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HOYA Corporation Vision Care Company

2001 1st Porter Prize Winner Development, manufacturing and sales of eyeglass lenses
High-value-added and customization strategy

Company Outline

The Vision Care Company of HOYA Corporation achieves high profitability with its customization strategy. In the manufacturing industry in Japan, where customization often results in low profitability, this is a unique competitive advantage. This involves much fine-tuning and a refined fit across its activities.

Unique Value Proposition

The strength of the Vision Care Company of HOYA Corporation is its high-value-added lenses, which are thin, non-reflective, and offer good optical quality. Emphasis is placed on the provision of high-value-added plastic lens with a high refractive index. To this end, the company aggressively pursues innovations in the development of ever higher performance materials through joint development projects with Japanese chemical manufacturers. Consequently, HOYA's brand image in the Japanese and European high-value-added lens markets is one of high-performance lenses. It was fortunate for HOYA that chemical manufacturers in Japan operate on a much smaller scale than their counterparts in the U.S. and Europe. Compared with the overall chemical product market, plastic lenses with a high refractive index is a small niche segment. Japanese chemical companies, which operate on a small scale, embraced this small niche market.

Furthermore, HOYA innovated the order process of custom-order lenses by taking over the burden from optical shops. Specifically, HOYA simplified the ordering process for opticians by developing an on-line ordering system, and provided services to customize lens to fit each user's frames and specifications. Changes included the undertaking of lens cutting and coating at its own factories, which greatly reduced the work burden for opticians in eyeglass shops handling the information of individual customers. Such innovations were possible because HOYA commenced direct sales to optical shops, marking a departure from the conventional practices of Japanese lens manufacturers. Direct sales meant that HOYA had to exchange information with the shops, and this access to such information inevitably lead to the establishment of an in-house lens cutting service. HOYA also built factories for undertaking final processing close to the market, thereby enabling shortened delivery times and speedy responses to individual customer requests. Simultaneously, the company took advantage of the benefits of large-scale mass production by concentrating the production of finished and semi-finished products at its plant in Thailand. (Please refer to the attached "Activity System Map" for a more detailed account of interrelationship of these activities.)

The Vision Care Company of HOYA Corporation ranks top in the world in sales of plastic lens with a high refractory index, and holds the number two position in the world as an eyeglass lens manufacturer. As a result of an activity system that enables high profitability despite a customization strategy, it has realized a Return on Invested Capital and a Return on Sales that are much higher than the industry average.

Return on invested capital (ROIC)   (Unit = percentage point)
Difference from industry averag
over 4 year period
Difference from industry average, by year
1997 1998 1999 2000
12.15%P 5.41%P 15.07%P 15.60%P 12.76%P
Return on invested capital = Operating income / Average invested capital

Return on sales (ROS)   (Unit = percentage point)
Difference from industry average
over 4 year period
Difference from industry average, by year
1997 1998 1999 2000
10.02%P 6.43%P 11.73%P 12.04%P 9.89%P
Return on sales =Operating income / Net sales

Activity System Map

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