To Become a Truly Global Company - Bridgestone · To Become a Truly Global Company ... Creating customer value . Enhancement of governance systems ... of the Model T Ford (d)

To Become a Truly Global Company （Bridgestone 2013MTP）

Masaaki Tsuya CEO and Representative Board Member Concurrently Chairman of the Board, Bridgestone Corporation Oct 17, 2013

Copyright © 2013 Bridgestone Corporation | Oct.17. 2013

1. Introduction (”2nd Foundation” & “MTP”)

2. MTP: The basic approach

3. 2013MTP: Priority issues

4. Management Target

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Today’s agenda






Today’s agenda

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The 1988 Firestone merger marked Bridgestone’s ”2nd Foundation”

- It began under difficult conditions and in the face of many challenges - In 2006 we initiated the first phase of our management reforms, refining/restarting/reinvigorating the vision of the “2nd Foundation”

- Building on the “2nd Foundation” ⇒ Transform Bridgestone into a truly global company

・Cultivating global corporate culture

・Developing human resources capable of global management

・Upgrading the global management structure

1.”2nd Foundation” & “MTP”

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Sales and Operating Profit ※Plan：As of Aug. 9, 2013 Public release

ＦＹ 2006 2007 2008 2009 2010 2011 2012 2013

ＲＯＡ (%) 3.0 4.1 0.3 0.0 3.6 3.8 Achieved

6.0% More than 6.0% “improve further”

ROA（2006～）

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2006 2007 2008 2009 2010 2011 2012 2013

Sales OP%

計画

100 million JPY


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1st Phase Management Reforms (2006 -- Spring 2012) Summary ⇒ Steady progress in management reforms The Bridgestone Essence : Refined corporate philosophy (on the occasion of the Company’s 80th anniversary in 2011) Lean ＆ Strategic (L&S) Optimize management on a Group and Global basis (GG Optimization) SBU organization MTP


Reform Tools

Basic Stance

Mission and Foundation

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2nd Phase Management Reforms (2012 -) ⇒ Ongoing Reforms : Continuous quality improvement ; increase the speed and the agility of business The Bridgestone Essence L&S, GG Optimization SBU organization, MTP

Creating customer value Enhancement of governance systems Further development of competitive advantage /differentiation through Innovation

- To become a truly global company - To achieve “Dan-Totsu” in our industries


Reform Tools Basic Stance

Mission and Foundation

Additional priority issues

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The function of MTP

– Important tool for implementing management reforms and ensuring focus on the Group’s Basic Stance

L&S ： MTP links short-term and long-term measures

GG Optimization ： MTP links divisions and SBUs providing transparency to the business on a global basis

– However, the MTP does have its challenges

Challenge1 ： The reliability of MTP numerical data in the mid- to long-term

Challenge2 ： Consistency of entire MTP over the mid- to long-term


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Today’s agenda

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MTP

– The characteristics of Bridgestone’s MTP

Period : 5 years

Update : Every year, rolling

Measures : The MTP incorporates both financial targets as well

as other goals related to company performance

Structure : Flows from the 2nd half revised budget and establishes

the foundation for the following year’s original budget

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MTP (2 Challenges) Reliability : The reliability of mid/long - term data is limited due to

the volatility of the business environment Consistency : Consistency of entire MTP over the mid/long-term 〈The cause of the challenges〉

Business environment : Continuous and dramatic changes, oftentimes unpredictable (Politics, economy, natural disasters, etc.)

Confidentiality : Matters excluded from MTP due to the need for confidentiality (e.g. Restructuring of business, Establishment of new factories, M&A until announcement)

Differences among sections : Inconsistent plans and implementation among SBUs and GMP sections ; differences in approach to the development of their respective MTPs


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Although not perfect, given the challenges identified above

MTP remains at the core as an important tool for implementing

management reforms


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- Focus management attention on the company’s future and the actions that need to be taken to achieve the ideal state under the uncertain business environment

- Ensuring focus on the Group’s Basic Stance: L&S and GG optimization

MTP is the most effective tool






Today’s agenda

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(1) Cultivating global corporate culture A. Clarifying brand strategy

B. Promoting innovation

(2) Developing human resources capable of global management

(3) Upgrading the global management structure A. Restructure the tire business SBUs

B. Expansion of the diversified product business

C. Enhancement of governance systems

D. Establishing a closer bond/linkage between and among the parts

of the entire group


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Ａ． Clarifying brand strategy

Current state

(a) Implemented by each SBU individually : insufficient, inconsistent (b) Global consumer tire products : BS brand around 2/3 FS brand around 1/4

(c) Tire／Diversified products : insufficient cooperation, inconsistent

(d) Brand Strategy : Not fully integrated

Future direction

(a) Group Global : Ensure overall consistency

(b) Brand Strategy : Fully integrated ; marketing

and brand strategy fully aligned

(1) Cultivating global corporate culture


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Ｂ． Promoting Innovation

Current state (a) Macro environment : Change and evolution affecting all aspects of life and culture (Politics, Economy, Environment, Technical innovation) (b) Consumers : Evolving lifestyles and changes in purchasing behaviors/preferences (c) Automobiles : A century has passed since the days of the Model T Ford (d) Tires : Half a century has passed since the introduction of steel radial tires

The direction of the reform

(a) Technology and business models innovation : accelerate

(b) In all areas of management : Continuous improvement

(1) Cultivating global corporate culture


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High Hardness

Rubber elasticity region

Low Hardness

【Classification of basic technology】 Macromolecular materials

【Business Scope】

Resin piping

Air spring Belts

Hoses Rubber tracks

Anti-vibration rubber Seismic isolation

rubber Construction

material

Chemical products Sealing film

Sports Cycles

Tire Passenger Tires

Truck & bus Tires Specialty Tires

【Social Areas】


(Airplane, Mining& Construction, Agricultural, Motor Cycle)

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Technology innovation

Horizontal expansion of global business domains

Guayule Russian Dandelion

100% sustainable material concept

Air Free Concept with ologic

Vertical expansion of supply chain 3. 2013MTP: Priority issues

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Business model Innovation

Tire, Conveyor Belt, HYD hose

Service & Maintenance

New tire

Service & Maintenance

Retread


Horizontal expansion of global business domains

Vertical expansion of supply chain

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(2) Developing human resources capable of the global management

Step 1 Content : Utilize our strength (diversity and global network), and advance the development and promotion of diverse talent, including women, local /regional staff, and individuals with unique and different perspectives

Timing ： Increase the pace of activity in this area

Step2

Content ： Designate English as an official company language Advance the participation of local/regional staff in global management roles through the restructuring of SBUs

Timing ： Gradual implementation over time (timing to be announced prior to its implementation)


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A. Restructure the tire business SBUs (a) Europe SBU： Step 1 Restructure the European business Restructure the Middle East and Africa business

Step 2 Extend the European SBU ( + Middle East and Africa SBU, Turkey, Russia)

(b) China SBU + Asia Pacific SBU：

Step 1 Prepare for integration

Step 2 Integrate management structure

⇒ From 6 regional tire SBUs to 4 regional tire SBUs (Japan, Americas, Europe, and Asia)

No changes in/to the Specialty Tire SBU

(3) Upgrading the global management structure


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10％

10％

10％

10％ 10000 10000

10000 10000

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The need to restructure and extend the European business: its position within the Bridgestone tire business


B. Expansion of the diversified product business

Content：

Timing ：Further progress/activation during 2013MTP period

“Selection and concentration” / Structural reforms

Strengthening collaboration among businesses

Promoting globalization

Further growth and improvements in the selected businesses



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C. Enhancement of governance systems Step 1 Content ：

Timing ： On-going Step 2 Content ：

Timing ： Implemented over the term of 2013MTP

Strengthen the “check and balance” function of the board of directors (the parent company and each subsidiary) Upgrade the board committees’ accountabilities/responsibilities (and build diverse teams in order to promote robust discussions)


Expand the development and launch/implementation of Global strategies and policies to ensure clear understanding of Group vision, goals and direction

- While maintaining consistency with Global strategies and policies, allow for local and regional modifications and adjustments which are responsive to the needs and characteristics of each region and business

Clarify authority and responsibility, and enhance delegation of authority


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Ｄ． Establishing a closer bond/linkage between and among the parts of the entire group

(a) Establishment of new departments － Global Innovation － GGMS (Group Global Marketing Strategy) (b) Establishment of new global meetings/opportunities to collaborate

－ GCC (Global Communication Corridor) － Global CQO Meeting － Global CRO Meeting － Global EXCO (Global Executive Committee)



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Today’s agenda

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Qualitative goal： ‐ Maintain our commitment to the Bridgestone Essence and our basic stance (L&S and GG Optimization) ‐ Secure growth and profitability ‐ Always aim for “ the higher level ” position ‐ Promote innovation

Quantitative goal

Growth ：Exceed the industry average

Overall ：Consistently deliver ROA 6％ and OP10％


- To become a truly global company - To achieve “Dan-Totsu” in our industries

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Statements made in this presentation with respect to Bridgestone's current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of Bridgestone. Forward-looking statements include, but are not limited to, those statements using words such as "believe," "expect," "plans," "strategy," "prospects," "forecast," "estimate," "project," "anticipate," "may" or "might" and words of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These statements are based on management's assumptions and beliefs in light of the information currently available to it. Bridgestone cautions you that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, and therefore you should not place undue reliance on them. You also should not rely on any obligation of Bridgestone to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Bridgestone disclaims any such obligation.

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Documents

To Become a Truly Global Company - Bridgestone · To Become a Truly Global Company ... Creating customer value . Enhancement of governance systems ... of the Model T Ford (d)