Konica Minolta 2013 Annual Report Download - page 23

Business Risks
Of the business operations and accounting status described in
the Group’s Securities Report, the following risks could have a
signifi cant effect on the judgment of investors in the Group.
Further, the forward-looking statements in the following section
are the Group’s judgments as of June 20, 2013.
Economic Risks
(1) Economic Trends in Primary Markets
The Group provides MFPs, production printing equipment, image
input/output components, display materials, products and
equipment for use in healthcare, and related services to
customers worldwide. Economic conditions in national markets
signifi cantly affect sales and earnings in these businesses.
Ongoing risks of concern in the global economy include the
protracted uncertainty about the economy in Europe, which is
experiencing fi scal problems, a slowdown of growth in the
Chinese economy and monetary policy revisions in leading
countries. Recessions in national markets that cause customers
to restrain investment, reduce operating expenses or reduce
consumption could adversely affect the Group’s results or
fi nances in ways such as causing inventories to increase,
reducing sales prices by increasing competition, or reducing
sales volume.
(2) Changes in Exchange Rates
The Group ameliorates the impact of exchange rates by
conducting hedging transactions centered on futures contracts
for major currencies including the U.S. dollar and the euro. In
addition, the impact of U.S. dollar-denominated procurement for
the MFPs, printers and production printing equipment the
Business Technologies Business produces in China is light
because it is basically offset by sales and payables in regions
where sales are denominated in U.S. dollars. However,
fl uctuations in euro exchange rates directly impact earnings.
Generally, yen appreciation versus the U.S. dollar and euro
negatively affects results, while yen depreciation versus these
currencies positively affects results.
Industry and Business Activity Risks
(3) Competition in Technology Innovation
The ability to innovate faster than other companies is the primary
source of competitive advantage in the Group’s core businesses
including MFPs, production printing equipment and other
information equipment, TAC polarizing fi lm for LCDs, and pickup
lenses for optical disks, and in the Group’s key areas for future
development including organic electroluminescent (EL) lighting.
The Group continually takes on the challenge of innovative
technology development and invests aggressively in R&D and
facilities, but these efforts may not be timely enough. Moreover,
competitors may develop similar or alternative technologies
more quickly. Accurately determining new directions in
technology innovation to meet customer needs is crucial, and
failure to do so could reduce the Group’s competitiveness in its
core and new businesses.
(4) Operating Environment in the Equipment and
Service Businesses
Solution and service needs are increasing in conjunction with
rising demand for high-value-added products that are
networked and multifunctional, including information equipment
such as MFPs, printers and production printing equipment, and
healthcare equipment. In addition, companies are strengthening
their sales channels through acquisitions, reorganization and
alliances with IT companies, particularly in the information
equipment industry. Competition among manufacturers and
distributors that respond to this trend is expected to further
intensify competition within the industry.
The Group operates under a policy of being the genre
leader in its Business Technologies Business, the Group’s
largest business and growth driver. The Group led the industry
in concentrating resources to expand its offi ce-use color MFP
and production printing equipment businesses, thus
establishing itself as the leading Group in European and North
American markets. However, the Group cannot guarantee
continued competitive advantage because technological
innovation is rapid in this fi eld and the importance of the
solutions and services business is further increasing. Slower
growth resulting from inability to maintain competitiveness in
technology and sales channels in the Business Technologies
Business could adversely affect the Group’s results. Moreover,
restrained corporate investment or cost reductions could cause
installation of new MFPs to decrease, which could adversely
affect the Group’s results in the future.
(5) Operating Environment in the Industrial
Business
The Industrial Business supplies components and materials for
LCD televisions, DVD and HDD products, and other products in
the digital home appliance market. Selling prices continue to
trend downward due to intense competition among
manufacturers in this market, which affects component and
material suppliers such as the Group. At the same time, shorter
product lifecycles require component and material manufacturers
to sell mass-produced products in a short time. Rapid changes
in supply and demand due to production adjustments caused by
market competition could adversely affect the Group’s results.
In addition, the Industrial Business’s major customers are
digital home appliance manufacturers. Rapid changes in demand
or decreases in prices in addition to failure to respond suffi ciently
to the industry trends the Group identifi es, such as global
reorganization of the digital home appliance industry or next-
generation products, could result in loss of customers and
adversely affect the Group’s results.
財務分析
Management’s Discussion and Analysis
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