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Issues to be Addressed

[As of May 21, 2019]

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. Providing ironclad quality

Aiming for improvement and growth in the quality of services provided to our customer will eventually result in sustainable growth and corporate value enhancement of the Company. 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 enhance its corporate value and brand.

2. Pursuit of productivity

The purpose of improving productivity is to effectively use the extra time created through efficiency improvement in a manner to create new values and revenue. By changing the working method and continually making small improvements, we will realize productivity improvements and will thereby overcome challenges in such areas as work style reform, effective use of intellectual property, and sustainable growth of the Company.

3. Strengthening of resource strategy

Given the persistent human resource shortage in the development staff on the back of increasing demand for IT investments, it is an urgent task for us to reinforce the development system that supports our ability to receive orders for development projects. The Group will strive to avoid any opportunity loss (such as lost contracts or downscaling of projects) by actively utilizing nearshore (distributed development within Japan based on collaboration with subsidiaries and partner companies) and offshore (distributed development outside Japan based on collaboration with local companies in Vietnam) collaborative development arrangements, in addition to creating a horizontal organizational structure across divisions and companies.

4. 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, will play a central role in such initiatives.

5. Research and development of new technologies

The Group will aim to maintain technological strength that enables us to respond to market needs in a timely manner and to ensure prompt provision of services by pushing forward with research and development of new technologies, including industry-academia collaboration, without being left behind amid the evolution of advanced technologies. For the time being, we will undertake timely early-stage investments, research and development, and joint research in the business areas such as artificial intelligence (AI) and Internet of Things (IoT). We will also work to make the results of such research and development on the right track to grow it into an ongoing profit-generating business by ensuring full business development based on them and early contribution to corporate earnings.

6. Enhancing group-wide coordination

The Group recognizes it as an urgent task to expand its business areas, secure sufficient human resources, and acquire new customers through M&A activities. For the purpose of realizing group synergy such as sales growth, cost reduction, and improvement of technological strength, it is increasingly important for us to take such measures as sales coordination between Group companies, business infrastructure improvements, and personnel exchanges. With regard to the management of each Group company, we dispatch Directors or Audit & Supervisory Board Members to Group companies from the perspective of corporate governance and has established the Group Business Promotion Unit to support performance management and group management in general.

7. Strengthening sales structure and relationships with customers

As customer needs are becoming increasingly diverse and complex, IT companies are expected to play a role of a “main IT partner” of customers to help them to achieve their business targets and to realize innovation toward the realization of their future vision. To meet these expectations and fortify the relationship with customers, we will continue to increase and develop our sales staff on an ongoing basis to strengthen the sales structure. 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.

8. Generating new businesses

Given the full advent of “digital transformation,” we recognize the need to develop unique solution business to secure our competitive advantages, in addition to the existing contracted development business and system integration business. Based on the positioning of AI, IoT, and cloud, which are among the strengths of the Group, as strategic technologies, we will actively make business investments to generate new businesses targeting a wide range of industries. We will also aim for early commercialization of such new businesses by actively promoting open innovation with external partners, without limiting the scope of such generating activities within the Company.

9. Strengthening corporate governance

Based on the understanding that we need to strengthen the corporate governance structure to realize sustainable growth and increase corporate value, we are working to build a structure that supports accurate and speedy decision-making and business execution systems, while developing and securing an appropriate supervision and monitoring systems. Furthermore, in order to step up the effectiveness of corporate governance from the perspective of securing management soundness and fairness, we will thoroughly make group-wide risk management, internal control, and compliance efforts (e.g., monthly checks and education) to earn greater trust and strengthen the self-cleansing power.

10. Promotion of health management and work style reform

“Health” and “work style” are not only problems for individual employees, but also important factors that are linked to corporate benefits and should be managed actively by companies. The Group will promote initiatives to create, from the standpoint and viewpoint of workers, a workplace that helps them to maintain and promote their mental and physical health and realize their suitable work style securely and safely. Such initiatives are not only expected to have positive effects on our reputation and hiring activities, but also are important for the Group’s risk management purposes. For the time being, we plan to focus on “promoting the operation of no-overtime days,” “reducing overtime hours,” “increasing the utilization rate of paid leave,” and “supporting for balancing work and childcare.” We will continue to promote various measures that are optimal to the Group in due consideration of the trends of national policies and legal systems.

11. Initiatives to promote diversity

Accepting diversity is essential for a company to ensure that individual employees can lead a rewarding life, while the company can build 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 use their full potential will lead 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. In September 2017, the Company was awarded the “Eruboshi (‘L Star’: L stands for Lady, Labor and Laudable)” certification in recognition of its efforts for actively hiring women and increasing the percentage of women among managers. In addition, we are actively hiring foreign nationals and people with disabilities.