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Nomura Securities Co Ltd
Strategic Analysis
Boon Chung Phua
Yasushi Iguchi
Akio Saita
Norihito Shimizu
1 Introduction Nomura Securities Co Ltd (NSC) is a wholly-owned subsidiary of Nomura Holdings
Inc (NHI) which forms part of the Nomura Group NSC plays a central role in the
securities business the Groups core business As the leading securities and investment
banking firm in Japan NSC endeavors to provide individual investors and other
diversified corporate clients with a range of services through the capital markets including
investment advisory services and fund raising In this paper we analyze the current
business of NSC using the framework provided in ldquoTHE STRATEGY CONCEPT AND
PROCESSrdquo by Arnoldo C Hax and Nicolas S Majluf and ldquothe delta projectrdquo by Arnoldo
C Hax and Dean L Wilde ll and propose a business strategy for NSC
The later part of this section we introduce NSC from three points of view its history
business overview and current business strategy
11 Company History
Nomura was incorporated in Japan on December 25 1925 under the Commercial Code
of Japan when the securities division of The Osaka Nomura Bank Ltd became a
separate entity specializing in the trading and distribution of debt securities in Japan
Nomura was the first Japanese securities company to develop its business internationally
with the opening in 1927 of a representative office in New York which actively traded
non-yen-denominated debt securities In Japan Nomura broadened the scope of their
business when they began trading in equity securities in 1938 and when they organized
the first investment trust in Japan in 1941
In recent years Nomura have sought to take advantage of new opportunities presented
by deregulation of the Japanese financial market and by developments in information
technology For example to increase retail customersrsquo access to their services they have
taken advantage of the Internet to offer on-line brokerage and related services
On October 1 2001 Nomura adopted a holding company structure In connection with
the reorganization Nomura changed its name from ldquoThe Nomura Securities Co Ltdrdquo to
ldquoNomura Holdings Incrdquo A wholly-owned subsidiary of Nomura assumed Nomurarsquos
securities businesses and is named ldquoNomura Securities Co Ltdrdquo the strategic business
unit being analyzed in this paper
Nomura have also strengthened their mergers and acquisitions and other financial
advisory business by acquiring majority interests in Nomura Corporate Advisors Co Ltd
formerly Nomura Wasserstein Perrella Co Ltd in November 1999 Nomura Corporate
Advisors became a wholly-owned subsidiary of Nomura in September 2000 and merged
with Nomura Securities in April 2002
Nomura have also enhanced their asset management business through the acquisition of
a majority interest in Nomura Asset Management Co Ltd in March 2000 Nomura Asset
Management became a wholly-owned subsidiary of Nomura in December 20011
12 Business Overview Nomura Securities Co Ltd (NSC) is the leading securities and investment banking firm
in Japan and have worldwide operations As of March 31 2003 they operated offices in
more than 20 countries and regions including Japan the United States the United
Kingdom Singapore and Hong Kong As of the same date they employed 14385
people with 11583 in Japan and 2802 outside Japan
NSCrsquos customers include individuals corporations financial institutions governments
and governmental agencies Their businesses consist of the following three business
segments
bull Domestic Retail ndash principally investment consultation services to retail customers
bull Global Wholesale ndash principally fixed income and equity trading investment banking
and merchant banking in and outside Japan
bull Asset Management ndash principally development and management of investment
trusts and investment advisory services
NSC is also one of the worlds leading securities firms with more than $150 billion assets
and shareholder equity of over $135 billion
13 Current Business Strategy
According to their core business fields NSC defined their current strategy as the
followings
1) Retail
1048774Reinforcement of channel to customers
1048774Stimulation of stock market
1048774Improvement of productivity and efficiency of branch management
1048774Customersrsquo attention to asset management by 401K plan
2) Investment banking
1048774Establishment of complete product line and management for customersrsquo demand
to equity finance
1048774Entry to merchant banking
3) Trading (bond and equity)
1048774Global product line
1048774Readiness to Straight Through Processing (STP) and T+1 []
1048774Adaptation to electronic transaction
4) Asset management
1048774Expansion of demand to mutual fund
1048774Stable portfolio management
[] STP means that information passing seamlessly and electronically among all participants
involved in the transaction process It goes far beyond the buyer and seller to include all affected
parties data provider exchange service provider computer operator regulator and more T+1
means that market participants have to make settlement on the day following trade date
2 Corporate Vision Nomura Grouprsquos vision is to establish its position as a globally competitive Japanese
financial services group In order to realize this vision it currently focuses on three areas
strengthening action to expand the securities market in Japan enhancing business
origination in Japan and pursuit of collective strength through greater cooperation among
its divisions
The Japanese economy has experienced severe recession over more than ten years
Most recently the Japanese economy experienced a recession in 2001 primarily due to a
global high technology recession but started recovering in early 2002 due to inventory
adjustments and economic turnarounds in the United States and Asia Since mid-2002
however the economy has stagnated as the recovery in domestic demand has been
weak and export growth has slowed In the spring of 2003 growth had yet to show signs
of recovery In October 2002 the Japanese government announced its Program for
Financial Revival to accelerate the disposal of non-performing loans at major Japanese
banks as a necessary step to revive the economy At the same time the government
decided to establish the Industrial Revitalization Corporation of Japan to coordinate the
disposal of bad debt and revitalization of Japanese industries and corporations This new
organization started operations in May 2003
The two key thrusts for Japans Revival are 1) Acceleration of Corporate Restructuring
and 2) the Shift of Individual Financial Assets Key developments toward economic
revival have begun to surface in the form of quicker corporate restructuring and the shift
of individual financial assets to capital markets Nomura increasingly expect to see a
cycle
where accelerated corporate restructuring helps boost corporate profitability and
individual investors move their money through capital markets to the more profitable
companies
This is Nomurarsquos fundamental stance regarding the business environment Its strategy is
for each division to play its own part towards Japanrsquos revival2
3 Strategic Positioning by using the Delta Model Nomura aims to contribute to Japanrsquos revival by supporting the flow of money between
companies progressing with restructuring and individual investors Its strategy towards
this end is to promote corporate restructuring by providing solutions via capital markets
and encourage the shift of individual financial assets from cash and deposits into higher
risk-return products by supplying diverse products (Ref Fig1)
Fig1 Two corporate objectives of Nomura
2 Investor presentation on May 16 2003 by Nobuyuki Koga President amp CEO Nomura Holdings Inc
The strategic positioning of Nomura is to provide a competitive capital marketplace
bringing together complementary groups of buyers and sellers through Total Customer
Solution based on Horizontal Breadth and Customer Integration and Systems Lock-In by
establishing a Dominant Exchange (Ref Fig2)
Fig2 Strategic positioning Movement of Nomura (Delta Model)
Nomurarsquos business portfolio comprised of Domestic Retail Global Wholesale and Asset
Management divisions Division heads are given discretion to execute business within
the management resources allocated
Business execution is split between the Chief Operating Officer (COO) and Co-COO
To strengthen cooperation among Nomura Group Business Lines and give full scope to
the Grouprsquos collective strength and achieve Horizontal Breadth the COO is responsible
for all three divisions and aims to pursue business that extends beyond Nomurarsquos
business lines (Ref Fig3)3
To promote integrated Group Management for Customer Integration the Co-COO will
advance integrated Nomura Group management transcending legal entities (Ref Fig4)
Nomurarsquos greatest asset is its integrated corporate strength By taking this approach
Nomura aims to break the division-legal entity mould and pursue efforts to enhance
Nomura Grouprsquos collective strength
3 Investor presentation on May 16 2003 by Nobuyuki Koga President amp CEO Nomura Holdings Inc
Nomura should aim to achieve a System Lock-In position through Dominant Exchange by
developing diversified customer-focused products and collaborating with other world wide
players to provide broad investment instruments opportunities and high return on
investments to attract the targeted investorsbuyers The ready pool of investorsbuyers
will further attract companies to approach Nomura to lead manage their capital raising
needs reinforcing the value of the marketplace
Fig4 Customer Integration in Nomura Group
4 Customer Segmentation Thinking about customer segmentation there are basic measurements such as
geography demography psychographics and behavior In this section we define
customer segmentation of NSC Basically customers for securities companies are
divided into two categories 1) individuals 2) corporate and government To analyze the
business we segment customers into the following tiers
Table 1 Customer Segmentation
First we subdivide individuals according to the following Fig5 We adopt 10 million
Japanese Yen as the level to differentiate rich from mass because the amount will be the
cap on the guarantee of full bank savings deposits when the deposit payoff system is
introduced in Japan in the near future We also use 30 million Japanese Yen as the level
to differentiate rich from middle-rich The household expenditure survey conducted by the
Management and Coordination Agency shows that about 15 of households in Japan
has over 30 million Japanese yen saving
Fig5 Individual customer segmentation
We characterize Tier 1 as individuals who are wealthy and have already built asset
These people are relatively few but they invest much money to utilize their own
familiarity with investment method and investment products To meet their demand NSC
has to provide professional know-how to reinforce customer satisfaction by realizing high
performance of investment result Tier 2 is a group of individuals who are not familiar with
investment but have substantial money to invest They are diamonds in the rough but
extremely attractive for NSC Thus NSC should place much emphasis on providing
education services to this tier as a coaching staff for investment Tier 2 customers
currently have much of their asset as cash or deposits The pie chart in Fig 6 shows the
business potential for this customer tier This chart shows a breakdown by product of
individual financial assets As of December 2002 56 of these assets were still held in
cash and deposits NSCrsquos role is to connect these assets with the risk assets 4
Fig6 Individual customer asset allocation
Tier 3 is a group of individuals who are low-value customers for NSC NSC should
provide low price user-friendly system and reliable information to this tier and lead them
to use on-line trading the low cost direct channel
On the other hand we also subdivide corporate customers into three tiers We use the
availability of bond IPO and financing issues as a measurement to divide the three tiers
Tier 1 is a group of companies which can offer bonds to the public or which meet the IPO
standards defined by Tokyo Stock Exchange NSC provides consultation services for
them to realize a low cost procurement of fund and build a good partnership to lead
manage bond and equity issues Since government can issue bond the government is
also included in this tier Tier 2 is a group of companies which have no large issue but
they may have the possibility to grow and result in IPO or MampA Therefore we cannot
easily conclude that NSC should lead them to low cost service channel To assign
companies to this tier NSC has to assess customersrsquo future growth precisely It is
essential to provide the necessary face-to-face financial consultation to maintain a good
relationship with them For Tier 3 with low business potential low price standardized
service can be provided
To summarize the description above the Business Dimension for each of the Customer
Tiers is shown in Table 2 and the Value Proposition for different Customer Tiers is
shown in Table 3
According to this customer segmentation each segment is located in the delta model as
following Fig7
Fig7 Strategic positioning based on our customer segmentation
Table 2 Business Dimension of the Customer Tier
Table 2 Business Dimension of the Customer Tier (Cont)
Table 3 Value Proposition
Table 3 Value Proposition (Cont)
1 Introduction Nomura Securities Co Ltd (NSC) is a wholly-owned subsidiary of Nomura Holdings
Inc (NHI) which forms part of the Nomura Group NSC plays a central role in the
securities business the Groups core business As the leading securities and investment
banking firm in Japan NSC endeavors to provide individual investors and other
diversified corporate clients with a range of services through the capital markets including
investment advisory services and fund raising In this paper we analyze the current
business of NSC using the framework provided in ldquoTHE STRATEGY CONCEPT AND
PROCESSrdquo by Arnoldo C Hax and Nicolas S Majluf and ldquothe delta projectrdquo by Arnoldo
C Hax and Dean L Wilde ll and propose a business strategy for NSC
The later part of this section we introduce NSC from three points of view its history
business overview and current business strategy
11 Company History
Nomura was incorporated in Japan on December 25 1925 under the Commercial Code
of Japan when the securities division of The Osaka Nomura Bank Ltd became a
separate entity specializing in the trading and distribution of debt securities in Japan
Nomura was the first Japanese securities company to develop its business internationally
with the opening in 1927 of a representative office in New York which actively traded
non-yen-denominated debt securities In Japan Nomura broadened the scope of their
business when they began trading in equity securities in 1938 and when they organized
the first investment trust in Japan in 1941
In recent years Nomura have sought to take advantage of new opportunities presented
by deregulation of the Japanese financial market and by developments in information
technology For example to increase retail customersrsquo access to their services they have
taken advantage of the Internet to offer on-line brokerage and related services
On October 1 2001 Nomura adopted a holding company structure In connection with
the reorganization Nomura changed its name from ldquoThe Nomura Securities Co Ltdrdquo to
ldquoNomura Holdings Incrdquo A wholly-owned subsidiary of Nomura assumed Nomurarsquos
securities businesses and is named ldquoNomura Securities Co Ltdrdquo the strategic business
unit being analyzed in this paper
Nomura have also strengthened their mergers and acquisitions and other financial
advisory business by acquiring majority interests in Nomura Corporate Advisors Co Ltd
formerly Nomura Wasserstein Perrella Co Ltd in November 1999 Nomura Corporate
Advisors became a wholly-owned subsidiary of Nomura in September 2000 and merged
with Nomura Securities in April 2002
Nomura have also enhanced their asset management business through the acquisition of
a majority interest in Nomura Asset Management Co Ltd in March 2000 Nomura Asset
Management became a wholly-owned subsidiary of Nomura in December 20011
12 Business Overview Nomura Securities Co Ltd (NSC) is the leading securities and investment banking firm
in Japan and have worldwide operations As of March 31 2003 they operated offices in
more than 20 countries and regions including Japan the United States the United
Kingdom Singapore and Hong Kong As of the same date they employed 14385
people with 11583 in Japan and 2802 outside Japan
NSCrsquos customers include individuals corporations financial institutions governments
and governmental agencies Their businesses consist of the following three business
segments
bull Domestic Retail ndash principally investment consultation services to retail customers
bull Global Wholesale ndash principally fixed income and equity trading investment banking
and merchant banking in and outside Japan
bull Asset Management ndash principally development and management of investment
trusts and investment advisory services
NSC is also one of the worlds leading securities firms with more than $150 billion assets
and shareholder equity of over $135 billion
13 Current Business Strategy
According to their core business fields NSC defined their current strategy as the
followings
1) Retail
1048774Reinforcement of channel to customers
1048774Stimulation of stock market
1048774Improvement of productivity and efficiency of branch management
1048774Customersrsquo attention to asset management by 401K plan
2) Investment banking
1048774Establishment of complete product line and management for customersrsquo demand
to equity finance
1048774Entry to merchant banking
3) Trading (bond and equity)
1048774Global product line
1048774Readiness to Straight Through Processing (STP) and T+1 []
1048774Adaptation to electronic transaction
4) Asset management
1048774Expansion of demand to mutual fund
1048774Stable portfolio management
[] STP means that information passing seamlessly and electronically among all participants
involved in the transaction process It goes far beyond the buyer and seller to include all affected
parties data provider exchange service provider computer operator regulator and more T+1
means that market participants have to make settlement on the day following trade date
2 Corporate Vision Nomura Grouprsquos vision is to establish its position as a globally competitive Japanese
financial services group In order to realize this vision it currently focuses on three areas
strengthening action to expand the securities market in Japan enhancing business
origination in Japan and pursuit of collective strength through greater cooperation among
its divisions
The Japanese economy has experienced severe recession over more than ten years
Most recently the Japanese economy experienced a recession in 2001 primarily due to a
global high technology recession but started recovering in early 2002 due to inventory
adjustments and economic turnarounds in the United States and Asia Since mid-2002
however the economy has stagnated as the recovery in domestic demand has been
weak and export growth has slowed In the spring of 2003 growth had yet to show signs
of recovery In October 2002 the Japanese government announced its Program for
Financial Revival to accelerate the disposal of non-performing loans at major Japanese
banks as a necessary step to revive the economy At the same time the government
decided to establish the Industrial Revitalization Corporation of Japan to coordinate the
disposal of bad debt and revitalization of Japanese industries and corporations This new
organization started operations in May 2003
The two key thrusts for Japans Revival are 1) Acceleration of Corporate Restructuring
and 2) the Shift of Individual Financial Assets Key developments toward economic
revival have begun to surface in the form of quicker corporate restructuring and the shift
of individual financial assets to capital markets Nomura increasingly expect to see a
cycle
where accelerated corporate restructuring helps boost corporate profitability and
individual investors move their money through capital markets to the more profitable
companies
This is Nomurarsquos fundamental stance regarding the business environment Its strategy is
for each division to play its own part towards Japanrsquos revival2
3 Strategic Positioning by using the Delta Model Nomura aims to contribute to Japanrsquos revival by supporting the flow of money between
companies progressing with restructuring and individual investors Its strategy towards
this end is to promote corporate restructuring by providing solutions via capital markets
and encourage the shift of individual financial assets from cash and deposits into higher
risk-return products by supplying diverse products (Ref Fig1)
Fig1 Two corporate objectives of Nomura
2 Investor presentation on May 16 2003 by Nobuyuki Koga President amp CEO Nomura Holdings Inc
The strategic positioning of Nomura is to provide a competitive capital marketplace
bringing together complementary groups of buyers and sellers through Total Customer
Solution based on Horizontal Breadth and Customer Integration and Systems Lock-In by
establishing a Dominant Exchange (Ref Fig2)
Fig2 Strategic positioning Movement of Nomura (Delta Model)
Nomurarsquos business portfolio comprised of Domestic Retail Global Wholesale and Asset
Management divisions Division heads are given discretion to execute business within
the management resources allocated
Business execution is split between the Chief Operating Officer (COO) and Co-COO
To strengthen cooperation among Nomura Group Business Lines and give full scope to
the Grouprsquos collective strength and achieve Horizontal Breadth the COO is responsible
for all three divisions and aims to pursue business that extends beyond Nomurarsquos
business lines (Ref Fig3)3
To promote integrated Group Management for Customer Integration the Co-COO will
advance integrated Nomura Group management transcending legal entities (Ref Fig4)
Nomurarsquos greatest asset is its integrated corporate strength By taking this approach
Nomura aims to break the division-legal entity mould and pursue efforts to enhance
Nomura Grouprsquos collective strength
3 Investor presentation on May 16 2003 by Nobuyuki Koga President amp CEO Nomura Holdings Inc
Nomura should aim to achieve a System Lock-In position through Dominant Exchange by
developing diversified customer-focused products and collaborating with other world wide
players to provide broad investment instruments opportunities and high return on
investments to attract the targeted investorsbuyers The ready pool of investorsbuyers
will further attract companies to approach Nomura to lead manage their capital raising
needs reinforcing the value of the marketplace
Fig4 Customer Integration in Nomura Group
4 Customer Segmentation Thinking about customer segmentation there are basic measurements such as
geography demography psychographics and behavior In this section we define
customer segmentation of NSC Basically customers for securities companies are
divided into two categories 1) individuals 2) corporate and government To analyze the
business we segment customers into the following tiers
Table 1 Customer Segmentation
First we subdivide individuals according to the following Fig5 We adopt 10 million
Japanese Yen as the level to differentiate rich from mass because the amount will be the
cap on the guarantee of full bank savings deposits when the deposit payoff system is
introduced in Japan in the near future We also use 30 million Japanese Yen as the level
to differentiate rich from middle-rich The household expenditure survey conducted by the
Management and Coordination Agency shows that about 15 of households in Japan
has over 30 million Japanese yen saving
Fig5 Individual customer segmentation
We characterize Tier 1 as individuals who are wealthy and have already built asset
These people are relatively few but they invest much money to utilize their own
familiarity with investment method and investment products To meet their demand NSC
has to provide professional know-how to reinforce customer satisfaction by realizing high
performance of investment result Tier 2 is a group of individuals who are not familiar with
investment but have substantial money to invest They are diamonds in the rough but
extremely attractive for NSC Thus NSC should place much emphasis on providing
education services to this tier as a coaching staff for investment Tier 2 customers
currently have much of their asset as cash or deposits The pie chart in Fig 6 shows the
business potential for this customer tier This chart shows a breakdown by product of
individual financial assets As of December 2002 56 of these assets were still held in
cash and deposits NSCrsquos role is to connect these assets with the risk assets 4
Fig6 Individual customer asset allocation
Tier 3 is a group of individuals who are low-value customers for NSC NSC should
provide low price user-friendly system and reliable information to this tier and lead them
to use on-line trading the low cost direct channel
On the other hand we also subdivide corporate customers into three tiers We use the
availability of bond IPO and financing issues as a measurement to divide the three tiers
Tier 1 is a group of companies which can offer bonds to the public or which meet the IPO
standards defined by Tokyo Stock Exchange NSC provides consultation services for
them to realize a low cost procurement of fund and build a good partnership to lead
manage bond and equity issues Since government can issue bond the government is
also included in this tier Tier 2 is a group of companies which have no large issue but
they may have the possibility to grow and result in IPO or MampA Therefore we cannot
easily conclude that NSC should lead them to low cost service channel To assign
companies to this tier NSC has to assess customersrsquo future growth precisely It is
essential to provide the necessary face-to-face financial consultation to maintain a good
relationship with them For Tier 3 with low business potential low price standardized
service can be provided
To summarize the description above the Business Dimension for each of the Customer
Tiers is shown in Table 2 and the Value Proposition for different Customer Tiers is
shown in Table 3
According to this customer segmentation each segment is located in the delta model as
following Fig7
Fig7 Strategic positioning based on our customer segmentation
Table 2 Business Dimension of the Customer Tier
Table 2 Business Dimension of the Customer Tier (Cont)
Table 3 Value Proposition
Table 3 Value Proposition (Cont)
unit being analyzed in this paper
Nomura have also strengthened their mergers and acquisitions and other financial
advisory business by acquiring majority interests in Nomura Corporate Advisors Co Ltd
formerly Nomura Wasserstein Perrella Co Ltd in November 1999 Nomura Corporate
Advisors became a wholly-owned subsidiary of Nomura in September 2000 and merged
with Nomura Securities in April 2002
Nomura have also enhanced their asset management business through the acquisition of
a majority interest in Nomura Asset Management Co Ltd in March 2000 Nomura Asset
Management became a wholly-owned subsidiary of Nomura in December 20011
12 Business Overview Nomura Securities Co Ltd (NSC) is the leading securities and investment banking firm
in Japan and have worldwide operations As of March 31 2003 they operated offices in
more than 20 countries and regions including Japan the United States the United
Kingdom Singapore and Hong Kong As of the same date they employed 14385
people with 11583 in Japan and 2802 outside Japan
NSCrsquos customers include individuals corporations financial institutions governments
and governmental agencies Their businesses consist of the following three business
segments
bull Domestic Retail ndash principally investment consultation services to retail customers
bull Global Wholesale ndash principally fixed income and equity trading investment banking
and merchant banking in and outside Japan
bull Asset Management ndash principally development and management of investment
trusts and investment advisory services
NSC is also one of the worlds leading securities firms with more than $150 billion assets
and shareholder equity of over $135 billion
13 Current Business Strategy
According to their core business fields NSC defined their current strategy as the
followings
1) Retail
1048774Reinforcement of channel to customers
1048774Stimulation of stock market
1048774Improvement of productivity and efficiency of branch management
1048774Customersrsquo attention to asset management by 401K plan
2) Investment banking
1048774Establishment of complete product line and management for customersrsquo demand
to equity finance
1048774Entry to merchant banking
3) Trading (bond and equity)
1048774Global product line
1048774Readiness to Straight Through Processing (STP) and T+1 []
1048774Adaptation to electronic transaction
4) Asset management
1048774Expansion of demand to mutual fund
1048774Stable portfolio management
[] STP means that information passing seamlessly and electronically among all participants
involved in the transaction process It goes far beyond the buyer and seller to include all affected
parties data provider exchange service provider computer operator regulator and more T+1
means that market participants have to make settlement on the day following trade date
2 Corporate Vision Nomura Grouprsquos vision is to establish its position as a globally competitive Japanese
financial services group In order to realize this vision it currently focuses on three areas
strengthening action to expand the securities market in Japan enhancing business
origination in Japan and pursuit of collective strength through greater cooperation among
its divisions
The Japanese economy has experienced severe recession over more than ten years
Most recently the Japanese economy experienced a recession in 2001 primarily due to a
global high technology recession but started recovering in early 2002 due to inventory
adjustments and economic turnarounds in the United States and Asia Since mid-2002
however the economy has stagnated as the recovery in domestic demand has been
weak and export growth has slowed In the spring of 2003 growth had yet to show signs
of recovery In October 2002 the Japanese government announced its Program for
Financial Revival to accelerate the disposal of non-performing loans at major Japanese
banks as a necessary step to revive the economy At the same time the government
decided to establish the Industrial Revitalization Corporation of Japan to coordinate the
disposal of bad debt and revitalization of Japanese industries and corporations This new
organization started operations in May 2003
The two key thrusts for Japans Revival are 1) Acceleration of Corporate Restructuring
and 2) the Shift of Individual Financial Assets Key developments toward economic
revival have begun to surface in the form of quicker corporate restructuring and the shift
of individual financial assets to capital markets Nomura increasingly expect to see a
cycle
where accelerated corporate restructuring helps boost corporate profitability and
individual investors move their money through capital markets to the more profitable
companies
This is Nomurarsquos fundamental stance regarding the business environment Its strategy is
for each division to play its own part towards Japanrsquos revival2
3 Strategic Positioning by using the Delta Model Nomura aims to contribute to Japanrsquos revival by supporting the flow of money between
companies progressing with restructuring and individual investors Its strategy towards
this end is to promote corporate restructuring by providing solutions via capital markets
and encourage the shift of individual financial assets from cash and deposits into higher
risk-return products by supplying diverse products (Ref Fig1)
Fig1 Two corporate objectives of Nomura
2 Investor presentation on May 16 2003 by Nobuyuki Koga President amp CEO Nomura Holdings Inc
The strategic positioning of Nomura is to provide a competitive capital marketplace
bringing together complementary groups of buyers and sellers through Total Customer
Solution based on Horizontal Breadth and Customer Integration and Systems Lock-In by
establishing a Dominant Exchange (Ref Fig2)
Fig2 Strategic positioning Movement of Nomura (Delta Model)
Nomurarsquos business portfolio comprised of Domestic Retail Global Wholesale and Asset
Management divisions Division heads are given discretion to execute business within
the management resources allocated
Business execution is split between the Chief Operating Officer (COO) and Co-COO
To strengthen cooperation among Nomura Group Business Lines and give full scope to
the Grouprsquos collective strength and achieve Horizontal Breadth the COO is responsible
for all three divisions and aims to pursue business that extends beyond Nomurarsquos
business lines (Ref Fig3)3
To promote integrated Group Management for Customer Integration the Co-COO will
advance integrated Nomura Group management transcending legal entities (Ref Fig4)
Nomurarsquos greatest asset is its integrated corporate strength By taking this approach
Nomura aims to break the division-legal entity mould and pursue efforts to enhance
Nomura Grouprsquos collective strength
3 Investor presentation on May 16 2003 by Nobuyuki Koga President amp CEO Nomura Holdings Inc
Nomura should aim to achieve a System Lock-In position through Dominant Exchange by
developing diversified customer-focused products and collaborating with other world wide
players to provide broad investment instruments opportunities and high return on
investments to attract the targeted investorsbuyers The ready pool of investorsbuyers
will further attract companies to approach Nomura to lead manage their capital raising
needs reinforcing the value of the marketplace
Fig4 Customer Integration in Nomura Group
4 Customer Segmentation Thinking about customer segmentation there are basic measurements such as
geography demography psychographics and behavior In this section we define
customer segmentation of NSC Basically customers for securities companies are
divided into two categories 1) individuals 2) corporate and government To analyze the
business we segment customers into the following tiers
Table 1 Customer Segmentation
First we subdivide individuals according to the following Fig5 We adopt 10 million
Japanese Yen as the level to differentiate rich from mass because the amount will be the
cap on the guarantee of full bank savings deposits when the deposit payoff system is
introduced in Japan in the near future We also use 30 million Japanese Yen as the level
to differentiate rich from middle-rich The household expenditure survey conducted by the
Management and Coordination Agency shows that about 15 of households in Japan
has over 30 million Japanese yen saving
Fig5 Individual customer segmentation
We characterize Tier 1 as individuals who are wealthy and have already built asset
These people are relatively few but they invest much money to utilize their own
familiarity with investment method and investment products To meet their demand NSC
has to provide professional know-how to reinforce customer satisfaction by realizing high
performance of investment result Tier 2 is a group of individuals who are not familiar with
investment but have substantial money to invest They are diamonds in the rough but
extremely attractive for NSC Thus NSC should place much emphasis on providing
education services to this tier as a coaching staff for investment Tier 2 customers
currently have much of their asset as cash or deposits The pie chart in Fig 6 shows the
business potential for this customer tier This chart shows a breakdown by product of
individual financial assets As of December 2002 56 of these assets were still held in
cash and deposits NSCrsquos role is to connect these assets with the risk assets 4
Fig6 Individual customer asset allocation
Tier 3 is a group of individuals who are low-value customers for NSC NSC should
provide low price user-friendly system and reliable information to this tier and lead them
to use on-line trading the low cost direct channel
On the other hand we also subdivide corporate customers into three tiers We use the
availability of bond IPO and financing issues as a measurement to divide the three tiers
Tier 1 is a group of companies which can offer bonds to the public or which meet the IPO
standards defined by Tokyo Stock Exchange NSC provides consultation services for
them to realize a low cost procurement of fund and build a good partnership to lead
manage bond and equity issues Since government can issue bond the government is
also included in this tier Tier 2 is a group of companies which have no large issue but
they may have the possibility to grow and result in IPO or MampA Therefore we cannot
easily conclude that NSC should lead them to low cost service channel To assign
companies to this tier NSC has to assess customersrsquo future growth precisely It is
essential to provide the necessary face-to-face financial consultation to maintain a good
relationship with them For Tier 3 with low business potential low price standardized
service can be provided
To summarize the description above the Business Dimension for each of the Customer
Tiers is shown in Table 2 and the Value Proposition for different Customer Tiers is
shown in Table 3
According to this customer segmentation each segment is located in the delta model as
following Fig7
Fig7 Strategic positioning based on our customer segmentation
Table 2 Business Dimension of the Customer Tier
Table 2 Business Dimension of the Customer Tier (Cont)
Table 3 Value Proposition
Table 3 Value Proposition (Cont)
1048774Reinforcement of channel to customers
1048774Stimulation of stock market
1048774Improvement of productivity and efficiency of branch management
1048774Customersrsquo attention to asset management by 401K plan
2) Investment banking
1048774Establishment of complete product line and management for customersrsquo demand
to equity finance
1048774Entry to merchant banking
3) Trading (bond and equity)
1048774Global product line
1048774Readiness to Straight Through Processing (STP) and T+1 []
1048774Adaptation to electronic transaction
4) Asset management
1048774Expansion of demand to mutual fund
1048774Stable portfolio management
[] STP means that information passing seamlessly and electronically among all participants
involved in the transaction process It goes far beyond the buyer and seller to include all affected
parties data provider exchange service provider computer operator regulator and more T+1
means that market participants have to make settlement on the day following trade date
2 Corporate Vision Nomura Grouprsquos vision is to establish its position as a globally competitive Japanese
financial services group In order to realize this vision it currently focuses on three areas
strengthening action to expand the securities market in Japan enhancing business
origination in Japan and pursuit of collective strength through greater cooperation among
its divisions
The Japanese economy has experienced severe recession over more than ten years
Most recently the Japanese economy experienced a recession in 2001 primarily due to a
global high technology recession but started recovering in early 2002 due to inventory
adjustments and economic turnarounds in the United States and Asia Since mid-2002
however the economy has stagnated as the recovery in domestic demand has been
weak and export growth has slowed In the spring of 2003 growth had yet to show signs
of recovery In October 2002 the Japanese government announced its Program for
Financial Revival to accelerate the disposal of non-performing loans at major Japanese
banks as a necessary step to revive the economy At the same time the government
decided to establish the Industrial Revitalization Corporation of Japan to coordinate the
disposal of bad debt and revitalization of Japanese industries and corporations This new
organization started operations in May 2003
The two key thrusts for Japans Revival are 1) Acceleration of Corporate Restructuring
and 2) the Shift of Individual Financial Assets Key developments toward economic
revival have begun to surface in the form of quicker corporate restructuring and the shift
of individual financial assets to capital markets Nomura increasingly expect to see a
cycle
where accelerated corporate restructuring helps boost corporate profitability and
individual investors move their money through capital markets to the more profitable
companies
This is Nomurarsquos fundamental stance regarding the business environment Its strategy is
for each division to play its own part towards Japanrsquos revival2
3 Strategic Positioning by using the Delta Model Nomura aims to contribute to Japanrsquos revival by supporting the flow of money between
companies progressing with restructuring and individual investors Its strategy towards
this end is to promote corporate restructuring by providing solutions via capital markets
and encourage the shift of individual financial assets from cash and deposits into higher
risk-return products by supplying diverse products (Ref Fig1)
Fig1 Two corporate objectives of Nomura
2 Investor presentation on May 16 2003 by Nobuyuki Koga President amp CEO Nomura Holdings Inc
The strategic positioning of Nomura is to provide a competitive capital marketplace
bringing together complementary groups of buyers and sellers through Total Customer
Solution based on Horizontal Breadth and Customer Integration and Systems Lock-In by
establishing a Dominant Exchange (Ref Fig2)
Fig2 Strategic positioning Movement of Nomura (Delta Model)
Nomurarsquos business portfolio comprised of Domestic Retail Global Wholesale and Asset
Management divisions Division heads are given discretion to execute business within
the management resources allocated
Business execution is split between the Chief Operating Officer (COO) and Co-COO
To strengthen cooperation among Nomura Group Business Lines and give full scope to
the Grouprsquos collective strength and achieve Horizontal Breadth the COO is responsible
for all three divisions and aims to pursue business that extends beyond Nomurarsquos
business lines (Ref Fig3)3
To promote integrated Group Management for Customer Integration the Co-COO will
advance integrated Nomura Group management transcending legal entities (Ref Fig4)
Nomurarsquos greatest asset is its integrated corporate strength By taking this approach
Nomura aims to break the division-legal entity mould and pursue efforts to enhance
Nomura Grouprsquos collective strength
3 Investor presentation on May 16 2003 by Nobuyuki Koga President amp CEO Nomura Holdings Inc
Nomura should aim to achieve a System Lock-In position through Dominant Exchange by
developing diversified customer-focused products and collaborating with other world wide
players to provide broad investment instruments opportunities and high return on
investments to attract the targeted investorsbuyers The ready pool of investorsbuyers
will further attract companies to approach Nomura to lead manage their capital raising
needs reinforcing the value of the marketplace
Fig4 Customer Integration in Nomura Group
4 Customer Segmentation Thinking about customer segmentation there are basic measurements such as
geography demography psychographics and behavior In this section we define
customer segmentation of NSC Basically customers for securities companies are
divided into two categories 1) individuals 2) corporate and government To analyze the
business we segment customers into the following tiers
Table 1 Customer Segmentation
First we subdivide individuals according to the following Fig5 We adopt 10 million
Japanese Yen as the level to differentiate rich from mass because the amount will be the
cap on the guarantee of full bank savings deposits when the deposit payoff system is
introduced in Japan in the near future We also use 30 million Japanese Yen as the level
to differentiate rich from middle-rich The household expenditure survey conducted by the
Management and Coordination Agency shows that about 15 of households in Japan
has over 30 million Japanese yen saving
Fig5 Individual customer segmentation
We characterize Tier 1 as individuals who are wealthy and have already built asset
These people are relatively few but they invest much money to utilize their own
familiarity with investment method and investment products To meet their demand NSC
has to provide professional know-how to reinforce customer satisfaction by realizing high
performance of investment result Tier 2 is a group of individuals who are not familiar with
investment but have substantial money to invest They are diamonds in the rough but
extremely attractive for NSC Thus NSC should place much emphasis on providing
education services to this tier as a coaching staff for investment Tier 2 customers
currently have much of their asset as cash or deposits The pie chart in Fig 6 shows the
business potential for this customer tier This chart shows a breakdown by product of
individual financial assets As of December 2002 56 of these assets were still held in
cash and deposits NSCrsquos role is to connect these assets with the risk assets 4
Fig6 Individual customer asset allocation
Tier 3 is a group of individuals who are low-value customers for NSC NSC should
provide low price user-friendly system and reliable information to this tier and lead them
to use on-line trading the low cost direct channel
On the other hand we also subdivide corporate customers into three tiers We use the
availability of bond IPO and financing issues as a measurement to divide the three tiers
Tier 1 is a group of companies which can offer bonds to the public or which meet the IPO
standards defined by Tokyo Stock Exchange NSC provides consultation services for
them to realize a low cost procurement of fund and build a good partnership to lead
manage bond and equity issues Since government can issue bond the government is
also included in this tier Tier 2 is a group of companies which have no large issue but
they may have the possibility to grow and result in IPO or MampA Therefore we cannot
easily conclude that NSC should lead them to low cost service channel To assign
companies to this tier NSC has to assess customersrsquo future growth precisely It is
essential to provide the necessary face-to-face financial consultation to maintain a good
relationship with them For Tier 3 with low business potential low price standardized
service can be provided
To summarize the description above the Business Dimension for each of the Customer
Tiers is shown in Table 2 and the Value Proposition for different Customer Tiers is
shown in Table 3
According to this customer segmentation each segment is located in the delta model as
following Fig7
Fig7 Strategic positioning based on our customer segmentation
Table 2 Business Dimension of the Customer Tier
Table 2 Business Dimension of the Customer Tier (Cont)
Table 3 Value Proposition
Table 3 Value Proposition (Cont)
means that market participants have to make settlement on the day following trade date
2 Corporate Vision Nomura Grouprsquos vision is to establish its position as a globally competitive Japanese
financial services group In order to realize this vision it currently focuses on three areas
strengthening action to expand the securities market in Japan enhancing business
origination in Japan and pursuit of collective strength through greater cooperation among
its divisions
The Japanese economy has experienced severe recession over more than ten years
Most recently the Japanese economy experienced a recession in 2001 primarily due to a
global high technology recession but started recovering in early 2002 due to inventory
adjustments and economic turnarounds in the United States and Asia Since mid-2002
however the economy has stagnated as the recovery in domestic demand has been
weak and export growth has slowed In the spring of 2003 growth had yet to show signs
of recovery In October 2002 the Japanese government announced its Program for
Financial Revival to accelerate the disposal of non-performing loans at major Japanese
banks as a necessary step to revive the economy At the same time the government
decided to establish the Industrial Revitalization Corporation of Japan to coordinate the
disposal of bad debt and revitalization of Japanese industries and corporations This new
organization started operations in May 2003
The two key thrusts for Japans Revival are 1) Acceleration of Corporate Restructuring
and 2) the Shift of Individual Financial Assets Key developments toward economic
revival have begun to surface in the form of quicker corporate restructuring and the shift
of individual financial assets to capital markets Nomura increasingly expect to see a
cycle
where accelerated corporate restructuring helps boost corporate profitability and
individual investors move their money through capital markets to the more profitable
companies
This is Nomurarsquos fundamental stance regarding the business environment Its strategy is
for each division to play its own part towards Japanrsquos revival2
3 Strategic Positioning by using the Delta Model Nomura aims to contribute to Japanrsquos revival by supporting the flow of money between
companies progressing with restructuring and individual investors Its strategy towards
this end is to promote corporate restructuring by providing solutions via capital markets
and encourage the shift of individual financial assets from cash and deposits into higher
risk-return products by supplying diverse products (Ref Fig1)
Fig1 Two corporate objectives of Nomura
2 Investor presentation on May 16 2003 by Nobuyuki Koga President amp CEO Nomura Holdings Inc
The strategic positioning of Nomura is to provide a competitive capital marketplace
bringing together complementary groups of buyers and sellers through Total Customer
Solution based on Horizontal Breadth and Customer Integration and Systems Lock-In by
establishing a Dominant Exchange (Ref Fig2)
Fig2 Strategic positioning Movement of Nomura (Delta Model)
Nomurarsquos business portfolio comprised of Domestic Retail Global Wholesale and Asset
Management divisions Division heads are given discretion to execute business within
the management resources allocated
Business execution is split between the Chief Operating Officer (COO) and Co-COO
To strengthen cooperation among Nomura Group Business Lines and give full scope to
the Grouprsquos collective strength and achieve Horizontal Breadth the COO is responsible
for all three divisions and aims to pursue business that extends beyond Nomurarsquos
business lines (Ref Fig3)3
To promote integrated Group Management for Customer Integration the Co-COO will
advance integrated Nomura Group management transcending legal entities (Ref Fig4)
Nomurarsquos greatest asset is its integrated corporate strength By taking this approach
Nomura aims to break the division-legal entity mould and pursue efforts to enhance
Nomura Grouprsquos collective strength
3 Investor presentation on May 16 2003 by Nobuyuki Koga President amp CEO Nomura Holdings Inc
Nomura should aim to achieve a System Lock-In position through Dominant Exchange by
developing diversified customer-focused products and collaborating with other world wide
players to provide broad investment instruments opportunities and high return on
investments to attract the targeted investorsbuyers The ready pool of investorsbuyers
will further attract companies to approach Nomura to lead manage their capital raising
needs reinforcing the value of the marketplace
Fig4 Customer Integration in Nomura Group
4 Customer Segmentation Thinking about customer segmentation there are basic measurements such as
geography demography psychographics and behavior In this section we define
customer segmentation of NSC Basically customers for securities companies are
divided into two categories 1) individuals 2) corporate and government To analyze the
business we segment customers into the following tiers
Table 1 Customer Segmentation
First we subdivide individuals according to the following Fig5 We adopt 10 million
Japanese Yen as the level to differentiate rich from mass because the amount will be the
cap on the guarantee of full bank savings deposits when the deposit payoff system is
introduced in Japan in the near future We also use 30 million Japanese Yen as the level
to differentiate rich from middle-rich The household expenditure survey conducted by the
Management and Coordination Agency shows that about 15 of households in Japan
has over 30 million Japanese yen saving
Fig5 Individual customer segmentation
We characterize Tier 1 as individuals who are wealthy and have already built asset
These people are relatively few but they invest much money to utilize their own
familiarity with investment method and investment products To meet their demand NSC
has to provide professional know-how to reinforce customer satisfaction by realizing high
performance of investment result Tier 2 is a group of individuals who are not familiar with
investment but have substantial money to invest They are diamonds in the rough but
extremely attractive for NSC Thus NSC should place much emphasis on providing
education services to this tier as a coaching staff for investment Tier 2 customers
currently have much of their asset as cash or deposits The pie chart in Fig 6 shows the
business potential for this customer tier This chart shows a breakdown by product of
individual financial assets As of December 2002 56 of these assets were still held in
cash and deposits NSCrsquos role is to connect these assets with the risk assets 4
Fig6 Individual customer asset allocation
Tier 3 is a group of individuals who are low-value customers for NSC NSC should
provide low price user-friendly system and reliable information to this tier and lead them
to use on-line trading the low cost direct channel
On the other hand we also subdivide corporate customers into three tiers We use the
availability of bond IPO and financing issues as a measurement to divide the three tiers
Tier 1 is a group of companies which can offer bonds to the public or which meet the IPO
standards defined by Tokyo Stock Exchange NSC provides consultation services for
them to realize a low cost procurement of fund and build a good partnership to lead
manage bond and equity issues Since government can issue bond the government is
also included in this tier Tier 2 is a group of companies which have no large issue but
they may have the possibility to grow and result in IPO or MampA Therefore we cannot
easily conclude that NSC should lead them to low cost service channel To assign
companies to this tier NSC has to assess customersrsquo future growth precisely It is
essential to provide the necessary face-to-face financial consultation to maintain a good
relationship with them For Tier 3 with low business potential low price standardized
service can be provided
To summarize the description above the Business Dimension for each of the Customer
Tiers is shown in Table 2 and the Value Proposition for different Customer Tiers is
shown in Table 3
According to this customer segmentation each segment is located in the delta model as
following Fig7
Fig7 Strategic positioning based on our customer segmentation
Table 2 Business Dimension of the Customer Tier
Table 2 Business Dimension of the Customer Tier (Cont)
Table 3 Value Proposition
Table 3 Value Proposition (Cont)
for each division to play its own part towards Japanrsquos revival2
3 Strategic Positioning by using the Delta Model Nomura aims to contribute to Japanrsquos revival by supporting the flow of money between
companies progressing with restructuring and individual investors Its strategy towards
this end is to promote corporate restructuring by providing solutions via capital markets
and encourage the shift of individual financial assets from cash and deposits into higher
risk-return products by supplying diverse products (Ref Fig1)
Fig1 Two corporate objectives of Nomura
2 Investor presentation on May 16 2003 by Nobuyuki Koga President amp CEO Nomura Holdings Inc
The strategic positioning of Nomura is to provide a competitive capital marketplace
bringing together complementary groups of buyers and sellers through Total Customer
Solution based on Horizontal Breadth and Customer Integration and Systems Lock-In by
establishing a Dominant Exchange (Ref Fig2)
Fig2 Strategic positioning Movement of Nomura (Delta Model)
Nomurarsquos business portfolio comprised of Domestic Retail Global Wholesale and Asset
Management divisions Division heads are given discretion to execute business within
the management resources allocated
Business execution is split between the Chief Operating Officer (COO) and Co-COO
To strengthen cooperation among Nomura Group Business Lines and give full scope to
the Grouprsquos collective strength and achieve Horizontal Breadth the COO is responsible
for all three divisions and aims to pursue business that extends beyond Nomurarsquos
business lines (Ref Fig3)3
To promote integrated Group Management for Customer Integration the Co-COO will
advance integrated Nomura Group management transcending legal entities (Ref Fig4)
Nomurarsquos greatest asset is its integrated corporate strength By taking this approach
Nomura aims to break the division-legal entity mould and pursue efforts to enhance
Nomura Grouprsquos collective strength
3 Investor presentation on May 16 2003 by Nobuyuki Koga President amp CEO Nomura Holdings Inc
Nomura should aim to achieve a System Lock-In position through Dominant Exchange by
developing diversified customer-focused products and collaborating with other world wide
players to provide broad investment instruments opportunities and high return on
investments to attract the targeted investorsbuyers The ready pool of investorsbuyers
will further attract companies to approach Nomura to lead manage their capital raising
needs reinforcing the value of the marketplace
Fig4 Customer Integration in Nomura Group
4 Customer Segmentation Thinking about customer segmentation there are basic measurements such as
geography demography psychographics and behavior In this section we define
customer segmentation of NSC Basically customers for securities companies are
divided into two categories 1) individuals 2) corporate and government To analyze the
business we segment customers into the following tiers
Table 1 Customer Segmentation
First we subdivide individuals according to the following Fig5 We adopt 10 million
Japanese Yen as the level to differentiate rich from mass because the amount will be the
cap on the guarantee of full bank savings deposits when the deposit payoff system is
introduced in Japan in the near future We also use 30 million Japanese Yen as the level
to differentiate rich from middle-rich The household expenditure survey conducted by the
Management and Coordination Agency shows that about 15 of households in Japan
has over 30 million Japanese yen saving
Fig5 Individual customer segmentation
We characterize Tier 1 as individuals who are wealthy and have already built asset
These people are relatively few but they invest much money to utilize their own
familiarity with investment method and investment products To meet their demand NSC
has to provide professional know-how to reinforce customer satisfaction by realizing high
performance of investment result Tier 2 is a group of individuals who are not familiar with
investment but have substantial money to invest They are diamonds in the rough but
extremely attractive for NSC Thus NSC should place much emphasis on providing
education services to this tier as a coaching staff for investment Tier 2 customers
currently have much of their asset as cash or deposits The pie chart in Fig 6 shows the
business potential for this customer tier This chart shows a breakdown by product of
individual financial assets As of December 2002 56 of these assets were still held in
cash and deposits NSCrsquos role is to connect these assets with the risk assets 4
Fig6 Individual customer asset allocation
Tier 3 is a group of individuals who are low-value customers for NSC NSC should
provide low price user-friendly system and reliable information to this tier and lead them
to use on-line trading the low cost direct channel
On the other hand we also subdivide corporate customers into three tiers We use the
availability of bond IPO and financing issues as a measurement to divide the three tiers
Tier 1 is a group of companies which can offer bonds to the public or which meet the IPO
standards defined by Tokyo Stock Exchange NSC provides consultation services for
them to realize a low cost procurement of fund and build a good partnership to lead
manage bond and equity issues Since government can issue bond the government is
also included in this tier Tier 2 is a group of companies which have no large issue but
they may have the possibility to grow and result in IPO or MampA Therefore we cannot
easily conclude that NSC should lead them to low cost service channel To assign
companies to this tier NSC has to assess customersrsquo future growth precisely It is
essential to provide the necessary face-to-face financial consultation to maintain a good
relationship with them For Tier 3 with low business potential low price standardized
service can be provided
To summarize the description above the Business Dimension for each of the Customer
Tiers is shown in Table 2 and the Value Proposition for different Customer Tiers is
shown in Table 3
According to this customer segmentation each segment is located in the delta model as
following Fig7
Fig7 Strategic positioning based on our customer segmentation
Table 2 Business Dimension of the Customer Tier
Table 2 Business Dimension of the Customer Tier (Cont)
Table 3 Value Proposition
Table 3 Value Proposition (Cont)
Fig2 Strategic positioning Movement of Nomura (Delta Model)
Nomurarsquos business portfolio comprised of Domestic Retail Global Wholesale and Asset
Management divisions Division heads are given discretion to execute business within
the management resources allocated
Business execution is split between the Chief Operating Officer (COO) and Co-COO
To strengthen cooperation among Nomura Group Business Lines and give full scope to
the Grouprsquos collective strength and achieve Horizontal Breadth the COO is responsible
for all three divisions and aims to pursue business that extends beyond Nomurarsquos
business lines (Ref Fig3)3
To promote integrated Group Management for Customer Integration the Co-COO will
advance integrated Nomura Group management transcending legal entities (Ref Fig4)
Nomurarsquos greatest asset is its integrated corporate strength By taking this approach
Nomura aims to break the division-legal entity mould and pursue efforts to enhance
Nomura Grouprsquos collective strength
3 Investor presentation on May 16 2003 by Nobuyuki Koga President amp CEO Nomura Holdings Inc
Nomura should aim to achieve a System Lock-In position through Dominant Exchange by
developing diversified customer-focused products and collaborating with other world wide
players to provide broad investment instruments opportunities and high return on
investments to attract the targeted investorsbuyers The ready pool of investorsbuyers
will further attract companies to approach Nomura to lead manage their capital raising
needs reinforcing the value of the marketplace
Fig4 Customer Integration in Nomura Group
4 Customer Segmentation Thinking about customer segmentation there are basic measurements such as
geography demography psychographics and behavior In this section we define
customer segmentation of NSC Basically customers for securities companies are
divided into two categories 1) individuals 2) corporate and government To analyze the
business we segment customers into the following tiers
Table 1 Customer Segmentation
First we subdivide individuals according to the following Fig5 We adopt 10 million
Japanese Yen as the level to differentiate rich from mass because the amount will be the
cap on the guarantee of full bank savings deposits when the deposit payoff system is
introduced in Japan in the near future We also use 30 million Japanese Yen as the level
to differentiate rich from middle-rich The household expenditure survey conducted by the
Management and Coordination Agency shows that about 15 of households in Japan
has over 30 million Japanese yen saving
Fig5 Individual customer segmentation
We characterize Tier 1 as individuals who are wealthy and have already built asset
These people are relatively few but they invest much money to utilize their own
familiarity with investment method and investment products To meet their demand NSC
has to provide professional know-how to reinforce customer satisfaction by realizing high
performance of investment result Tier 2 is a group of individuals who are not familiar with
investment but have substantial money to invest They are diamonds in the rough but
extremely attractive for NSC Thus NSC should place much emphasis on providing
education services to this tier as a coaching staff for investment Tier 2 customers
currently have much of their asset as cash or deposits The pie chart in Fig 6 shows the
business potential for this customer tier This chart shows a breakdown by product of
individual financial assets As of December 2002 56 of these assets were still held in
cash and deposits NSCrsquos role is to connect these assets with the risk assets 4
Fig6 Individual customer asset allocation
Tier 3 is a group of individuals who are low-value customers for NSC NSC should
provide low price user-friendly system and reliable information to this tier and lead them
to use on-line trading the low cost direct channel
On the other hand we also subdivide corporate customers into three tiers We use the
availability of bond IPO and financing issues as a measurement to divide the three tiers
Tier 1 is a group of companies which can offer bonds to the public or which meet the IPO
standards defined by Tokyo Stock Exchange NSC provides consultation services for
them to realize a low cost procurement of fund and build a good partnership to lead
manage bond and equity issues Since government can issue bond the government is
also included in this tier Tier 2 is a group of companies which have no large issue but
they may have the possibility to grow and result in IPO or MampA Therefore we cannot
easily conclude that NSC should lead them to low cost service channel To assign
companies to this tier NSC has to assess customersrsquo future growth precisely It is
essential to provide the necessary face-to-face financial consultation to maintain a good
relationship with them For Tier 3 with low business potential low price standardized
service can be provided
To summarize the description above the Business Dimension for each of the Customer
Tiers is shown in Table 2 and the Value Proposition for different Customer Tiers is
shown in Table 3
According to this customer segmentation each segment is located in the delta model as
following Fig7
Fig7 Strategic positioning based on our customer segmentation
Table 2 Business Dimension of the Customer Tier
Table 2 Business Dimension of the Customer Tier (Cont)
Table 3 Value Proposition
Table 3 Value Proposition (Cont)
To promote integrated Group Management for Customer Integration the Co-COO will
advance integrated Nomura Group management transcending legal entities (Ref Fig4)
Nomurarsquos greatest asset is its integrated corporate strength By taking this approach
Nomura aims to break the division-legal entity mould and pursue efforts to enhance
Nomura Grouprsquos collective strength
3 Investor presentation on May 16 2003 by Nobuyuki Koga President amp CEO Nomura Holdings Inc
Nomura should aim to achieve a System Lock-In position through Dominant Exchange by
developing diversified customer-focused products and collaborating with other world wide
players to provide broad investment instruments opportunities and high return on
investments to attract the targeted investorsbuyers The ready pool of investorsbuyers
will further attract companies to approach Nomura to lead manage their capital raising
needs reinforcing the value of the marketplace
Fig4 Customer Integration in Nomura Group
4 Customer Segmentation Thinking about customer segmentation there are basic measurements such as
geography demography psychographics and behavior In this section we define
customer segmentation of NSC Basically customers for securities companies are
divided into two categories 1) individuals 2) corporate and government To analyze the
business we segment customers into the following tiers
Table 1 Customer Segmentation
First we subdivide individuals according to the following Fig5 We adopt 10 million
Japanese Yen as the level to differentiate rich from mass because the amount will be the
cap on the guarantee of full bank savings deposits when the deposit payoff system is
introduced in Japan in the near future We also use 30 million Japanese Yen as the level
to differentiate rich from middle-rich The household expenditure survey conducted by the
Management and Coordination Agency shows that about 15 of households in Japan
has over 30 million Japanese yen saving
Fig5 Individual customer segmentation
We characterize Tier 1 as individuals who are wealthy and have already built asset
These people are relatively few but they invest much money to utilize their own
familiarity with investment method and investment products To meet their demand NSC
has to provide professional know-how to reinforce customer satisfaction by realizing high
performance of investment result Tier 2 is a group of individuals who are not familiar with
investment but have substantial money to invest They are diamonds in the rough but
extremely attractive for NSC Thus NSC should place much emphasis on providing
education services to this tier as a coaching staff for investment Tier 2 customers
currently have much of their asset as cash or deposits The pie chart in Fig 6 shows the
business potential for this customer tier This chart shows a breakdown by product of
individual financial assets As of December 2002 56 of these assets were still held in
cash and deposits NSCrsquos role is to connect these assets with the risk assets 4
Fig6 Individual customer asset allocation
Tier 3 is a group of individuals who are low-value customers for NSC NSC should
provide low price user-friendly system and reliable information to this tier and lead them
to use on-line trading the low cost direct channel
On the other hand we also subdivide corporate customers into three tiers We use the
availability of bond IPO and financing issues as a measurement to divide the three tiers
Tier 1 is a group of companies which can offer bonds to the public or which meet the IPO
standards defined by Tokyo Stock Exchange NSC provides consultation services for
them to realize a low cost procurement of fund and build a good partnership to lead
manage bond and equity issues Since government can issue bond the government is
also included in this tier Tier 2 is a group of companies which have no large issue but
they may have the possibility to grow and result in IPO or MampA Therefore we cannot
easily conclude that NSC should lead them to low cost service channel To assign
companies to this tier NSC has to assess customersrsquo future growth precisely It is
essential to provide the necessary face-to-face financial consultation to maintain a good
relationship with them For Tier 3 with low business potential low price standardized
service can be provided
To summarize the description above the Business Dimension for each of the Customer
Tiers is shown in Table 2 and the Value Proposition for different Customer Tiers is
shown in Table 3
According to this customer segmentation each segment is located in the delta model as
following Fig7
Fig7 Strategic positioning based on our customer segmentation
Table 2 Business Dimension of the Customer Tier
Table 2 Business Dimension of the Customer Tier (Cont)
Table 3 Value Proposition
Table 3 Value Proposition (Cont)
Fig4 Customer Integration in Nomura Group
4 Customer Segmentation Thinking about customer segmentation there are basic measurements such as
geography demography psychographics and behavior In this section we define
customer segmentation of NSC Basically customers for securities companies are
divided into two categories 1) individuals 2) corporate and government To analyze the
business we segment customers into the following tiers
Table 1 Customer Segmentation
First we subdivide individuals according to the following Fig5 We adopt 10 million
Japanese Yen as the level to differentiate rich from mass because the amount will be the
cap on the guarantee of full bank savings deposits when the deposit payoff system is
introduced in Japan in the near future We also use 30 million Japanese Yen as the level
to differentiate rich from middle-rich The household expenditure survey conducted by the
Management and Coordination Agency shows that about 15 of households in Japan
has over 30 million Japanese yen saving
Fig5 Individual customer segmentation
We characterize Tier 1 as individuals who are wealthy and have already built asset
These people are relatively few but they invest much money to utilize their own
familiarity with investment method and investment products To meet their demand NSC
has to provide professional know-how to reinforce customer satisfaction by realizing high
performance of investment result Tier 2 is a group of individuals who are not familiar with
investment but have substantial money to invest They are diamonds in the rough but
extremely attractive for NSC Thus NSC should place much emphasis on providing
education services to this tier as a coaching staff for investment Tier 2 customers
currently have much of their asset as cash or deposits The pie chart in Fig 6 shows the
business potential for this customer tier This chart shows a breakdown by product of
individual financial assets As of December 2002 56 of these assets were still held in
cash and deposits NSCrsquos role is to connect these assets with the risk assets 4
Fig6 Individual customer asset allocation
Tier 3 is a group of individuals who are low-value customers for NSC NSC should
provide low price user-friendly system and reliable information to this tier and lead them
to use on-line trading the low cost direct channel
On the other hand we also subdivide corporate customers into three tiers We use the
availability of bond IPO and financing issues as a measurement to divide the three tiers
Tier 1 is a group of companies which can offer bonds to the public or which meet the IPO
standards defined by Tokyo Stock Exchange NSC provides consultation services for
them to realize a low cost procurement of fund and build a good partnership to lead
manage bond and equity issues Since government can issue bond the government is
also included in this tier Tier 2 is a group of companies which have no large issue but
they may have the possibility to grow and result in IPO or MampA Therefore we cannot
easily conclude that NSC should lead them to low cost service channel To assign
companies to this tier NSC has to assess customersrsquo future growth precisely It is
essential to provide the necessary face-to-face financial consultation to maintain a good
relationship with them For Tier 3 with low business potential low price standardized
service can be provided
To summarize the description above the Business Dimension for each of the Customer
Tiers is shown in Table 2 and the Value Proposition for different Customer Tiers is
shown in Table 3
According to this customer segmentation each segment is located in the delta model as
following Fig7
Fig7 Strategic positioning based on our customer segmentation
Table 2 Business Dimension of the Customer Tier
Table 2 Business Dimension of the Customer Tier (Cont)
Table 3 Value Proposition
Table 3 Value Proposition (Cont)
Table 1 Customer Segmentation
First we subdivide individuals according to the following Fig5 We adopt 10 million
Japanese Yen as the level to differentiate rich from mass because the amount will be the
cap on the guarantee of full bank savings deposits when the deposit payoff system is
introduced in Japan in the near future We also use 30 million Japanese Yen as the level
to differentiate rich from middle-rich The household expenditure survey conducted by the
Management and Coordination Agency shows that about 15 of households in Japan
has over 30 million Japanese yen saving
Fig5 Individual customer segmentation
We characterize Tier 1 as individuals who are wealthy and have already built asset
These people are relatively few but they invest much money to utilize their own
familiarity with investment method and investment products To meet their demand NSC
has to provide professional know-how to reinforce customer satisfaction by realizing high
performance of investment result Tier 2 is a group of individuals who are not familiar with
investment but have substantial money to invest They are diamonds in the rough but
extremely attractive for NSC Thus NSC should place much emphasis on providing
education services to this tier as a coaching staff for investment Tier 2 customers
currently have much of their asset as cash or deposits The pie chart in Fig 6 shows the
business potential for this customer tier This chart shows a breakdown by product of
individual financial assets As of December 2002 56 of these assets were still held in
cash and deposits NSCrsquos role is to connect these assets with the risk assets 4
Fig6 Individual customer asset allocation
Tier 3 is a group of individuals who are low-value customers for NSC NSC should
provide low price user-friendly system and reliable information to this tier and lead them
to use on-line trading the low cost direct channel
On the other hand we also subdivide corporate customers into three tiers We use the
availability of bond IPO and financing issues as a measurement to divide the three tiers
Tier 1 is a group of companies which can offer bonds to the public or which meet the IPO
standards defined by Tokyo Stock Exchange NSC provides consultation services for
them to realize a low cost procurement of fund and build a good partnership to lead
manage bond and equity issues Since government can issue bond the government is
also included in this tier Tier 2 is a group of companies which have no large issue but
they may have the possibility to grow and result in IPO or MampA Therefore we cannot
easily conclude that NSC should lead them to low cost service channel To assign
companies to this tier NSC has to assess customersrsquo future growth precisely It is
essential to provide the necessary face-to-face financial consultation to maintain a good
relationship with them For Tier 3 with low business potential low price standardized
service can be provided
To summarize the description above the Business Dimension for each of the Customer
Tiers is shown in Table 2 and the Value Proposition for different Customer Tiers is
shown in Table 3
According to this customer segmentation each segment is located in the delta model as
following Fig7
Fig7 Strategic positioning based on our customer segmentation
Table 2 Business Dimension of the Customer Tier
Table 2 Business Dimension of the Customer Tier (Cont)
Table 3 Value Proposition
Table 3 Value Proposition (Cont)
Fig6 Individual customer asset allocation
Tier 3 is a group of individuals who are low-value customers for NSC NSC should
provide low price user-friendly system and reliable information to this tier and lead them
to use on-line trading the low cost direct channel
On the other hand we also subdivide corporate customers into three tiers We use the
availability of bond IPO and financing issues as a measurement to divide the three tiers
Tier 1 is a group of companies which can offer bonds to the public or which meet the IPO
standards defined by Tokyo Stock Exchange NSC provides consultation services for
them to realize a low cost procurement of fund and build a good partnership to lead
manage bond and equity issues Since government can issue bond the government is
also included in this tier Tier 2 is a group of companies which have no large issue but
they may have the possibility to grow and result in IPO or MampA Therefore we cannot
easily conclude that NSC should lead them to low cost service channel To assign
companies to this tier NSC has to assess customersrsquo future growth precisely It is
essential to provide the necessary face-to-face financial consultation to maintain a good
relationship with them For Tier 3 with low business potential low price standardized
service can be provided
To summarize the description above the Business Dimension for each of the Customer
Tiers is shown in Table 2 and the Value Proposition for different Customer Tiers is
shown in Table 3
According to this customer segmentation each segment is located in the delta model as
following Fig7
Fig7 Strategic positioning based on our customer segmentation
Table 2 Business Dimension of the Customer Tier
Table 2 Business Dimension of the Customer Tier (Cont)
Table 3 Value Proposition
Table 3 Value Proposition (Cont)
According to this customer segmentation each segment is located in the delta model as
following Fig7
Fig7 Strategic positioning based on our customer segmentation
Table 2 Business Dimension of the Customer Tier
Table 2 Business Dimension of the Customer Tier (Cont)
Table 3 Value Proposition
Table 3 Value Proposition (Cont)
Table 2 Business Dimension of the Customer Tier
Table 2 Business Dimension of the Customer Tier (Cont)
Table 3 Value Proposition
Table 3 Value Proposition (Cont)
Table 2 Business Dimension of the Customer Tier (Cont)
Table 3 Value Proposition
Table 3 Value Proposition (Cont)
Table 3 Value Proposition (Cont)
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