Honda 2008 Annual Report Download - page 38

2. Honda is reliant on the protection and preservation of
its intellectual property
Honda owns or otherwise has rights in a number of patents and
trademarks relating to the products it manufactures, which have
been obtained over a period of years. These patents and trade-
marks have been of value in the growth of Honda’s business and
may continue to be of value in the future. Honda does not regard
any of its businesses as being dependent upon any single patent
or related group of patents. However, an inability to protect this
intellectual property generally, or the illegal breach of some or a
large group of Honda’s intellectual property rights, would have an
adverse effect on Honda’s operations.
3. Honda is subject to legal proceedings
Honda is subject to a number of suits, investigations and/or pro-
ceedings under relevant laws and regulations of various jurisdic-
tions. A negative outcome in one or more of these pending legal
proceedings could adversely affect Honda’s business, financial
condition or results of operations.
1. Honda’s financial services business conducts business
under highly competitive conditions in an industry with
inherent risks
Honda’s financial services business offers various financing plans
designed to increase the opportunity for sales of its products
and to generate financing income. However, customers can also
obtain financing for the lease or purchase of Honda’s products
through a variety of other sources that compete with our financ-
ing services, including commercial banks and finance and leasing
companies. The financial services offered by us also involve risks
relating to residual value, credit risk and cost of capital. Competi-
tion for customers and/or these risks may affect Honda’s results
of operations in the future.
2. Honda relies on various suppliers for the provision of
certain raw materials and components
Honda purchases raw materials, and certain components and
parts, from numerous external suppliers, and relies on some key
suppliers for some items and the raw materials it uses in the man-
ufacture of its products. Honda’s ability to continue to obtain these
supplies in an efficient and cost-effective manner is subject to a
number of factors, some of which are not within Honda’s control.
These factors include the ability of its suppliers to provide a con-
tinued source of supply and Honda’s ability to compete with other
users in obtaining the supplies. Loss of a key supplier in particular
may affect our production and increase our costs.
3. Honda conducts its operations in various regions
of the world
Honda conducts its businesses worldwide, and in several coun-
tries, Honda conducts businesses through joint ventures with local
entities, in part due to the legal and other requirements of those
countries. These businesses are subject to various regulations,
including the legal and other requirements of each country. If these
regulations or the business conditions or policies of these local en-
tities change, it may have an adverse affect on Honda’s business,
financial condition or results of operations.
4. Honda may be adversely affected by wars, use of
force by foreign countries, terrorism, multinational conflicts,
natural disasters, epidemics and labor strikes
Honda conducts its businesses worldwide, and its operations may
variously be subject to wars, use of force by foreign countries, ter-
rorism, multinational conflicts, natural disasters, epidemics, labor
strikes and other events beyond our control which may delay or
disrupt Honda’s local operations in the affected regions, including
the purchase of raw materials and parts, the manufacture, sales
and distribution of products and the provision of services. Delays
or disruptions in one region may in turn affect our global opera-
tions. If such delay or disruption occurs and continues for a long
period of time, Honda’s business, financial condition or results of
operations may be adversely affected.
5. Honda may be adversely affected by inadvertent
disclosure of confidential information
Although Honda maintains internal controls through established
procedures to keep confidential information including personal
information of its customers and relating parties, such informa-
tion may be inadvertently disclosed. If this occurs, Honda may be
subject to, and may be adversely affected by, claims for damages
from the customers or parties affected. Also, inadvertent disclo-
sure of confidential business or technical information to third par-
ties may result in a loss of Honda’s competitiveness.
Risk Factors
Risks Relating to Honda’s Operations
Annual Report 2008
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