Business Environment and Management Strategy
In 2020, the Internet advertising market, to which the IT segment belongs, was approximately 2,229.0 billion yen (up 5.9% from the previous year). While Japan's total advertising expenditures were 6,159.4 billion yen (down 11.2% year on year), the first negative growth since the Great East Japan Earthquake in 2011, the accelerating digitalization of society is expected to provide a tailwind for market expansion. (Source: "Advertising Expenditures in Japan in 2020," Dentsu Inc.)
In the fiscal year ending June 30, 2021, sales in the Internet advertising market were decreasing until around the summer of 2020, due to the impact of the novel coronavirus infection (COVID-19). However, sales have been recovering since the fall of 2020, partly due to the accelerated digitalization of society. (Source: Ministry of Economy, Trade and Industry, "Current Survey of Selected Service Industries", February 2021, 3. The advertising industry)
As a result, we estimate that the sales of our Group's services will continue to grow steadily, although they will be negatively affected to some extent by the overall market environment.
The outlook remains uncertain, given the possibility of a recurrence of the state of emergency, the spread of COVID-19 variants, and delays in the vaccination rollout.
In the content marketing business, which accounts for approximately 80% of the sales of our IT segment, we will develop the following two main strategies. The first one is to further expand value proposition marketing; the second is to expand area marketing support services.
Management Strategy for the IT Segment
Further expansion of value proposition marketing
"Value proposition marketing" is a unique marketing strategy that delivers concrete results through a combination of four consulting capabilities: "SEO consulting" or media production and management that responds to search engine algorithms, "area consulting" to reveal the client's superiority in the target area, "positioning consulting" to establish the client's competitive advantage in the target market, and "persona consulting" to design user attitudinal changes that lead to conversion.
Value Proposition (VP) marketing advertising is focused on creating content of value to the customers. It's a content marketing technique that promotes changes in user attitudes by revealing competitive advantages of our clients' services and products, and is highly effective for attracting customers.
Through this unique strategy that differentiates us from our competitors, we will promote new advertising methods and expand our share of the Internet advertising market.
Expansion of area marketing support services
In addition to capturing business opportunities through conventional outbound marketing, we have also started an inbound marketing media, which specializes in providing information on attracting customers to stores. Articles on this media focus on analyzing customer-attraction methods and marketing theories tailored to specific types of businesses and services, and are targeted at managers and store owners who are facing challenges in attracting customers. We plan to expand our business through inbound sales by further strengthening the operation of this media.
Our area marketing support service expansion is a response to the needs of small and medium-sized companies in local regions. These companies have a defined business area and need "differentiation" and "branding" services to increase their market share within that area. Focusing on this latent need, we are expanding our area marketing support services outside of Tokyo, to the rest of Japan via online business meetings.
Language Education Segment
For the language education sector, despite the postponement of the use of private English examinations in the new university entrance examination system starting in 2020, we believe that parents are becoming more and more interested in the early learning of English in elementary schools and in the four skills (listening, speaking, reading, and writing).
In the fiscal year ending June 30, 2021, face-to-face language training faced difficulties due to the negative impact of the COVID-19 pandemic. However, from our sales activities we have determined that there is a strong need for online language learning.
We are continuing to adapt our business activities in areas that in areas that now require anti-virus measures and an adaption to the "new normal", such as the face-to-face corporate language training business. Specifically, we are promoting the shift of our language education business to online by utilizing IT solutions developed by Zenken Group.
Management Strategies for the Language Education Segment
Promotion of online language education
English conversation is essential for people who wish to work in the global economy. Our service allows users to take online English conversation lessons with native speakers. We have been providing integrated services, including system development, since 2016, and currently more than 40 junior high schools and high schools across Japan are using our services. Our main competitive advantages are the quality control of our directly hired instructors and the quality of our original textbooks, which have made us an attractive partner to some of the leading educational institutions in Japan. We plan to further expand this business.
Business and financial issues to be addressed on a priority basis
Securing and developing human resources
Securing and developing human resources is essential for the Group, in order to expand its business and strengthen its management. We will strive to achieve sustainable growth over the medium and long term by disseminating information through public relations activities to make the Group more attractive to talented human resources, and by creating work styles and work environments that allow them to maximize their potential.
Development of new businesses
Our corporate vision is to "create new opportunities".
We are currently developing new businesses such as the overseas IT human resources business. In this project we are focused on the overseas IT human resources market, in order to solve the pressing issue of labor shortage in Japan. In 2019 we established ZENKEN INDIA LLP in Bengaluru, the "IT capital" of India, and began collaboration with a local engineering college. We have opened the Japan Career Center at the college (online career center will open in 2021) and are promoting matching between local students and Japanese companies.
As of March 2021, we have partnered with 29 local schools in India and have approximately 5,400 registered students. 41 Japanese companies have hired students, and 122 students have been hired. We plan to expand our business by increasing the number of registered students who wish to work in Japan (in cooperation with our local partner schools), as well as by reaching out to more companies throughout Japan that are suffering from a shortage of IT human resources.
We will continue to develop and nurture new businesses in addition to the ones mentioned above. To achieve this, we will utilize internal resources, but will also consider using external resources through business alliances and M&As.
Strengthening of internal control system
Strengthening our risk management system and thoroughly standardizing and streamlining our operations through the establishment of a solid internal control system are crucial for the Group to expand its business and achieve continuous growth. We will work to strengthen our internal control system by raising the compliance awareness of our officers and employees and by establishing an internal control system appropriate for our consolidated subsidiaries and business divisions.