-making and responsiveness by clarifying responsibility and authority. |
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Balance operating independence and central control.
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Internal Company System Will Support Performance
Along with the introduction of an internal company system in April 2002, the Company organization underwent a transition to a structure comprising three internal companies, one company that has been spun off, four business tie-ups, subsidiaries and affiliates and the Corporate Division. This new structure will vertically integrate R&D, production, marketing and sales resources by business to enhance efficiency and focus, giving each business the tools it will need to succeed. At the same time, vertical integration is expected to improve accountability and support Ajinomoto’s drive to increase return on equity.
Ajinomoto’s new organization will have a strongly beneficial effect on returns on capital. Each company will have responsibility for its financial performance, with the result that each company will have a clearly defined interest in managing its capital effectively. The Corporate Division will be available to support the operations of each company, but will bill for services rendered. Thus each company will carefully consider its requirements for support services, while the Corporate Division will be required to provide services of the highest levels of quality and effectiveness. The result will be elimination of duplicated effort and decreased costs. In April 2003, the Corporate Division is scheduled to undergo an additional reorganization to reduce personnel and further clarify its support roles.
Strong Corporate Governance
Ajinomoto’s internal company system has been designed to achieve a good balance between operating independence and central control of issues that are fundamental to sound corporate governance. Strategic brand building will remain a primary corporate responsibility, while each internal company will take responsibility for brand strategies for its own products. Managing return on equity (ROE) will be a corporate responsibility, while internal companies will be responsible for increasing the efficiency with which they deploy assets as measured by return on assets, which will in turn improve Group ROE.
Accelerated decisions and greater managerial accountability are essential to the success of the internal company system. In response to changes in the Commercial Code of Japan, Ajinomoto is evaluating the most appropriate structure for its board of directors. The Company is also evaluating measures to reinforce its corporate auditor system. |
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