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 percent
Our 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 percent
Profitability is achieved through a combination of growth, price management and
cost efficiency.
Return on capital employed 20 percent
Return 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, electromechanical 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 focus
We focus on meeting or exceeding our customers expectations with our products
and services
Product driven
We 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 people
We 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 market
ASSA 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 operating 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, 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 and convenience perspective.

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