The themes under the policy of further strengthen the business foundation are (1) Develop closer ties with customers, (2) Create new value, and (3) Be more flexible and resilient.
The February 2023 acquisition of U.S. guitar manufacturer Cordoba Music Group, LLC, is an example of our initiatives based on theme (1). The guitar business has been positioned as a business to be fostered, which means we will be aggressively investing in this business to grow its scale and improve its profitability. Moreover, the addition of Cordoba Music Group to the Yamaha Group has bolstered our product lineup while also allowing us to strengthen our operating foundation by utilizing this company’s strengths in planning, product development, and brand communication.
This acquisition was conducted through Yamaha Guitar Group, Inc., a U.S subsidiary that is well-versed on the local market and is located in close physical proximity to Cordoba Music Group. Yamaha Guitar Group also spearheaded the post-merger integration process based on its past experience in this area. Specifically, Yamaha Guitar Group has the experience of leading the smooth completion of the post-merger integration process with regard to the 2018 acquisition of the globally recognized Ampeg brand for bass amps, and this experience has helped keep the process for Cordoba Music Group advancing on schedule.
In managing overseas Group companies, we plan to continue positioning individuals who are highly knowledgeable about the respective markets in management positions and empowering them to exercise autonomy whenever possible. Given this approach, I think that corporate governance should function as a catalyst for generating synergies behind the unifying role of the Japanese headquarters and the autonomous drive for expansion of the management of subsidiaries. Specifically, we should take appropriate steps to verify whether Group governance is functioning as intended and whether the internal regulations necessary for this functionality are being effectively implemented, and frameworks should be flexibly revised as needed to accomplish these objectives.
We are also expanding our business domain as part of our efforts under theme (1). For example, we are accelerating the growth of the automotive sound system operations developed as part of the industrial machinery and components business. These operations entail the supply of surround sound systems and speakers for use in vehicles. The atmosphere within vehicles is not ideal from the perspective of acoustics. Yamaha, however, possesses insight into signal processing technologies and acoustics control that can be used to overcome challenges faced in regard to in-vehicle environments. In-vehicle products developed utilizing Yamaha’s distinctive strengths have earned high praise, and six Chinese and other automobile manufacturers had adopted these products for use in their vehicles as of fiscal 2023. In these operations, we seek to go beyond simply producing and supplying components to create high-quality audio systems that match the vehicle concept shaped by the manufacturer’s values. Through this approach, we aspire to earn a position as a partner working together with automobile manufacturers.
As for theme (2), we are enhancing Yamaha Music Connect, a service that truly exemplifies this theme. Based on our Yamaha Music ID customer data platform, Yamaha Music Connect is a service that supplies individual users with the apps and content that best match them. There is a lot of competition in the field of online music services as a diverse range of offerings are already available from a variety of providers. However, there still has yet to emerge a service that can be a clear market leader. Yamaha is bolstering the range of functions offered through its service with the goal of sup-plying functions that can be enjoyed with ease by users ranging from beginners to experienced musicians. This will include accommodating a wide range of needs, including those of individuals wanting to play with their colleagues in remote environments, people wanting to receive online lessons without having to worry about time, and musicians looking for a simple way to share their performances.
The development of this service is being led by the Music Connect Department, a new organization placed under my direct jurisdiction, to guide the formulation of unprecedented new business schemes, including those for collaboration with start-ups, and to thereby create new value through open innovation.
For Yamaha Music ID, our service platform for forging broader, deeper, and longer ties with customers, we have set the target of issuing five million IDs by fiscal 2025. In fiscal 2023, we reached nearly half of this amount with 2.4 million registered IDs, a number indicating the high interest in this service among customers.
Theme (3) relates to raising the resilience of our supply chains, and will thus be an ongoing focus in the future. Our previous approach toward supply chains entailed placing efficiency as our top priority. This led us to emphasize minimizing inventories of components and works in progress. However, the supply chain disruptions seen over the past two years have made it clear that a supply chain focused purely on efficiency will require a substantial amount of time to recover when disrupted by extreme circumstances. It is for this reason that it is so important for us to reassess our supply chain based on the assumption that unpredictability will be a constant in the operating environment. With this perspective, we must examine what exactly constitutes the ideal supply chains for Yamaha and how supply chains should be matched to the coming times. We must not be hasty in this process. Rather, we must take the time to carefully discuss these
matters and build the best possible supply chains.