Our Road to the Future an inspiration for all ASSA ABLOY employees

Our Road to the Future

With this book, we illustrate, in simple terms, the refined business strategy of the ASSA ABLOY Group. In addition to describing established, successful practices, it presents new concepts and ideas to help our company attain even greater success. Read the book and share it with your colleagues weve designed it to be enjoyable and easy to understand. Our goal is to inspire everyone at ASSA ABLOY to move full speed ahead in making our strategy a success. Our path is clear, so lets move forward together.

Johan Molin, President and CEO, ASSA ABLOY

Where we come from

The lock business is one of the oldest industries in the world, and a number of our Group companies have been around for well over 100 years. However, ASSA ABLOY is a relatively young organization, created in 1994 when ASSA, the lock division of the Swedish company Securitas, and Abloy, the corresponding division at the Finnish company Wrtsil, merged. In its first year, ASSA ABLOY had around 5,000 employees and sales of SEK 3 billion.

Who we are today

Through a combination of organic growth and acquisitions, we have gone from being a regional company to becoming a true international player. ASSA ABLOY is by far the global leader in door opening solutions, dedicated to satisfying end-user needs for security, safety, and convenience. With more than 150 companies operating in almost all countries around the globe, ASSA ABLOY has been extremely successful, and is today the largest company in the industry, offering a more complete product range than any other company on the market.

Trends in our industry

Demand for safety and security with a focus on convenience and design is increasing worldwide. Customers are increasingly looking for solutions rather than individual lock components. The market is rapidly changing toward new technologies, where ASSA ABLOY has a leading position. Electromechanics will be increasingly important for our future growth. Another important trend for the future is that security and safety regulations are constantly evolving.

Our vision

To be the true world leader, the most successful and innovative provider of door opening solutions

To lead in innovation and provide well-designed, convenient, safe and secure solutions that give true added value to our customers

To offer an attractive company to our employees

Targets

Growth 10 percentOur target is to grow 10 percent through a combination of organic and acquired growth. Organic growth is driven from the development of new products through innovation and gain of market share. The acquired growth comes from three dimensions: complimentary to what we do, increased geographic coverage, and new technologies.

Profitability 16-17 percentProfitability is achieved through a combination of growth, price management and cost efficiency.

Return on capital employed 20 percentReturn on capital employed is achieved through growth, profitability and conscious utilization of working capital such as accounts receivable, accounts payable, and inventory, as well as limited investments in fixed assets.

Our business is door opening solutions

Our market is everywhere in the world where there is a need for secure, safe, and convenient door openings. It is fair to say that ASSA ABLOYs business is built around the total door solution, and almost everything that is connected to the door, attached to the door, or surrounds the door. We want to make door solutions seamless to the world. Our mechanical, electromechanical, and electronic products enable us to meet any need from a security, safety, design, or convenience perspective.

Our focus is on door solutions seamlessly connected to the surrounding world

Changing global conditions have had a huge impact on safety and security, and today many buildings are protected by intelligent systems and other electronic systems. Our products play an important part in our customers security and safety and are an integral part of our customers overall solution. Our focus, however, remains firmly on the door opening. By concentrating on what we do best, we continue to provide the best possible total door solutions.

Our businesses

Our business focuses on five key areas: mechanical locks and hardware, electro-mechanical and electronic locks, access control and electronic key issuance, automatic door solutions, and security doors.

We also have an interest in some niche markets, such as consumer security, identification technology for non security applications, and window opening solutions.

Our products and solutions are used in commercial, industrial, institutional, and residential areas.

Our core values

Sticking to our core values has made us the successful company we are today. These values are:

Continuous innovation of top-quality products that meet or exceed customer needs are core to build true and sustainable competitive advantage.

Customer relevance in all our product and service offerings, developed through close relationships with the customers and long term commitment.

Cost efficiency in order to improve the price/quality ratio and the availability of our products and services, we continuously work on increased efficiency at all levels, in all areas of our organization and those of the suppliers.

Our strategy is product driven with customer focus

The product is central to what we do and what we offer the customer. It is the driving force of our success. We are a true product driven company, but with a highly developed customer focus wherever we meet the customer. The three building blocks of our product driven strategy are:

Customer focusWe focus on meeting or exceeding our customers expectations with our products and services

Product drivenWe believe that the product is the driving force of our business and we develop innovative high quality products and solutions that are cost effective Competent peopleWe believe that competent people is the basis of our continuous success

Sales unit channel segmentation

We believe a segmented approach increases customer relevance and provides us with a better understanding of the real customer need. Following this simple conviction in the sales unit has made ASSA ABLOY very successful in the market.

Product unit profit center

We believe profit centers best provide customer focus in production, as well as direct understanding of the importance of innovative product solutions and excellent service. Following this simple conviction in the product unit has given ASSA ABLOY superior products and excellent customer service.

Our organizational flow

Specialization and focus always bring excellent results. We serve the customer best through a clear split between the sales and product units. We either have people focusing on the product or people focusing on the customer. This ensures roles with a clear distinction of tasks and responsibilities.

In this way, sales units focus on customer needs, while the product units make sure we develop the right next-generation product for the right customer, and provide excellent service.

Strategy to action

First, our aim is to increase our market presence through customer relevance. This includes focusing on the specification and project market and helping influential groups such as architects and public authorities to choose ASSA ABLOY.

Secondly we also achieve product leadership by focusing on innovation. By being innovative on a continuous basis, we can develop lasting competitive advantages.

Thirdly, we radically reduce our break-even costs through cost efficiency.

Market strategy increased market presence

Apart from leading the trend towards higher security and safety, we reinforce and develop our presence in the market through three channels:

Utilize the power of branding Grow our core business Expand into new markets

The power of branding ASSA ABLOY

We have grown through many acquisitions, and our brand portfolio today consists of more than 80 leading brands. To utilize our brand asset on a global basis, we will over time transform the local brands into ASSA ABLOY.

ASSA ABLOY is chosen as the Groups master brand. In addition to this, a selected number of global brands will be used. A global brand is typically complementary to ASSA ABLOY with an overlapping value proposition or addressing a different market segment. Furthermore on a local basis product brands can exist subject to local decision.

Grow our core business specification

To guide the customer to the right safety and security solution, it is very important to come into the decision process early. We do this through our specification teams approaching customers and influencers as ASSA ABLOY, offering a full range of products.

In addition to this, it is important that we develop selection tools and product configurators as well as providing product support on a 24/7 basis.

The specification market creates end-customer demand market pull making us the most attractive partner for our distributors.

Grow our core business market channels

Our single biggest potential for growth in the market is within our existing market channels. There is nothing as effective as to dig where you stand.

We strive to achieve the full share of our partners sales and maximum loyalty by offering market pull through specification, a full range of products, adequate training, and good support.

In addition to this, we increase market share through the use of global brands complemented with local product brands.

Grow our core business electronic and automatic door solutions

Electronic and automatic door solutions are evolving rapidly. Doors are becoming seamless with the building and an integrated part of the buildings network. In order to benefit from this growth, we need to make our doors intelligent and apply open standards to ensure easy installation and interconnectivity.

This requires a well-trained, dedicated ASSA ABLOY commercial support organization, as well as an authorized network providing aftermarket services.

Expand into new markets

We see four different roads for expansion into new markets.

Geography Build presence in regions where both population and economic growth are strong acquire local leaders.

As billions of people in emerging markets improve their standard of living, the future potential for growth in our business is enormous. To capture this growth from emerging markets, we plan to go local.

Develop the door and window OEM marketASSA ABLOYs presence is strong in a few markets today on the door and window OEM market. Through acquisitions we can build a global platform in addition to organic growth.

Capture and develop the residential market Develop channels and products with residential focus.

Leverage technology into new applications explore our lead in RFID and technology and take a major part of the rapid growth of the market.

Product leadership through innovation Innovation is the number-one driver of organic growth. But it does not have to be achieved solely through giant leaps in technology. By taking many small steps on a continuous basis, ASSA ABLOY can achieve true, sustainable advantages. These advantages are how we boost benefits for our customers at the same time as we reduce costs and improve quality.

Product leadership boost benefits

Our overall objective with product leadership is to meet or exceed customer expectations. This means taking quantum leaps on customer benefits with every new product.

Thinking through the customer benefits at an early stage in the design phase ensures minimum cost and maximum benefit

Product leadership cut costs

Crucial to successful product leadership is to achieve quantum leaps on cost reduction on every new product. This means reduction of components, modular build-up, introduction of standard options, concurrent engineering, design for manufacturing and assembly, and early supplier involvement.

Achievement of all these parameters assure success.

Product leadership the process

An efficient R&D organization is achieved through a split between new development and product maintenance. All new projects are driven by customer needs, coordinated by product management, and documented in a product master specification. We work in cross-functional groups and meet on a regular basis in the product council to decide on resource allocation and priorities.

Shared Technology has been created to facilitate the increasing demand for global standards and products. In addition, competence groups from various market regions have been formed for cross border development of major product groups.

Product leadership operational excellence

Lean methods are central to operational excellence within production. We work in the direction of a demand-driven one-piece flow production, utilizing flow lines with integrated testing and packing. Our factories are visual, where the whole flow is driven by automatic ordering through Kanban and the materials are provided by zero-defect suppliers.

Professional sourcing is another building block for operational excellence. As we transform the Group from full in-house manufacturing to assembly in the western world, sourcing grows in importance. We strive for a limited number of suppliers, strategic partners, supplier agreements, category management, value engineering, and zero-defect suppliers.

Product leadership 100% quality

100% quality starts through the gateway development process. The next step is zero defects from the suppliers and that we perform a quality-assured assembly process. With good processes, we will dramatically reduce the field problems.

Despite all this, problems do occur. We assure maximum speed and quality in problem handling through selective field reporting, a top-three problems approach, and installment of quality councils led by divisional management.

Radically reduce our break-even cost through an efficient manufacturing footprint

We radically reduce our break-even costs by embracing lean manufacturing methods and consolidating operations where appropriate. The single most important transformation is to move from being manufacturing-centric to becoming an assembly-oriented organization. We outsource non-critical activities while moving value-added manufacturing to low-cost countries. Furthermore, we utilize common sourcing of all major components and products.

Radically reduce our break-even cost support function efficiency

Our mission is that all support functions are carried out in the most efficient manner. The most important part of this is shared services within administration. Other activities are Lean in office, consolidation of IT platforms as well as reduction of the number of legal units adding to the efficiency.

People make it all happen

People turn our values and strategy into action, making them our most valuable resource. ASSA ABLOY is a result-driven company that recognizes and rewards performance by giving a clear task and full authority to act.

Individual growth and career development is achieved through challenging tasks, continuous training, trust, feedback, and teamwork. Access to information and the opportunity to ask questions are fundamental for motivation and performance.

We continuously recruit competent, well-educated and trained people and give priority to internal recruitment when equal competence is available.

We learn from our mistakes and we never hide. People within ASSA ABLOY are expected to be in charge of their own development.

Our cornerstones

Our cornerstones are vision, realism, courage, and ethics. They are the guiding principles for all ASSA ABLOY employees:

Our Vision is to be the true world leader, the most successful and innovative provider of door opening solutions. It is also to lead in innovation and provide well-designed, convenient, safe and secure solutions that give true added value to our customers.

Realism is about understanding the business, the market, the products, and the competition, as well as our own organization and business processes. Realism is fundamental in all decisions.

Courage is about embracing continuous change. This means continuous innovation of top-quality products that meet or exceed customer needs and that we provide customer relevance in all our product and service offerings developed through close relationships with the customers.

Courage is also about cost efficiency through continuous improvement of the price/quality ratio and increased efficiency at all levels, and in all areas of our organization and those of the suppliers.

Ethical behaviour is an integral part of our way of conducting business. We trust and respect other people and their ability. We behave as good citizens in all areas of operation and include the environmental aspect in all that we do.

ASSA ABLOY is the true world leader, the most successful and innovative provider of door opening solutions, dedicated to satisfying end-user needs for security, safety and convenience. With more than 150 companies opera-ting throughout the world, ASSA ABLOY has the strongest global presence in our industry.

Our market is everywhere in the world where there is a need for secure, safe, and convenient door openings. It is fair to say that ASSA ABLOYs business is built around the total door solution, and almost everything that is connected to the door, at-tached to the door, or surrounds the door. We want to make door solutions seam-less to the world. Our mechanical, electromechanical, and electronic products enable us to meet any need from a security, safety, design and convenience per-spective.

Copyright ASSA ABLOY AB 2007

Editor: ke Sund

Project Coordinator: Karin Hanson

Illustrations: Lars Rehnberg

Produced by: OTW Publishing

Design: Vidar Hekkelstrand

Print: Alfa print, Stockholm

ISBN