Panasonic 2006 Annual Report Download - page 39

exchange controls, and changes in the tax system or rate of taxa-
tion in countries where Matsushita operates businesses. With
respect to products exported overseas, tariffs, other barriers or
shipping costs may make Matsushita’s products less competitive
in terms of price. Expanding its overseas business may require
significant investments long before Matsushita realizes returns on
such investments, and increased investments may result in
expenses growing at a faster rate than revenues.
Matsushita may not be able to keep pace with technologi-
cal changes and develop new products and services in a
timely manner to remain competitive
Matsushita may fail to introduce new products and services in
response to technological changes in a timely manner despite its
efforts to develop new products and services continuously. Some
of Matsushita’s core businesses, such as consumer digital elec-
tronics and key components and devices, are concentrated in
industries where technological innovation is the central competitive
factor. Matsushita continuously faces the challenge of developing
and introducing viable and innovative new products. Matsushita
must predict with reasonable accuracy both future demand and
new technologies that will be available to meet such demand. If
Matsushita fails to do so, it will not be able to compete in new
markets.
Matsushita may not be able to develop product formats
that can prevail as de facto standards
Matsushita has been forming alliances and partnerships with other
major manufacturers to strengthen technologies and the develop-
ment of product formats, such as next-generation home and mobile
networking products, data storage devices, and software systems.
Despite these efforts, Matsushita’s competitors may succeed in
developing de facto standards for future products before
Matsushita. In such cases, the Company’s competitive position,
operating results and financial condition could be adversely affected.
Matsushita may not be able to successfully recruit
and retain skilled employees, particularly scientific,
technical and management professionals
Matsushita’s future success depends largely on its ability to attract
and retain certain key personnel, including scientific, technical and
management professionals. Matsushita anticipates that it will need
to hire additional skilled personnel in all areas of its business.
Industry demand for such employees, however, exceeds the
number of personnel available, and the competition for attracting
and retaining these employees is intense. Because of this intense
competition for skilled employees, Matsushita may be unable to
retain its existing personnel or attract additional qualified employ-
ees to keep up with future business needs. If this should happen,
Matsushita’s future growth, operating results and financial condi-
tion could be adversely affected.
Alliances with, and strategic investments in, third
parties undertaken by Matsushita may not produce
positive results
Matsushita develops its business by forming alliances or joint ven-
tures with, and making strategic investments in, other companies,
including investments in venture companies. Furthermore, the
strategic importance of partnering with third parties is increasing.
In some cases, such partnerships are crucial to Matsushita’s goal
of introducing new products and services, but Matsushita may not
be able to successfully collaborate or achieve expected synergies
with its partners. Matsushita does not, however, control these
partners, who may make decisions regarding their business
undertakings with Matsushita that may be contrary to Matsushita’s
interests. In addition, if these partners change their business
strategies, Matsushita may fail to maintain these partnerships.
Matsushita is dependent on the ability of third parties to
deliver parts, components and services in adequate quality
and quantity in a timely manner, and at a reasonable price
Matsushita’s manufacturing operations depend on obtaining raw
materials, parts and components, equipment and other supplies
including services from reliable suppliers in adequate quality and
quantity in a timely manner. It may be difficult for Matsushita to
substitute one supplier for another, increase the number of suppli-
ers or change one component for another in a timely manner or at
all due to the interruption of supply or increased industry demand.
This may adversely affect the Matsushita Group’s operations.
Although Matsushita decides purchase prices by contract, the
prices of raw materials including oil, parts and components, may
increase due to changes in supply and demand. Some compo-
nents are only available from a limited number of suppliers, which
also may adversely affect Matsushita’s operations.
Matsushita is exposed to the risk that its customers may
encounter financial difficulties
Many of Matsushita’s customers purchase products and services
on payment terms that do not provide for immediate payment. If
customers from whom Matsushita has substantial accounts
receivable encounter financial difficulties and are unable to make
payments on time, Matsushita’s business, operating results and
financial condition could be adversely affected.
Risks Related to Matsushita’s Management Plans
Matsushita has implemented its new mid-term management
plan “Leap Ahead 21” (announced on January 9, 2004) for the
three-year term ending March 2007. Matsushita’s business vision
focuses on “realizing a ubiquitous networking society” and “con-
tributing to coexistence with the global environment” through
cutting-edge technologies. Based on this vision, Matsushita aims
to become a company that creates more value for customers.
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Matsushita Electric Industrial Co., Ltd. 2006