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Issues to be Addressed

[As of May 8, 2020]

In order to respond effectively to the business environment and meet the expectations of stakeholders, the Group will promptly execute various measures to address challenges identified below to push forward with research on advanced technologies and creation of new business models, while enhancing the value added of existing business areas, and will thereby realize sustainable growth and increase corporate value.

1. Generating new businesses and conducting research and development of new technologies

Given the full advent of “digital transformation,” the Group thinks it necessary to generate unique new businesses (services and products) to secure its competitive advantages in addition to the existing system integration business.
For the time being, the Group will endeavor to generate new businesses targeting a wide range of industries by positioning areas of AI and cloud computing, which are among the strengths of the Group, as strategic technologies.
Furthermore, in order to maintain technological prowess that enables the Group to respond to market needs in an appropriate and timely manner and to solicit and integrate knowledge and ideas indispensable for generating a revolutionary new business, the Group will make efforts for research and development of new technologies through alliance with other companies, industry-academia collaboration, joint research with customers, open innovation, etc.

2. Acquiring new customers and strengthening relationships with customers

As customer needs are becoming increasingly diverse and complex, the Group is expected to play a role of an “IT partner” of customers to help them to achieve their business targets and to realize innovation toward the realization of their future vision.
In order to meet customers’ expectation and provide services and products for a wide range of customers, the Group intends to acquire new customers and strengthen the relationship with customers by increasing and developing the dedicated sales staff on a continuous basis.
We will also create a mechanism to share sales and customer information to facilitate coordination among sales team members from different Group companies and business divisions, and develop broad proposal-style sales operations that are strategic and comprehensive.

3. Providing ironclad quality

Aiming to enhance the quality of services provided to our customer will eventually result in sustainable growth and corporate value enhancement of the Group.
By steadily putting into practice such basic business behaviors as “keeping a contract/promise,” “taking responsibility in one’s work,” and “keeping the promised quality (Q), cost (C), and delivery (D),” we will work to improve the quality of our business including project management. And through such efforts, CRESCO will endeavor to continue to win and live up to the trust and confidence of customers and thereby to establish the CRESCO brand.
In March 2020, the Group was awarded the “PM Application Encouragement Prize” by the Society of Project Management for the efforts it has continuously made so far.

4. Pursuit of productivity

The purpose of improving productivity is to create new values and revenue by effectively using extra “time” generated and “cost saved” by improving operational efficiency and streamlining through the repetition of small ingenious efforts.
Improving productivity contributes to addressing constant manpower shortage, ensuring competitive advantage and improving work environment, and it is also a subject directly related to profitability.
The Group is making efforts to create an environment in which employees can work in an autonomous and lively manner through work style reform tailored to the situation of each Group company as well as the adoption of various information sharing tools, the utilization of intellectual property, work process improvement, the renewal of the main system, etc.

5. Securing human resources engaged in development

Given the persistent human resource shortage in the development staff on the back of increasing demand for IT investments, it is a continuous challenge for us to secure human resources that supports our ability to receive orders for development projects.
The Group will strive to avoid any opportunity loss resulting from a shortage of human resources (such as lost contracts or downscaling of projects) by actively utilizing nearshore collaborative development arrangements (distributed development within Japan based on collaboration with subsidiaries and partner companies) and offshore collaborative development arrangements through CRESCO VIETNAM CO., LTD. (distributed development outside Japan based on collaboration with local companies in Vietnam), in addition to creating a horizontal development structure across divisions and companies.
The Group will also strive for strengthening relationships with partner companies, implementing measures to prevent the loss of human resources and improving productivity.

6. Hiring and development of human resources

In labor-intensive contracted development services, much of the value to be provided to customers is created by human resources. For the continued development of such services, it is indispensable for us to hire and develop human resources.
We recognize that human resources are important management resources in that any difference in them will be the factor to determine competitive advantages of each company in these times in which products and services offered by companies are subject to severe selection, particularly in the IT industry.
We will promote ongoing hiring activities (e.g., new graduates, engineers, and senior management), the creation of a corporate culture of learning and human resource development programs with the aim to be recognized as a “model company for human resource development.” Competency Management Strategy Office, which is specialized in securing and training adequate human resources in line with the business plan, will play a central role in such initiatives.

7. Promotion of work style reform

The Group is making efforts for creating a work environment and introducing various programs from the “standpoint and perspective of workers” by conceiving work style reform as a subject conducive to productivity improvement and something that can be expected to be effective for raising employee motivation, recruiting human resources and preventing employee separation.
Specific issues to be addressed are the “reduction of prescribed working hours,” the “introduction of teleworking system” and the “operation of a leave program easy to apply for.”
In particular, occasioned by the scourge of COVID-19, the “introduction of teleworking system” is considered as something that is not limited to emergencies but will be established as an “ordinary work style that presupposes productivity improvement and a performance-based approach.”
In September 2019, the Group was “Platinum-Kurumin” certified as a company supporting childcare in accordance with the Act to Advance Measures to Support Next-Generation Child-Rearing for the fact that not only female employees but also male employees take a childcare leave, etc., a reduction in overtime work, a high percentage of the number of paid annual leave taken, etc.
It is intended to promote highly effective measures by positively using digital technology in light of the Japanese government’s policy and the trends of relevant legal institutional changes.

8. Promotion of health management

“Health” is not only a problem for individual employees, but also an important factor that is linked to corporate benefits and should be managed actively by companies.
Initiatives for maintaining and promoting mental and physical health of employees are expected to effective with regard to corporate reputation and human resource hiring and is also important as a part of corporate risk management.
The Group announced a Declaration on Health and Productivity Management in September 2019 and was certified as a “2020 recognized organization” under the “Certified Health & Productivity Management Outstanding Organizations Recognition Program” in March 2020.
We will continue to promote various measures that are optimal to the Group in order to realize a workplace where employees are healthy and can work securely and safely with a sense of worthwhileness.

9. Initiatives to promote diversity

Accepting diversity is indispensable both for individual employees to lead a fulfilling life and for a company to establish a competitive advantage in a changing market environment or technological structure.
Providing diverse human resources with opportunities to participate equally in the organization and to exert their ability to the maximal extent leads to various innovation and value creation.
The Group’s basic policy is to respect differences among individuals and evaluate individuals based on their performance, skills, and contribution, without considering attributes that are unrelated to job duties, such as gender, age, and nationality.
The Group also devote its effort to hiring women and increasing the percentage of women among managers and was awarded the “Eruboshi (‘L Star’: L stands for Lady, Labor and Laudable)” certification based on the Act on the Promotion of Female Participation and Career Advancement in the Workplace in September 2017. In addition, the Group is also making positive efforts for hiring foreign nationals and people with disabilities.

10. Promotion of M&A and alliance and reinforcement of Group companies management

Expanding business, ensuring new business opportunities, acquiring human resources and acquiring customers through continuous promotion of M&A and alliance are important items in growth strategies. In addition, it is considered indispensable to “maximize the earning power” through group synergy by implementing measures ranging from intra-group alliance and collaboration to business infrastructure improvement, technological support, personnel exchanges, etc.
With regard to reinforcing the management of each Group company, in addition to dispatching Directors or Audit & Supervisory Board Members to Group companies from the perspective of corporate governance, the Group established the Group Business Integration Unit to address the promotion of group business optimization and post merger integration (PMI).

11. Strengthening corporate governance

As it is considered important to strengthen the corporate governance system in order to realize sustained growth and corporate value enhancement, we are working to establish a system for exact and rapid decision making and business execution and a proper supervision and monitoring system.
Furthermore, in order to reinforce the effectiveness of corporate governance further in terms of soundness and fairness of management, we will work to ensure the implementation of measures for risk management, internal control and compliance across the whole Group (e.g., monthly checks and education) and to enhance its credibility and reinforce its self-rectification ability by developing a policy for investment strategies and financial management in response to changes in a business environment, utilizing Independent Outside Directors, enhancing the diversity of the Board of Directors, etc.

12. Business portfolio optimization and flexible organizational management

It is one characteristic of the Group’s business that it is based on continuous business relationship with customers. Accordingly, there are two aspect to it: “stability” and “dependency.”
In light of such a characteristic of the Group’s business, efforts are made to optimize its business portfolio in order to diversify risks so that the Group’s performance may not be at mercy of a particular customer, industry or a technological trend.
Efforts will also be made for the effective use (selection and concentration) of management resources (personnel, goods, money, information and time) and flexible organizational management through marketing activities, R&D and the activation of organizations, teams and personnel in order to anticipate diversifying and complicating needs and significantly changing technological innovation and adapt aptly to an increasingly severe business environment.