Honda 2011 Annual Report Download - page 36

Honda’s financial services business offers various financing plans to its customers 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 financing services, including commercial banks
and finance and leasing companies. The financial services offered by us also involve credit risk
as well as risks relating to lease residual values, cost of capital and access to funding. Competi-
tion for customers and/or these risks may affect Honda’s results of operations in the future.
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
manufacture 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 continued 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.
Honda conducts its businesses worldwide, and in several countries, 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 entities change, it may have an adverse affect on Honda’s business, financial condi-
tion or results of operations.
Honda conducts its businesses worldwide, and its operations may variously be subject to wars,
use of force by foreign countries, terrorism, multinational conflicts, political uncertainty, 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 operations. 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.
Although Honda maintains internal controls through established procedures to keep confi-
dential information including personal information of its customers and relating parties, such
information 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, inadvert-
ent disclosure of confidential business or technical information to third parties may result in a
loss of Honda’s competitiveness.
Honda may be
adversely affected
by inadvertent
disclosure of
confidential
information
Honda relies on
various suppliers
for the provision of
certain raw materials
and components
2.
5.
Honda conducts
its operations in
various regions
of the world
3.
Honda may be adversely
affected by wars, use of
force by foreign countries,
terrorism, multinational
conflicts, political
uncertainty, natural
disasters, epidemics and
labor strikes
4.
Honda’s financial
services business
conducts business
under highly
competitive conditions
in an industry with
inherent risks
1.
— Risks Relating to Honda‘s Operations —
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