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FUJI OIL HOLDINGS

New Year's Thoughts Challenge and Innovation – The Shift to a Group Headquarter System

2016.1.4

A happy new year to one and all!

Last year, a mild recovery was seen in the overall Japanese economy due to financial and fiscal policies enacted by the government, and further expansion of business can be expected through Japan’s participation in the TPP. However, a glance at the rest of the world reveals fears of a slowdown in the Chinese economy and blunt growth in developing countries as well as unrest in various areas rooted in the terror attacks that occurred in Paris, France last year. This has contributed to a situation in which the future of the world economy is extremely opaque, and large fluctuations in stock prices have been experienced. At Fuji Oil, we strongly feel that it is necessary to establish a structure capable of dealing with such changes.

For Fuji Oil, last year saw progress toward a new management paradigm in the form of a shift to a group headquarter system. We felt a shift to this group headquarter system was necessary as we were keenly aware that continuing down the same path would put our very existence in danger, and that we had to innovate in response to the changing environment around us.

1. Enhancement of group’s strategic functionality
It is said that Japanese companies are not skilled at making use of capital and assets. One of the reasons for this is ambiguity in the separation of management and implementation, and if a company is unable to efficiently and proactively make use of capital and assets, then it is not possible to imagine how it will attain future growth. Our structural shift to the group headquarter system will allow Fuji Oil Holdings Inc. to specialize in and focus on group strategy, thus enhancing its ability to make proposals for new business, mergers and acquisitions, and other aspects of management strategy, as well as optimizing the distribution of management resources within the group.

2. Leveraging value creation capability in each location
I always say that there are three keywords when it comes to global management; cost, speed, and localization. Whereas Fuji Oil used to look at the world as being bipolar with “Japan” on the one hand and “overseas” on the other, henceforth we shall divide our regions of operation into Japan, Asia, the Americas, and Europe, and empower companies established to oversee group companies operating in each region to take control of aspects of management including the direction of business and decision making. Those on the ground who know the local market and customers better than anyone else think, develop, and sell locally. We shall enhance each of these business operations in order to increase our speed of management.

3. Creation of a global governance structure
I stated above that cost, speed, and localization were keywords for global management, but this is predicated on simplification, transparency, and delegation. In order to construct a transparent and fair management structure for shareholders, customers, partners, and other stakeholders while delivering future growth, the role and responsibility of Fuji Oil Holdings and each group company must be clearly defined. The division of management and implementation will allow Fuji Oil Holdings to specialize in group management and strategy formulation, while also allowing group companies to specialize in operations in their particular business locale. The establishment of Chief Executive Officer (CEO), Chief Strategy Officer (CSO), Chief Technology Officer (CTO), and Chief Financial Officer (CFO) positions in group management will further enhance the structure for global governance.

4. Securing and developing human resources for management
I often talk about “kachizukuri” (creating value). If one adds “kotozukuri” (creating movements), to technology based “monozukuri” (creating products), then “monozukuri” becomes “kachizukuri”. The starting point for the creation of movements that turn technology into value is the ability to move people, and in order to do this, I believe it is necessary to develop the human resources with the requisite skills. And that means undertaking “hitozukuri” (fostering people). Fuji Oil Holdings will optimize the allocation of people – an important management resource – by securing and developing the next-generation management staff to take responsibility for the group’s future growth.

Currently, more than half of the group’s employees are of a nationality other than Japanese, and we have created the “Fuji Oil Group Management Philosophy” to act as a new and concrete guide to our management philosophy and policies with which Fuji Oil has always been managed. Our employees around the world will face in the same direction, consider the well-being of people and the earth, and work to provide solutions to social issues. Our Management Philosophy states that the Fuji Oil Group’s mission is to seek to develop the potential of food ingredients and contribute to the happiness and well-being of the people by offering delicious and healthy food. I truly want to make Fuji Oil Group that works for people, and as such, our keywords for this year shall be “diversity” and “ESG” (environmental, social, and governance).

This year is going to be a very important one in which our innovation implemented last year bears fruit, and I intend to ensure that the group goes forward as one.

Hiroshi Shimizu
President and CEO
January 1st, 2016