Tokyo Boeki GroupManagement Axis

(Attachment)

Action Guidelines to Embody Management Participated by All

April, 2023

Introduction
I joined Tokyo Boeki Ltd. in 1969 and will celebrate 54 years of service thisyear. During that time, many things have happened to the company. While thelife span of a company is said to be 30 years, Tokyo Boeki celebrated its 75th
anniversary last year, and when I think about the fact that we have been able
to continue to do so, I believe that there is a core of management that is uniqueto Tokyo Boeki.
I myself have faced many difficulties over the past 54 years and haveovercome each and every one of them. In the process of launching the TB-eye
Ltd., and developing it into one of the core businesses of the Tokyo Boeki Group,
I felt as if there was a one core axis that ran through my mind as to what I
should think and act upon most importantly in order to ensure the survival andgrowth of the Tokyo Boeki Group. This is to create a culture of freedom andopen-mindedness and a culture that aims for the happiness of our employees.
In July 2022, I became Chairman and Mr. Tsubouchi became President ofTokyo Boeki Holdings Corporation, and the group entered a new chapter. I
would like to share with you what I consider to be the core and axis of Tokyo
Boeki Group management. I sincerely hope that you will take this axis as yourown, use it as your daily compass, and pass it on to the next generation tocontinue the growth and survival of the Tokyo Boeki Group.

Tokyo Boeki Holdings Corporation
Chairman and Representative Director, Sanshiro Kato

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Management Axis of Tokyo Boeki Group
Conceptual Diagram

Core Value (the Spirit of Management Participated by All)
Philosophy
Purpose
VisionThe management axis of Tokyo Boeki Group, as I see it, is a four-layered
concentric circle as shown in the diagram above. In the center is our “Core
Value,” outside of which are our “Philosophy,” “Purpose,” and outermost is our“Vision”. In other words, Core Value is central to the Tokyo Boeki Group's
management and run through all of its operations. Therefore, please keep inmind that the Philosophy, Purpose, and Vision that I will explain hereafter will
always return to our Core Value, “the Spirit of Management Participated by All”.

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1.

Core ValueThe Spirit of Management Participated by All
We believe that the core value of the Tokyo Boeki Group is “the Spirit ofManagement Participated by All” advocated by Yasuo Matsumiya, the founderof Tokyo Boeki.
*In the long history of Tokyo Boeki Group, “the mindset of a pioneer” and “the Spirit ofovercoming any obstacles and to never reduce our efforts” have been derived from “the Spiritof Management Participated by All” and these were combined to form “the Three Founding
Spirits,” but the first two are only derivations and they will surely come to mind when you think
deeply about “the Spirit of Management Participated by All,” so I will return to the starting
point and summarize it as “the Spirit of Management Participated by All”.

-What is “the Spirit of Management Participated by All”?
It is the awareness that all executives and employees of Tokyo Boeki Grouplove the company and the group, and participate in the management of thecompany and the group from their own standpoints. It is also a spirit ofcontributing to the sustainable development of society and growing ourselves
along with the growth of the company and the group.

-Origin and how it evolved
Yasuo Matsumiya does not explain the spirit of the company in detail.
However, my guess is that it was “all employees should feel the same way
as the president and work for the company.”
Later, Hiroshi Machida, the second president, said, “It is usually impossible
to ask employees, for example, new employees, to feel the same way as thepresident. In order to ask them to feel the same way, the president must firstshow respect and esteem for the employees. This will create communication
between the group company presidents and employees, and employees will
come to understand the presidents’ feelings and feel close to them”. He defined
the spirit as the one management, especially group company presidents,
should have at first.
Later, Sanshiro Kato, the sixth president, said, “the Spirit of Management
Participated by All” must first be possessed by group presidents. At the sametime, however, it is also necessary for the employees to try to understand their
feelings. In other words, it should not be possessed only by the president or
the employees, but by the entire management team and all employees,
including the president, from the beginning.
Today, “the Spirit of Management Participated by All” is understood as theone all management and all employees should share.
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-Why is “the Spirit of Management Participated by All” the core value ofTokyo Boeki Group?
This is the first time that the Tokyo Boeki Group clearly positions “theSpirit of Management Participated by All” as the core value. A core value
is the most important thing in running a company, and it is at the center ofevery decision we make. Why is the most important value “the Spirit of all
management”?

-What kind of condition does “the Spirit of Management Participated byAll” emerge from?
It will come from a state in which all executives and all employees work withautonomy, freely expressing their opinions as equal partners in front of thework, and striving for a higher level of perfection in their work. It will comefrom such a culture (environment) where everyone “mutually acknowledges
each other,” “respects each other,” and “communicates with each other,” andfrom a culture (environment) that is free and open-minded.

-How are “the Spirit of Management Participated by All” and the Purposeof Tokyo Boeki Group related?
I place in the Purpose, which you will see in later pages, two items. The firstis “the contribution to the development of a sustainable society (SDGs),
and the second, “the pursuit of the happiness of employees bothmaterially and spiritually”.
So, what does mean by “employees’ happiness”? First of all, employees need
to be compensated for their work. But even if they do, will that be enough tomake them happy? If “the work” itself, which is the most time-consuming partof the day, is not enjoyable, then perhaps they will not be able to feel happiness.
Then, what kind of “work” do we find enjoyable?
1) Autonomy (intrinsic motivation)
We do not enjoy our work if we feel that we are being forced to do it byothers. I believe that by thinking for ourselves and participating in work on ourown initiative, we can expand the possibilities of enjoying our work. This is not
something to be pushed by others, but is truly a step forward on one's own
initiative. This is the essence of “the Spirit of Management Participated by All.

2) Culture (Environment)
Even if you try to work with initiative, you cannot do it if the atmosphere is
one that stifles it. All of management and employees acknowledge each other,respect each other, communicate and exchanges their dreams each other.
Intrinsic motivation can be nurtured and protected from work stress in such a-4-culture (environment). (The Tokyo Boeki Group aims to create such a culture(environment) by uniting individuals who are “bright, honest, smart, andtough.)

3) Fair evaluation
If the work we do is not evaluated properly and fairly, and if it is not reflectedin our compensation and promotion, we will lose our motivation. We can only
work hard when we are evaluated fairly. I believe fairness is very important not
only in personnel evaluation but in everything.

In other words, “the Spirit of Management Participated by All” is thefoundation and core of realizing Tokyo Boeki's “raison d'etre (Purpose)” and“the happiness of employees” and thus, the bases of “the Spirit of Management
Participated by All” are : 1) autonomy (intrinsic motivation), 2) a Culture(environment), and 3) Fair evaluation. “The Spirit of Management Participatedby All” is not merely a tool for improving the Group's performance, but is thecore of realizing “the happiness of employees”, which is the raison d'etre(purpose) of our group.
We are always faced with difficult decisions. At such times, we must makedecisions with “the Spirit of Management Participated by All”, the core value ofTokyo Boeki Group, in mind.
Under “the Spirit of Management Participated by All”, let's unite the power ofall executives and employees to grow the Group.

2. Philosophy
Tokyo Boeki's management philosophy was formulated in April 1995.
Tokyo Boeki Group will be a creative company where each and every employee
can realize their dreams through their work. We will be a company in which
each individual takes pride and contributes to the world. (established April,
1995)
However, you may not be sure what one word “philosophy” means. Well, if
you look it up in the dictionary...
It says, “philosophy is an idea, which is the highest thought deriving fromreason.” Then, I looked up the “idea”, it says, “it is a Greek word. An eternal
and immortal existence that can be known only by reason beyond the senses
and is thought to govern the entire universe. Generally, a conception andphilosophy”. The Japanese-English dictionary says, the philosophy is cause,or philosophical construct.
The term “philosophical construct” according to the English-Japanese dictionary,-5-

is a philosophical concept.
Like this, it becomes more and more confusing.
Dr. Collins, the author of The Visionary Company, explains that a philosophy
should fill every corner of an organization and influence the decision making
and policies and serve as an action guideline for the organization and together
with the its purpose (purpose) and near-term goals (mission) provide thestarting point for a vision for the future.
If we follow this explanation, the Tokyo Boeki Group's Philosophy is “theprinciples that the Group should absolutely adhere to, centering on ourcore value, “the Spirit of Management Participated by All”. Therefore, wewould like to review the philosophy formulated in 1995 and establish thefollowing one, which incorporates the principles that the Group should
absolutely adhere to.

<Philosophy of Tokyo Boeki Group>Tokyo Boeki Group will be a group where all group employees participate
in management from their own standpoints under a free and vigorous
culture, always contributing to the sustainable development of society,and the success of our customers, being recognized as a necessary partof society, and appreciated by our customers. We will be a group in which
employees feel happy and proud by working in such a group.

Feel happy and proud

Acknowledged and appreciated bycustomers and society

Contribute to customers’ success andsustainable development of society

Participate management from eachstandpoint-6-3. Purpose of Tokyo Boeki Group-Contribute to the development of a sustainable society (SDGs)
At Tokyo Boeki Group, the importance of social contribution has always been
one of our most important values, as “social contribution - conducting businessthat contributes to local communities and international society”. However, it
was a value of rather low priority. Furthermore, it seemed that it was believedthat the group should contribute to society as long as the business performed
well and it was not anti-social. This was partly because the social climate was
not very interested in social contribution (SDGs), and partly because the Tokyo
Boeki Group was not achieving satisfactory results in terms of performance andcould not afford to actively pursue social contribution.
This time, since we have placed “the Spirit of Management Participated byAll” as our core value, we newly place the social contribution at the top of ourraison d'etre (Purpose). This means, we position “contributing to sustainablesocial development (SDGs)” as the raison d'etre of the company (Tokyo Boeki
Group), and our business is the means to realize this raison d'etre. This is thebiggest difference from the past.
Due to the changing times, companies that cannot contribute to society are nolonger recognized for their existence. Moreover, Tokyo Boeki Group's businessperformance has improved as debt-free, increasing its stability. Therefore, wewould like to place “contributing to the sustainable development of society(SDGs)” at the forefront of the Tokyo Boeki Group's raison d'etre (Purpose).
And if we “work” with the desire to “contribute to the sustainable
development of society” and actually do so, we can be proud of the Tokyo Boeki
Group and of ourselves.
Let me rephrase that the Tokyo Boeki Group's raison d'etre (Purpose) is to“contribute to the development of a sustainable society (SDGs)”. With a strong
sense of this purpose, let's “work” and contribute to “the sustainable
development of society (SDGs)”.
-Pursue the happiness, both materially and spiritually, of Tokyo Boeki
Group employees.
The Tokyo Boeki Group's goal has always been “employee happiness”.
However, while this has been frequently stated by the management to theemployees, it ranks surprisingly low in our existing values and stated, “Selfrealization- Love people, work and live a rich life.” in the past.
This time, we have placed it in the second position of the raison d'etre(Purpose). From a conventional viewpoint, we would have placed it at the topof the list. However, this time, with the strong determination that “Tokyo
Boeki Group is going to make a breakthrough in society and the world,”
we have placed “Contribution to sustainable development of society(SDGs)” first and “Pursuit of the happiness of Tokyo Boeki Group
employees, both materially and spiritually” second. However, there is-7-little difference between the two, and should be considered almost parallel.
So, what does “employee happiness” mean? I have already explained this in
1, but I will repeat it again. Please think it again and again so that it becomesthe axis of your mind.
What is employee happiness?
Employees need to feel happy materially and spiritually. For the material
aspect, it will be necessary to receive compensation commensurate with theirwork. However, this alone may not fill nor satisfy the spiritual aspect. I believethat “the work” itself, which is the most time-consuming part of your day, must
be enjoyable.
So, what kind of “work” do we find enjoyable?
1) Autonomy (intrinsic motivation)
We do not enjoy our work if we feel that we are being forced to do it by others.
I believe that by thinking for ourselves and participating in work on our own
initiative, we can expand the possibilities of enjoying our work. This is not
something to be pushed by others, but is truly a step forward on one's own
initiative.
2) Culture (Environment)
Even if you try to work with initiative, you cannot do it if the atmosphere is one
that stifles it. All of management and employees acknowledge each other,respect each other, communicate and exchanges their dreams each other.
Intrinsic motivation can be nurtured and protected from work stress in such aculture (environment). (The Tokyo Boeki Group aims to create such a culture(environment) by uniting individuals who are “bright, honest, smart, andtough.)
3) Fair evaluation
If the work we do is not evaluated properly and fairly, and if it is not reflectedin our compensation and promotion, we will lose our motivation. We can only
work hard when we are evaluated fairly. I believe fairness is very important not
only in personnel evaluation but in everything.
I believe we can expand the possibility of feeling secure and the work
enjoyable by 1) having autonomy (intrinsic motivation, 2) creating a free andvigorous culture (environment), and 3)being evaluated in a fair manner.
With these ideas in mind, let us pursue “the happiness of Tokyo Boeki
Group employees, both materially and spiritually”.
We believe that Tokyo Boeki's two raison d'etre, contributing to the-8-sustainable development of society (SDGs) and pursuing the happinessof Tokyo Boeki Group employees, both materially and spiritually, will be
realized through implementing the Tokyo Boeki Group's core value, “the Spiritof Management Participated by All”.

4. Vision
The vision of the Tokyo Boeki Group is “a group that maintains a balanced
business portfolio (multiple growth businesses) under a challenging and freespirited culture, is recognized by society as an essential part of its existence,and makes all group employees proud.
-A Group that maintains a balanced business portfolio (multiple growthbusinesses) to respond to changes in society.
Characteristics of a group that originate from a trading company conglomerate management
Unlike the manufacturing industry, which is selective and concentrated on arelatively small number of businesses, a trading company is involved in a
relatively large number of businesses perhaps because it can and need to startbusiness without much capital investment and its profit is not as large as
manufacturing counterparts. Today, some trading companies expand into thefield of manufacturing. Tokyo Boeki Group is no exception as a corporate grouporiginating from trading business and is involved in multiple businesses and has
also expanded into the manufacturing sector.
When considering the future vision of the Tokyo Boeki Group, we believe that
conglomerate management, which encompasses multiple businesses, needs todetermine and maintain an appropriate number of businesses based on
concentration and selection. Of course, it may be expanding into brand-new
businesses that are not adjacent to existing one, or into manufacturingbusinesses that are not trading, after analyzing and responding to changes in
the world and various other circumstances. And it must maintain a wellbalanced business portfolio that includes profitable, well-developed existing
businesses and new businesses that could be profitable in the future.
<Deepening existing businesses and developing new businesses>
Use creativity and ingenuity to deepen, grow, and develop our existing
business. However, it is also true that no business can last forever. We should
develop new businesses that will support the next generation. By completingthese two tasks, we will create a Tokyo Boeki Group that will last forever.
＜Business differentiation>
When conducting business, the important thing is to be differentiated fromother companies. Without differentiation, the business will becomecommoditized and margins will be thin. For differentiation, the Tokyo Boeki-9-Group must add value. It is created by listening to our customers, considering
their needs, and solving their problems (providing business solutions).
<Customer first>
In order to adopt our customers' requests and conduct differentiatedproblem-solving (solution) business, we must communicate with our customers
and be loved by them and we must be valued and trusted by our customers.
This is where differentiated problem-solving (solutions) begins.
<Specific business portfolio>
The specific business portfolio that the group should maintain will change in
response to changes in the world, and I would like to leave it to the groupmanagement and group employees at each time.
-A group with a free and vigorous corporate culture that can challenge
innovation and talk about dreams.
We will nurture a free and vigorous corporate culture full of “bright, honest,
smart, and tough” people who can challenge innovation and talk about their
dreams for the future, who respect others under “the Spirit of Management
Participated by All,” and who can freely express their opinions as equal partners.
In such a corporation, employees feel that they will grow along with the growthof the group.
-A group that contributes to the development of society and the successof our customers, is recognized as a necessary part of society, and makes
all employees proud of.
By contributing to the sustainable development of society as well as the
success of our customers we shall be acknowledged as an indispensable partof our society. Let us create a Tokyo Boeki Group of which all employees canbe proud.

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(Attachment)

Action Guidelines to Embody “Management Participated by All”

Take good care of your colleagues (communicate with each other)-Greet each other (Greetings are the first step in communication).
-Respect and honor your colleagues(respect is the first step in communication).

-Listen carefully to what the other person is saying(listening carefully is the first step in communication).

■Think and act independently-Think everything with your own mind, and challenge and act with
passion.
-When making mistakes, humbly admit them and learn from them forthe future success.
-Always keep BS/PL (numbers) in mind (profitability is determined byoperating profit, not sales).

■Feel free to express your opinions-Speak and discuss freely and humanly correct opinions without too
much consideration to others.
-Work as equal partners.

■ Act properly as a human being (act without embarrassment toyour peers and family)-Observe laws.
-Contribute to the realization of a sustainable society.
-Be in good physical and mental health conditions.

■Move forward with the Company-Let's grow ourselves as the company grows.
-Act with pride as an employee of Tokyo Boeki Group- 11 -