Mazda 2016 Annual Report Download - page 48

6. Procurement of Materials and Components
The Group relies on numerous suppliers outside the Group for the procurement of materials
and components.
For that reason, the Group may face diffi culties in procuring the necessary level of
materials and components for volume production, due to supply constraints or reduced logis-
tics functions in the event of these suppliers being affected by a disaster, due to tight supply
balances, or due to changes to 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 compo-
nents be of insuffi cient quality, the possibility 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 products 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 technol-
ogies 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 property rights. Nonetheless,
should differences in recognition or opinion lead to a disputed infringement of third-party
intellectual property 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 business
results and fi nancial position.
The Group’s intellectual property is not subject 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 litiga-
tion, 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 position 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 manufacturing sites and other important facilities against
fi re and earthquakes, the Group has concluded natural disaster insurance contracts and taken
other steps to minimize the fi nancial risk of such events. However, the ability of the Group to
supply products may be severely disrupted in the event of a major natural disaster, such as an
earthquake, typhoon, fl ood, or fi re or other accident, which could adversely affect the Group’s
business results and fi nancial position.
Business Risks
MAZDA ANNUAL REPORT 2016
Financial Section
Message from
Management
Review of Operations
Drivers of Value Creation
Foundations Underpinning
Sustainable Growth
Contents