CHAPTER

CSO MESSAGE
We will appropriately allocate
our managerial resourcesfrom a firmwide viewpoint toachieve sustainable profit
growth.
Koutarou Ueda

As clearly stated in the Group’s purpose, the Benesse Groupis constantly working to solve social issues centered on
people based on its belief in the potential of people. Mainlyin the fields of education and nursing care, we have been
sincerely serving customers by attributing importance toonsite activities and have proven track records for the quality,
know-how and reliability of our services, with our employeesbeing committed to providing such services by sharing thevalues of the Group. All the quality, know-how, and reliability
are important assets of the Group, as are our employees.
I believe that by capitalizing on these assets the Group can
become a corporate entity that is deemed necessary for thesolution of global issues both within and outside Japan.
On the other hand, the fields of education and nursing
care are undergoing changes at an even greater speed.
The Company used to formulate its firmwide medium-term
management plan based on the strategies and business plans
made by each business department in line with the firmwide
policies. This approach was quite effective in enabling theCompany to respect the opinions of those working onsite
and make improvements to provide more customer value
over the decades. However, Japan’s formerly rising population
began to decrease, and digitalization started to be promoted
dramatically. We can no longer depend on a conventional
approach, because if we do, we are likely to make strategies
and plans that are simple extensions of the conventional ones.
Against this backdrop, in the Transformation Business
Plan, we clearly show the goals to be achieved by the entire
company under the plan, indicate the “targeted status” of eachbusiness for our business portfolio, and then make our strong

23 Benesse Report 2023

Key points of the portfolio strategy
To generate stable profits in the Core Education
business
The Core Education business comprises the Shinkenzemi,
Shinken Simulated Exams, and prep school businesses,with which we have built a unique business model for thecreation of customer value. This business has been driving
the Group’s growth since its founding, and still accounts
for a large portion in terms of the profits generated by
the Group. At least 90% of senior high schools in Japanare our customers, and we have an overwhelmingly large
number of students enrolled in the business, who aremainly elementary school students. The customer basethat we have built and the trust that we have earned fromour customers will give us a great advantage in the coming
age of digital data and AI.
However, due to Japan’s decreasing birthrate, ourmarket in the country has been diminishing, while themarket needs that we are required to meet are changing
due to the trend of digitalization. Also, changes are being▶Key points in portfolio transformation

Managing Executive Officer, CSO,
Executive General Manager of Corporate
Planning and Promotion

Key points of the Transformation
Business Planof employees beyond the divisional framework as well asa system to ensure that the human resource development
department will receive fair evaluations. We will thereby
increase the precision of matching between our employees
and business opportunities beyond the simple allocation ofpersonnel. As for the organizational abilities and key humanresources that we clearly lack, I will cooperate with theCHRO and the Chief Financial Officer (CFO) to acquire themfrom the outside through a special employment program,strategic investments, and M&A. Furthermore, I expectthat the structural reform of the core businesses and theimprovement of our corporate productivity, both of which
are promoted under the leadership of the Chief DX Officer(CDXO), will help us secure more resources.
As described above, the CXOs need to collaborate andenhance their teamwork to implement the Transformation
Business Plan. Already, only several months after theannouncement of the Plan, we have promoted mutual
collaboration and cooperation in an unprecedented manner.
To achieve the structural reform of the business portfolio,
it is important to promote management and corporatetransformation mainly by enhancing the CXO system, while
promoting the transformation of the businesses.

commitment to transforming our management approachand system. Specifically, we uphold, “Establish three pillars
of income with Core Education, Core Nursing Care, and New
Fields for sustainable, profitable growth” as one of the goals
and clarify the time frame for the achievement of the goal.
We will push ahead with the structural reform of our businessportfolio under this plan.

Approach to the structural reform ofthe portfolio
It will take us more than one to two years to complete thestructural reform of the portfolio. For the reform, we will first
define the targeted status for each of the businesses and thenappropriately set the tasks to be performed, the goals to bereached, and the timeframe for the attainment of each goal.
Then, the management team will lead the reform for years, while
allocating the necessary resources with total commitment.
In the Transformation Business Plan, we set the targeted
status of the following businesses that comprise New Fields
to be the growth driver: the University and Working Adult
Business, the Nursing Care Peripheral Business, and Overseas
Business. We will input resources intensively in New Fields. For
example, for human resource development, which is being
promoted under the leadership of the Chief Human Resource
Officer (CHRO), we will implement a range of measures tohelp employees develop their career with strong ownershipand support their reskilling while showing, more clearly thanbefore, the organizational abilities and types of personnel
that we need to have to achieve rapid growth in New Fields.
Moreover, we will introduce a career development meetingin which the management team furthers their understanding

01 Our Vision and Business Strategies▶Management and corporate transformation

Strengthening resources and optimizing their
allocation from a company-wide, medium- tolong-term perspective

Reconstruction and reinforcement of system led by
CXO to achieve the goals of Transformation Business
PlanManagement decision-making based on appropriate
evaluation of return on investment (ROI) of key measures incore businesses and business potential of low-profit businesses

Construction of management system where top
management allocates resources across thecompany

Improvement of management team’s capacity,expertise, and productivity to drive achievement ofTransformation Business Plan goals

Improvement of corporate productivity

Enhancement of the CXO system

Rebuilding the CXO system and clarifying the CXOs’ missions and KPIs
CEO

Enhance corporate
expertise

Overall supervision
ESG and sustainability

CSO

CFO

CHRO

CCO

Achievement andupdating of theTransformation
Business Plangoals

Appropriate
profit generation

Enhancement oforganizational
strength
Allocation ofhuman resources

Promotion ofinternal &externalcommunications

Cash allocation

Enhancecross-organizational
cooperation for speedier
implementation

Increase the precision ofprogress monitoring

CLROCDXO

Governance

DXCompliance

Structuralreforms▶Establishment of the Transformation Management Committee●Participants: All CXOs
Purpose: Promote discussion for the CXOs to share issues and information for closer
cooperation and optimal decision making● Frequency: Every week●

▶Organization of the CXO Monitoring Meeting (monthly)●

Held immediately after the end of the monthly Company Management Committee meeting forthe CXOs to discuss necessary corporate support in reference to the business progress report
made at the committee meeting

Benesse Report 2023

24

CSO MESSAGE

CHAPTERsteadily made to the lives of our customers and theirlearning environment, including an increase in the numberof working mothers and the decline and diversification ofpeople’s motivation for learning. Under these circumstances,
we need to maintain and enhance our customer base,which is one of our strengths, respond to the diversificationof customers’ needs, steadily grasp the opportunities
brought about by the Next GIGA Program and other social
reform initiatives, and transform our strengths gained in
the age of expanding population into those that match theage of data, depopulation and digitalization, thus creating anext-generation business model.
In consideration of these changes and challenges, wewill examine our ROI first, and then implement measuresand make investments effectively to maintain andenhance our customer base and to respond to diversified
customer needs. At the same time, we will proactively
utilize the technologies that are dramatically changing,such as generative AI systems, across the organization
to promote structural reforms. In the progress ofdigitalization, we will transform our products and services
into those that better match our customers, includingchildren, their parents and schools, while responding tothe diversification of their needs by further developing
peripheral services such as EVERES, Challenge Schooland MARUG land. Further, in anticipation of the dramaticchanges to be made starting in 2025 following thosemade under the Next GIGA Program, we will work on
the Mirai Seed software and C4th as strategic products
and strive to create the next-generation versions ofShinkenzemi and Shinken Simulated Exams in the Core
Education business.

For the stable growth of the Core Nursing CarebusinessIn the Core Nursing Care business, we will focus on recovering
the occupancy rate at our nursing care facilities, which has
yet to recover from the impact of COVID-19. However, theoccupancy rate is steadily increasing along with an increasein the number of inquiries from people who want to visit
the facilities for a tour. We will make even more efforts tostrengthen relationships with hospitals and care managers
while enhancing our sales activities and providing short-term
nursing care services to boost the occupancy rate as soon aspossible. On a medium- to long-term basis, the populationof people aged 85 and older will continue to increase up to2065. In view of this fact, we aim to achieve stable growthin the business by improving the quality of our nursing careservices and helping our customers improve their qualityof life (QOL) through innovative measures such as offering
Majikami AI solutions based on the expertise of Majikami(Benesse's specialists in nursing care).

For the acceleration of growth in New FieldsFor New Fields, which comprises the university and working
adult field, the nursing care peripheral field, and the overseas
field, we set the targeted status to be a growth driver for theentire Group up to fiscal 2028.

University and Working Adult BusinessIn the university and working adult field, the markets will
steadily expand for learning, career development and thematching of human resources, amid the remarkable change
and diversification of people’s work styles and necessary
skills. In response, we will make strategic investments andproactive use of the Group’s assets and resources to rapidly
develop the business in a manner unique to Benesse,
specifically by assisting both companies and individuals
with reskilling and thereby more closely linking learning andworking.
The Benesse Group did not have a robust customer
base for businesses targeting companies and working
adults in the past. However, by making strategic
investments in Udemy to form business partnerships withthis online learning platform provider, we now have morethan 1,300 corporate customers, including more than 50%of the Nikkei 225 Index constituents and more than 1.4
million personal users of the business in Japan, and thePursue sustainable profit growth through portfolio structure transformation

Our vision (FY2028 -)Goals of current medium-term plan (FY2025)

Sustainable profit growth through a three-pillared
income structure

Our targeted status for FY2025, backcast form our visionWell-balanced profit generation from three areas:
Core Education, Core Nursing Care, and New Fields
GrowthdriverCore
Education

Stabilized earnings throughstructural reforms and response toincreasingly diverse needs, etc.
Initiation of business modeltransformation

CoreNursingCare

Quick recovery to pre-COVID-19
occupancy rates
Moving on to stable growthtrajectory

New Fields

Strategic investment and sales
growth to drive profit growth inFY2026 and beyond

Stable profits

New Fields

Stablegrowth

CoreEducation

Core NursingCare* Core Education = Out-of-School Learning + School + K&F, Core Nursing Care = Nursing Care and Childcare
New Fields = University and Working Adult, Nursing Care Peripheral, and Overseas

25 Benesse Report 2023

01 Our Vision and Business Strategies

number of customers is continuing to increase. Also, we
have recently made announcements about Waris joining
the Benesse Group and about our strategic investment in
SkyHive to form a business partnership with the company.
We will continue to speed up our growth in the businessby forming strategic capital and business partnerships
including M&A, freeing ourselves from not-invented-here
syndrome. Further, to propel the growth of our Universityand Working Adult Business, we will make effective useof the powerful assets possessed by the Benesse Group,
including Manavision, through which we have contact withalmost all senior high school students in Japan; Shinken-AD,
through which we offer support to universities acrossJapan; doda campus, a joint venture with PERSOL CAREER
Co, Ltd. to support new graduates in finding jobs, theTamahiyo and Kodomo Challenge businesses, and “ThankYou!” magazine, which helps us further our relationships
with parents, particularly mothers.

Nursing Care Peripheral Business
The Benesse Group has long accumulated a range ofexpertise and know-how as a leading enterprise in theindustry of nursing care facilities. We regard the nursing
care peripheral business, in which we have uniquestrengths, as an important growth business for us. Thenursing care market is expected to expand on a mediumto long-term basis. However, due to the serious shortageof labor in Japan, it is becoming a great social challenge
to secure staff for nursing care service and to serve highquality meals, which have a direct impact on health andQOL, to the residents of nursing care facilities. In theTransformation Business Plan, we have made our firstclear statement that the nursing care peripheral field is an
important growth field for the entire Group. We will takeon the challenge of promoting the nursing care peripheralbusiness by making effective use of the Group’s assets,
including the industry top-level know-how that we havegained through our business operations as well as Group
personnel well-versed in digital technologies.

Basic policy for overseas business development

1

Develop in domains(education/nursing care related)
where the company has strengths
and know-how, rather than inunrelated areas.

2

Base the strategy on deep
commitment to a specific country,
rather than a global development
strategy (e.g., K12 education in India).

3

However, in areas where we haveknowledge but insufficientorganizational capacity, consider
scenarios involving M&A as a starting
point or booster.

Overseas Business
The Benesse Group has been making examinations to build
a new pillar for the Group’s profit growth outside of Japan
since before the outbreak of COVID-19. The educationand nursing care fields, in which the Group is operating,strongly reflect the culture, tradition, values and social
systems of each country, and we cannot simply apply themethods used in the fields in Japan in other countries.
However, the Benesse Group’s business know-how andassets, which we have accumulated over decades, are on
an incomparably high level globally, and many people fromleading companies overseas and foreign governments are
surprised at the level of our assets when I talk with them.
The Benesse Group is thus attracting much attention fromoverseas as a leading company in Japan, which is facing
social challenges ahead of other companies and which also
boasts high quality product brands. Therefore, I think that
we have great business potential in the countries where
our products and services are closely matched to help local
communities and people solve their issues and where we
can find a market with substantial size and growth potential.
Based on these ideas, we have already expanded theKodomo Challenge business in China and have also started
to embrace the challenge of conducting the school support
business in India with a focus on the assessment of students.
Japan and India have much in common in terms of school
entrance examination systems. Moreover, India announced
its intention to reform its entrance examination system in2020 and has been implementing measures for the reform.
We can steadily support the reform based on Benesse’sknow-how and expertise in the field and will take on thechallenge of serving local customers in a manner uniqueto Benesse in the country where the education market
will grow at an overwhelmingly high pace. Also, in thenursing care field, including both the operation of nursing
care facilities and the peripheral business, we will promotedialogue and the implementation of pilot projects withcandidates for our leading business partners in overseas
countries and particularly in China, for which we have been
making examinations with a focus on the human resource
development field.

Benesse Report 2023

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