Mazda 2015 Annual Report Download - page 41

Business Risks
Signifi cant risks that could affect the Mazda
Group’s business results and fi nancial posi-
tion include those listed below.
This list, however, shows the main risks
anticipated at the end of the fi scal year ended
March 31, 2015, and does not represent a
comprehensive list of all the risks faced by
the Group. The forward-looking statements in
this section are based on the judgments of
the Group as of the end of the fi scal year
ended March 31, 2015.
1. Economic Conditions Impacting the
Mazda Group
Selling its products in Japan and other parts of
the world, including in North America, Europe,
and Asia, the Group is greatly impacted by eco-
nomic trends and fl uctuations in demand in
each of its markets. Therefore, the Group’s
business results and fi nancial position could be
adversely affected by, for example, an eco-
nomic downturn, recession, changes in demand
structure, declining demand, and intensifying
price competition in its main markets.
2. Fluctuations in Exchange Rates
The Group is engaged in business activities on
a global scale. The Group not only exports
products from Japan to other parts of the
world but also exports products manufactured
at overseas plants to other markets in the
world. These transactions are conducted in
various currencies, and consequently its busi-
ness results and fi nancial position are exposed
to the effects of fl uctuations in exchange
rates. In addition, as overseas assets and liabil-
ities denominated in local currencies are
translated into yen, there could be an adverse
effect on shareholders’ equity through foreign
currency translation adjustments due to
exchange rate fl uctuations.
The Group uses forward-exchange con-
tracts and other instruments to minimize the
impact of short-term exchange rate risk.
However, depending on the circumstances of
fl uctuations in exchange rates, loss of oppor-
tunity could be generated.
3. Alliances and Joint Ventures
The Group is performing or examining joint
activities with other companies under tech-
nology alliances, joint ventures, and in other
forms with respect to the development, pro-
duction, and sales of products. These joint
activities are designed to optimize resources,
facilitate their prioritization, and generate
synergies. However, in the event of a dis-
agreement over management, fi nancial, or
other matters between the parties involved,
or in the event that the expected results were
not produced due to such factors as changes
to or terminations of alliances and joint ven-
tures, the Group’s business results and fi nan-
cial position could be adversely affected. In
addition, unintended changes to or termina-
tions of alliances and joint ventures could
have an adverse effect on the Group’s busi-
ness results and fi nancial position.
4. Statutory Regulations Covering the
Environment
In addition to being subject to environmental
regulations pertaining to fuel consumption
and exhaust emissions, automobile safety,
and the pollutant emission levels from manu-
facturing plants, the Group’s operations in
each country where it does business are also
subject to various statutory regulations, such
as labor regulations.
Going forward, the Group’s business results
and fi nancial position could be adversely
affected by the increased costs associated with
more stringent statutory regulations.
5. Market Competitiveness
The Group competes with a large number of
companies in automobile markets in all parts
of the world. Maintaining and enhancing the
Group’s ability to compete in these markets,
which includes maintaining and developing
Mazda brand value, is crucial to ensuring
growth. Consequently, the Group is imple-
menting a range of initiatives to boost its
competitiveness in product development,
manufacturing, sales, and other areas.
However, the Group’s business results and
fi nancial position could be affected in the
event that it fails to launch appealing prod-
ucts at opportune times, due to a failure to
accurately ascertain market trends or as a
result of issues related to technological capa-
bilities and manufacturing. The same holds
true if the Group fails to take effective steps
to respond to customer values or changes
thereof, including declines in market share or
product prices, through its dealership net-
work or sales methods.
6. Procurement of Materials and Components
The Group relies on numerous suppliers out-
side the Group for the procurement of mate-
rials and components.
For that reason, the Group may face diffi -
culties in procuring the necessary level of
materials and components for volume pro-
duction, due to supply constraints or reduced
logistics functions in the event of these sup-
pliers being affected by a disaster, due to
tight supply balances, or due to changes to
Mazda Annual Report 2015
39
C
CONTENTS
Growth Strategy
Message from Management
Introduction
Review of Operations
Foundations Underpinning
Sustainable Growth