Mazda 2015 Annual Report Download - page 42

and breaches of supply contracts.
Should the Group be unable to absorb the
effects of any increases in the prices of the
materials being procured by the Company—for
example, by making internal efforts to boost
productivity or passing on price rises to
customers—or should procured materials and
components be of insuffi cient quality, the pos-
sibility exists of a deterioration in output or
higher costs, which could adversely affect the
Group’s business results and fi nancial position.
7. International Business Activities
In addition to Japan, the Group sells its prod-
ucts and carries out business activities in
markets in all parts of the world, including
the United States and Europe, as well as
developing and emerging markets overseas.
In these international markets, the Group is
subject to the following potential risks, which
could affect the Group’s business results and
fi nancial position if manifested:
• Adverse political and economic developments
• Impediments arising from changes in laws
and regulations
• Import / export regulations, such as tariffs,
detrimental taxes, and other regulations
• Diffi culties in attracting and securing personnel
• Undeveloped infrastructure
• Strikes and other labor disputes
• Terrorist incidents, war, disease, and other
factors leading to social disorder
8. Protection of Intellectual Property
In order to maintain competitiveness, the
Group is working to accumulate and protect
technologies and expertise that help it to
develop unique products. At the same time,
the Group is taking steps to prevent the
infringement of third-party intellectual prop-
erty rights. Nonetheless, should differences
in recognition or opinion lead to a disputed
infringement of third-party intellectual prop-
erty rights that results in the Group being
forced to halt the production and sale of
products, or needing to pay damages, this
could also adversely affect the Group’s busi-
ness results and fi nancial position.
The Group’s intellectual property is not sub-
ject to complete protection in certain regions.
In the event that third parties use the Group’s
intellectual property rights on an unauthorized
basis to produce similar products, the Group
may have to pay substantial expenses for liti-
gation, or experience a decline in sales due to
an inability to offer unique products. This could
adversely affect the Group’s business results
and fi nancial position.
9. Product Quality
While striving to improve the quality of its
products to meet the requirements of the
market, the Group also does its utmost to
ensure the safety of its products. However,
should a defect develop in a product due to
unforeseen circumstances or a large-scale
recall occur, this could adversely affect the
Group’s business results and fi nancial posi-
tion due to such factors as the incurring of
signifi cant costs, the Group’s diminished
brand image, and loss of market trust.
10. Natural Disasters and Accidents
In addition to measures to protect its manu-
facturing sites and other important facilities
against fi re and earthquakes, the Group has
concluded natural disaster insurance con-
tracts and taken other steps to minimize the
fi nancial risk of such events. However, the abil-
ity of the Group to supply products may be
severely disrupted in the event of a major
natural disaster, such as an earthquake, ty-
phoon, or fl ood, or fi re or other accident,
which could adversely affect the Group’s busi-
ness results and fi nancial position.
11. Dependence on Information Technology
In the course of various business activities
such as development, production, and sales of
products, the Group utilizes information tech-
nology, networks, and systems. The Group’s
products are also equipped with these tech-
nologies, including driving support system,
etc. Despite countermeasures implemented in
information technology, networks, and sys-
tems to allow safe operations, such factors as
failures in infrastructure, cyberattacks, and
infection by computer viruses may result in
suspension of business activities, loss of data,
and deterioration in product functions. Should
these events occur, the Group’s business
results and fi nancial position could be
adversely affected due to the incurring of
costs associated with countermeasures, loss
of product credibility, and damage to the
brand image, etc.
Mazda Annual Report 2015
40
C
CONTENTS
Growth Strategy
Message from Management
Introduction
Review of Operations
Foundations Underpinning
Sustainable Growth