Charting our direction 2007. 4. 19
PILLARS OF OUR STRATEGY Align strategy for growth and ROIC - Achieve 20% ROIC by 2010 Become the leading Manage portfolio to win consumer electronics player in the world Develop strategies for the • Enhancing customer “polarizing consumer” value with innovation and design Innovate through design, as well • Delivering superior returns to as technology shareholders • Developing the Invest in clear, global brand identity “benchmark” organization Align and upgrade organization for the future 1 / 8
ALIGN STRATEGY FOR GROWTH AND ROIC New strategy and business planning process, with performance Align strategy for growth measures on ROIC and ROIC Become the Margin improvement initiatives leading consumer electronics player 2 Manage portfolio to win underway in the world - Optimize product mix to enhance pricing • Enhancing Develop strategies for the customer value 3 - Consolidate purchasing with innovation “polarizing” consumer and design - Expand lean manufacturing practice Innovate through design, • Delivering 4 - SKU rationalization superior returns as well as technology - Corporate center restructuring to share holders Invest in clear, global 5 • Developing the Asset productivity initiatives brand identity “benchmark” organization - Tighter cash cycles Align and upgrade 6 - Reduce inventories Organization for the future - Delay / reduce non-critical CAPEX - Eliminate non-productive assets 2 / 8
MANAGE PORTFOLIO TO WIN Focus on businesses where we can and should be in Top 3 Align strategy for growth 1 and ROIC Key consideration for each product Become the and market, e.g., leading consumer electronics player - Size and growth of the market Manage portfolio to win in the world - Profit pool • Enhancing - Current competitive position Develop strategies for the customer value 3 with innovation “polarizing” consumer Actions likely to include and design Innovate through design, - Optimizing business portfolio • Delivering 4 superior returns as well as technology - Innovating go-to-market approaches in to share holders some products and countries Invest in clear, global 5 • Developing the - Restructuring unprofitable businesses brand identity “benchmark” organization - Bringing in partners where we can Align and upgrade 6 benefit each other Organization for the future Reviews on-going and decisions will be made in 2 nd half of ‘07 3 / 8
DEVELOP STRATIES FOR THE “ POLARIZING” CONSUMER Align strategy for growth Consumers “polarizing” 1 and ROIC Become the 2 Manage portfolio to win leading consumer electronics player Position as premium in all markets in the world - Innovations in design and technology • Enhancing Develop strategies for the for ‘Trading-up’ consumers customer value “polarizing” consumer with innovation - Cost competitiveness for ‘Trading-down’ and design consumers Innovate through design, • Delivering 4 superior returns as well as technology to share holders Invest in clear, global 5 Focus on high-end market, while • Developing the brand identity “benchmark” establishing “aspirational” position organization Align and upgrade 6 in the low-end Organization for the future 4 / 8
INNOVATE THROUGH DESIGN AS WELL AS TECHNOLOGY Innovation based on customer Align strategy for growth 1 and ROIC insights Become the 2 Manage portfolio to win leading consumer electronics player in the world Cultivate design as key competitive Develop strategies for the 3 • Enhancing “polarizing” consumer edge customer value with innovation - Success to date with Chocolate, Shine, and design Innovate through design Steam TROMM, Art DIOS – many more • Delivering as well as technology superior returns to come to share holders Invest in clear, global 5 • Developing the brand identity “benchmark” Continue investment in R&D and organization Align and upgrade 6 design Organization for the future 5 / 8
INVEST IN GLOBAL BRAND IDENTITY Increase investment to build brand identity Align strategy for growth 1 - Not just about awareness, but real brand and ROIC pull and emotional bond Become the 2 Manage portfolio to win leading consumer electronics player in the world Develop strategies for the 3 Position brand to appeal to premium • Enhancing “polarizing” consumer customer value segment and establish “aspiration” with innovation Innovate through design, and design 4 for others as well as technology • Delivering superior returns to share holders Invest in clear, global Global brand identity initiatives • Developing the brand identity “benchmark” - Brand re-positioning organization Align and upgrade - Revamped communication 6 Organization for the future - Marketing spend reallocations 6 / 8
ALIGN AND UPGRADE OF ORGANIZATION FOR THE FUTURE Align strategy for growth 1 Enhance structure, roles, processes and ROIC and measurements to focus on ROIC Become the 2 Manage portfolio to win leading consumer electronics player in the world Develop strategies for the 3 • Enhancing “polarizing” consumer Upgrade key functional areas such customer value with innovation as marketing, purchasing, SCM, Innovate through design, and design 4 manufacturing and innovation as well as technology • Delivering superior returns to share holders 5 Invest in clear, global brand identity • Developing the “benchmark” Recruit and develop global talent organization Align and upgrade in all areas organization for the future 7 / 8
STRATEGIC INITIATIVES FOR DIGITAL DISPLAY Realign product/market priorities to meet consumer demand and profit challenges (e.g. focus 50”+ for PDP TV, strengthen 40”+ for LCD TV) Aggressively reduce COGS (e.g. integrated purchasing, launch of cost-innovation models) to minimize margin loss and prepare stronger foundation for expected supply/demand balance - Improvement expected in 2H, ’07 and beyond Targeted R&D investment to improve quality and cost Explore options to restructure PDP business to better align with overall FPTV strategy 8 / 8
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