Investor Relations | Management Policy

Management Policy

Fundamental Management Policy

TDK was founded as a venture enterprise in 1935 for the purpose of industrializing a magnetic material called ferrite, which was invented at the Tokyo Institute of Technology. TDK’s corporate motto is “Contribute to culture and industry through creativity,” a message that embodies the company’s founding spirit. Guided by this spirit, in the ensuing years TDK has sought to refine its materials and process technologies, as it develops new products that satisfy market needs. Concurrently, TDK has advanced globalization and diversification of its business operations while actively pursuing M&As, collaboration with external partners and other initiatives. As a result, TDK today is engaged in four main businesses: Passive Components, Sensor Application Products, Magnetic Application Products, and Energy Application Products.
Looking ahead, TDK would like to remain a dynamic company that continues to deliver even higher value to all stakeholders, including shareholders, customers, suppliers, employees and local communities, by bringing together the entire Group’s strengths while taking full advantage of the strengths of each Group company, and constantly drawing on innovative thinking and a willingness to tackle new challenges.

Targeted Management Indicators

To realize this fundamental management policy, TDK conducts its business activities with reference to the following indicators.

(Important Fundamental Management Indicator)
* TVA (TDK Value Added)

TVA measures the added value newly created by the company’s business activities and is an important decision-making tool for management.
TVA is a TDK proprietary value-added yardstick that measures the extent of earnings commensurate with invested capital. This indicator compares earnings after taxes but without deducting interest expenses with the cost of capital (stockholders’ equity + interest-bearing liabilities).

(Indicator for Managing Environmental Performance)
* CO2 Emissions Reductions

As part of its environmental action plan to promote business activities in harmony with the natural environment, TDK has set a target for CO2emissions reductions.

Medium- and Long-Term Management Strategy

The business environment revolving around electronics is now standing on the threshold of a period of major upheaval. Transformation has begun in earnest, with an energy transformation (EX) driven by the shift from fossil fuels to renewable energy and a digital transformation (DX) driven by the permeation of digital technologies, such as the Internet of Things (IoT; technology for connecting a variety of things to the Internet) and Artificial Intelligence (AI), to every aspect of society.
Under its medium- and long-term management strategy, the TDK Group is pursuing two core priorities: (1) “contribute to the solution of energy and environmental issues” and (2) “contribute to making society more efficient through the use of data.”
The aforementioned trends of EX and DX will dramatically increase the demand for electronic components. With this in mind, TDK will strive to expand its four main businesses: Passive Components, Sensor Application Products, Magnetic Application Products, and Energy Application Products. TDK aims to achieve sustainable growth and increase corporate value by refining the materials and process technologies it has cultivated, and strengthening provision of solutions that respond to market needs. In addition, TDK will pursue a zero-defect quality strategy based on advanced technological capabilities, along with working to further globalize its business operations through speed-focused management.
In the three-year medium-term plan running through fiscal 2021, the TDK Group is targeting a return on equity (ROE) of over 14%. The Group will work to enhance its overall profitability and capital efficiency, while effectively investing in new product development and new businesses, in addition to investing in its main businesses.
The TDK Group will continuously strive to contribute to the solution of various social issues on a global scale by implementing its corporate motto, “Contribute to culture and industry through creativity.”

Pressing Issues

The global economy is expected to suffer a substantial downturn that will likely persist over an extended period of time due to the global spread of coronavirus disease 2019 (COVID-19). As a result, the COVID-19 pandemic could have a lasting negative impact on the international community after it has ended, drastically reshaping the social and industrial landscape. The business environment surrounding the TDK Group could also be altered tremendously.
However, even amid these changes in the social and industrial landscape, the trends of EX and DX should continue to grow in the electronics market. These trends are expected to bring about the creation of new markets in the TDK Group’s business fields. Significant growth opportunities will be presented to the TDK Group by trends that include the widespread adoption of renewable energy and electric vehicles in EX, the growing use of the fifth-generation mobile communications system (5G) and the practical use of Advanced Driving Assistance Systems (ADAS) in automobiles in DX.
There will also be growing adoption of IoT, wearable products, and cloud services. It is imperative for TDK to steadily capture these growth opportunities without falling behind these major changes.
To this end, TDK will actively conduct research and technological development, with a view to launching competitive new products in a timely fashion and expanding production capacity in line with demand.
TDK also recognizes that acquiring and appropriately allocating management resources is a pressing issue for realizing growth. Accordingly, TDK will revise the Group’s entire business portfolio as necessary. Human resources are one of TDK’s most important management resources.
With non-Japanese employees accounting for more than 90% of the TDK Group’s workforce, TDK believes that diverse and abundant human resources are a key source of its competitiveness. To enhance its human resources further, TDK identify talented human resources from across the entire TDK Group, and work to train and make the most of these individuals.
The current medium-term plan positions improving the value the TDK Group imparts to society as one of its high-priority issues. The Sustainability Promotion HQ established in April 2019 is taking the lead in bolstering initiatives toward this goal. TDK aims to drive further growth by bolstering its business initiatives using the SDGs—the international development goals listed in “The 2030 Agenda for Sustainable Development” adopted at a UN Summit in September 2015—as a framework, and contributes to society through sustainable business activities.
In line with the Group’s globalization, TDK is working to strengthen Group governance by redeveloping rules that clearly delineate the responsibilities and authorities of each Group company and by continuously striving to make its corporate philosophy more widely and better known throughout the Group.

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