Past, Present, and Future
Reviewing the 19th and 20th Mid-Term Management Plans
We embarked on RICOH Resurgent initiatives under the 19th Mid-Term Management Plan, launched in fiscal 2017. These efforts included overhauling the cost structure, optimizing business processes, and strategically assessing businesses for expansion or divestment, putting the Office Services business on a growth trajectory. Under the 20th Mid-Term Management Plan, we responded flexibly and promptly to the impact of the COVID-19 pandemic and other challenges but were unable to reach our business growth goals. We nonetheless progressed steadily toward becoming a digital services company. This was notably by strengthening our management foundations, including by deploying a business unit structure, business portfolio management, and a job-based human resources system.
| 19th Mid-Term Management Plan | ||
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| Fiscal 2017 | Fiscal 2018–2019 | |
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Reviewed five major principles predicated on market expansion and overhauled our earnings structure
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Bolstering profitability and governance |
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| Operating climate |
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| Basic policies | ❶ Implement structural reforms ❷ Prioritize growth businesses ❸ Reinforce management systems |
❶ Develop businesses that leverage our strengths ❷ An open management style ❸ Focused investments |
| Results |
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| A year of tacking crises and accelerating our transformation | 20th Mid-Term Management Plan | |
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| Fiscal 2020 | Fiscal 2021–2022 | |
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Continue to stay close to customers’ work in a changing world |
Sustainably improve corporate value by resolving social issues |
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| Operating climate |
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| Basic policies | ❶ Respond to the pandemic crisis ❷ Accelerate transformation beyond the COVID-19 pandemic |
❶ Enhance business competitiveness ❷ Strengthen management foundations ❸ Improve capital returns |
| Outcomes |
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21st Mid-Term Management Strategy Overview and Progress
In April 2023, we launched our 21st Mid-Term Management Strategy, a three-year initiative focused on accelerating our transformation from a revenue structure primarily dependent on the Office Printing business to becoming a digital services company.
Medium- to long-term goals
Become a digital services company that supports worker creativity and provides services that transform workplaces
Fiscal 2025 financial targets announced in March 2023: Operating profit of ¥130 billion and ROE exceeding 9%
Progress with three basic policies
❶ Reinforce regional strategies and evolve Group management
Transitioning to a highly profitable structure: Ricoh is expanding revenue streams beyond Office Printing and transitioning to a more profitable business model. To keep improving profitability, we aim to enhance our value creation at customer touchpoints, leverage Group synergies, and better adapt to changing business conditions.
Transforming the profit structure: Ricoh has designated Process Automation*1, Workplace Experience*2, and IT Services as key focus areas. We are executing a strategy to amass recurring contracts and revenues in these service areas by concentrating resources while factoring in regional characteristics.
❷ Establish key revenue sources in frontlines and social domains
- Expanding the scope of digital services and delivering value to a broader range of customers.
- Establishing key revenue sources in the frontline and social domains, focusing on the Commercial Printing business.
- Using business portfolio management to identify key focus areas and explore appropriate exit strategies for certain operations.
❸ Leverage global talent
Formulated a human capital strategy that regards employee capabilities as capital, investing extensively in people to transform the business structure and expand global value offerings.
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*1Process Automation: formerly referred to as Business Process Automation
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*2Workplace Experience: formerly referred to as Communication Services
Office Services growth
- Business growth and structural reforms centered on Office Services have led to steady performances. Resolved supply constraints on MFPs and ICT products that affected fiscal 2022 results, normalizing sales activities.
- In Japan, services and solutions tailored to legal revisions to the invoice system and other customers performed well.
- Although demand for some ICT products weakened in Europe and the United States, growth continued in the services businesses, particularly among acquired companies.
Current and targeted digital services sales contributions
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(excluding other businesses)
Corporate Value Improvement Project
We have worked on this initiative since April 2023 to realize our vision of becoming a digital services company. We have assessed crucial challenges from multiple angles to enhance our corporate value. These efforts have included engaging with shareholders, investors, and analysts, and considering capital market perspectives. Our low price-to-book ratio stems largely from our modest profitability. In transitioning to a digital services company, we are overhauling our profit structure to better align with our business model.
This project aims to reform our profit structure in four respects: [1] Transformation of Headquarters, [2] Acceleration of business selection and concentration, [3] Transformation of the Office Printing business structure, and [4] Acceleration of Office Services’ profit growth.
Profit structure transformation overview
Key initiatives under profit structure transformation program
1Transformation of Headquarters
R&D optimization
- Focusing R&D investments in workplace areas that align closely with our vision to become a digital services company
Back-office function optimization
- Shifting the Group management structure to a digital-services-oriented organization that lifts customer touchpoint value
- Shifting to a new headquarters structure from April 2024 by enhancing Center of Excellence functions in supply chain management
2Acceleration of business selection and concentration
Business portfolio management
- We are further accelerating ongoing business portfolio management initiatives to transition to a digital services company and optimally allocate resources
- We are strategically allocating resources to workplace domain where our strengths can be utilized. We will use portfolio management to decide whether to initiate exit processes for underperforming businesses
3Transformation of the Office Printing business structure
Profit improvement through joint venture
- Because we expect the office printing market to shrink, we will bolster our management structure to ensure profitability despite declining sales
- We will manage our entire value chain from overarching perspectives, including through ETRIA, a joint venture with Toshiba Tec that we established on July 1, 2024, and by optimizing supply chain management. ETRIA is developing a highly competitive common engine while reducing procurement costs and streamlining development and production systems
4Acceleration of Office Services’ profit growth
Setting key performance indicators
- For this digital services core, we have set key performance indicators to improve customers’ Office Services installations and recurring sales growth rates and will undertake ongoing measures to boost profitability
Optimization of human capital
- We are drawing on a reskilling program to develop digital talent that can drive sales at customer touchpoints and cultivate people who can help streamline operations by digitalizing processes. We are also tapping the expertise of acquired companies
34Common
Optimization of supply chain management
- Undertaking initiatives to optimize office services procurement costs, demand forecasting processes, and logistics costs
Reviewing sales and service systems
- Optimizing the sales and service structure
- Digitalizing processes to enhance productivity
- Building a more efficient sales model by harnessing inside sales and other approaches
As a workplace services provider, we will prioritize transforming our profit structure in fiscal 2024. As well as striving to steadily expand earnings, we will undertake long-term growth strategies to continuously improve corporate value.