Outside Director Evaluation of Effectiveness and Findings
Insights on Growth and Governance of the International Beverage Business from Our Outside Directors
Independent Outside Director Masataka Inoue/Independent Outside Director Mina Ito
In a recent discussion, outside directors Mr. Masataka Inoue and Ms. Mina Ito, who was appointed as an outside director in April 2024, shared their expectations and concerns about the future of the International Beverage Business.
Role as an outside director
—Ms. Ito, you were appointed as an outside director in 2024. Could you tell us why you accepted the role?
As an international lawyer and business advisor, I have supported companies’ global expansions across the U.S., Asia, Europe, and most recently, the Middle East and Africa. I had been closely observing DyDo Group’s bold entry into Turkey in 2016 as an exciting example of a company venturing into a niche market. When I was approached by the DyDo Group to serve as an outside director, I had the opportunity to speak with President Takamatsu. He shared with me the Company’s aspirations to expand into the Polish market and their commitment to achieving the three key pillars of Group Mission 2030, including “Expansion of the Business Overseas.” After hearing the enthusiasm for these goals, I decided to accept the role of outside director. Moving forward, I plan to leverage my 30 years of experience in international law and supporting the execution of new business ventures to contribute to the continued growth and bold challenges of the Group.
—Mr. Inoue, as a long-serving outside director, how do you approach your role in overseeing the Company?
As an outside director, my guiding belief is that “corporate management means doing the right things, the right way.” By “doing the right things,” I mean achieving shareholder value and sustainable growth. “Doing it the right way” involves managing risks that could harm shareholder value and ensuring effective business operations. In pursuit of sustainable growth, the Company aims to generate cash flow through the expansion of the core vending machine business, and then invest that into growth areas like the International Beverage Business and non-beverage ventures, creating new pillars of future revenue. While the domestic vending machine market is saturated, refining the Company’s strength in smart operations not only reduces costs and addresses the labor shortage, but it also makes significant contributions to society from an SDGs perspective, aligning with my core belief.
■ Expansion of the International Beverage Business and governance of local companies
—What are your thoughts on the International Beverage Business, a key growth area for the Company?
I believe the International Beverage Business will become a major pillar for the Company’s growth. While there have been regions where it previously withdrew, it has learned from those experiences, and now it is seeing success in Turkey. A crucial aspect of driving the International Beverage Business forward is having a clear strategic vision and understanding the purpose behind expanding into international markets. Regarding the expansion into Poland, I fully support President Takamatsu’s strong commitment to using this as a foothold to building a solid business foundation in the European market. I look forward to seeing a clear business plan that outlines the Company’s direction for the future soon.
In my experience supporting many companies’ overseas expansions, all companies experience failures, but the key to success is how well they can “learn from failure.” When reflecting on failures, it’s important to use those lessons to set investment strategies, criteria for making investments, and even exit strategies. During this process, companies often need to revisit the fundamental reasons for expanding overseas. This not only helps foster a mindset shift and boost motivation among team members but also creates a positive cycle where, within the established criteria, they can confidently take bold steps with a sense of security
I agree. I feel this is still an area where the Company has room for improvement. When setting investment criteria, it needs to consider not just the returns from individual investment projects but also how those investments impact the overall capital efficiency of the Company. Without clear criteria, it can be very difficult to make decisions about withdrawing from a market. While the Company has gradually improved in this regard by setting targets for each individual project and withdrawing if those targets are not met, I believe there’s a need for more stringent and standardized criteria across the board.
—Governance at local subsidiaries is crucial after expanding overseas. What are your thoughts on this?
When it comes to governance, sharing a common vision through concrete discussions is key. First, the Company needs to engage in meaningful dialogue with the local management teams to ensure alignment on the direction of the business. After that, it must focus on preventing risks that could diminish shareholder value, such as losses from fraud or accidents. The essential elements here are fostering a corporate culture that prevents misconduct and accidents, enforcing rules, and establishing a robust audit system. At the core of this is a delegation of authority framework that regulates the actions of local management. Additionally, for major functions, it’s critical that the holding company clearly communicates its approach, and the subsidiaries, in turn, establish rules and processes based on that guidance. For example, from a quality assurance perspective, despite differences in laws and cultures across countries, the Company might adopt a policy like “striving for safety and security beyond industry standards.” This ensures that, no matter how many countries it expands into, the Group maintains a consistent approach. Currently, the Group is revisiting its regulations. It is defining its approach for key functions, applying this across subsidiaries, and the holding company will support and oversee these efforts.
Risks at overseas subsidiaries can range from daily operational issues like labor disputes, accounting fraud, embezzlement, debt collection problems, cybercrime, and the leakage of trade secrets, to more significant risks like antitrust violations (cartels) or bribery, which can result in heavy fines. The most important factor in preventing fraud is ensuring that the top management’s clear stance of “zero tolerance for fraud” is thoroughly communicated and upheld at all levels of the organization. Additionally, building trust through open dialogue during internal audits with local personnel, and sharing and providing feedback on business goals with local management, is crucial. I believe it’s important to apply the transparent, open communication culture the Company has in its domestic operations to the management of its overseas subsidiaries. This can help in establishing rules and a robust compliance system. As the International Beverage Business is poised to become a key pillar for the future, I want to help drive both growth strategies and governance efforts as an outside director.
