Panasonic 2008 Annual Report Download - page 61

Risks Related to Matsushita’s Management Plans
Matsushita is implementing its mid-term management plan
called GP3 (announced on January 10, 2007), which will run
from fiscal 2008 to fiscal 2010. Under this plan, Matsushita
aims to achieve sales of ¥10 trillion and ROE of 10% in fiscal
2010 by achieving steady growth with profitability. Furthermore,
in line with its twin corporate visions under this plan of “contrib-
uting to realizing a ubiquitous networking society” and “coexis-
tence with the global environment,” Matsushita aims to earn the
support of all its stakeholders worldwide by sustaining growth
through continued innovation and ensuring sound business
activities on a global basis. Another way is by setting a target of
reducing total global CO2 emissions during the plan by 300,000
tons compared with fiscal 2007 at Matsushita’s manufacturing
operations worldwide through environmental initiatives. Due
mainly to the various risk factors described in this section,
Matsushita may not be successful in achieving all the goals set
out in its mid-term management plan. In addition, Matsushita
may not be able to improve efficiency or realize growth through
these measures due to the increased costs arising from unex-
pected additional reorganization or restructuring, improper
allocation of operational resources or other unpredictable fac-
tors. Also, Matsushita announced on April 28, 2008, its annual
forecast and major initiatives for the year ending March 31,
2009. However, Matsushita may not be successful in achieving
all the targets or in realizing the expected benefits because of
various external and internal factors.
Risks Related to Legal Restrictions and Litigations
Matsushita may be subject to product liability or
warranty claims that could result in significant direct or
indirect costs
The occurrence of defects in Matsushita products could make
Matsushita liable for damages not covered by product and
completed operation liability insurance, whereby the Company
could incur significant expenses. Due to negative publicity
concerning these problems, Matsushita’s business, operating
results and financial condition may be adversely affected.
Matsushita may fail to protect its proprietary intellectual prop-
erties, or face claims of intellectual property infringement by a
third party, and may lose its intellectual property rights on key
technologies or be liable for significant damages
Matsushita’s success depends on its ability to obtain intellectual
property rights covering its products and product design.
Patents may not be granted or may not be of sufficient scope
or force to provide Matsushita with adequate protection or
commercial advantage. In addition, effective copyright and
trade secret protections may be unavailable or limited in some
countries in which Matsushita operates. Competitors or other
third parties may also develop technologies that are protected
by patents and other intellectual property rights, which make
such technologies unavailable or available only on terms
unfavorable to Matsushita. The Company obtains licenses for
intellectual property rights from other parties; however, such
licenses may not be available at all or on acceptable terms in
the future. Litigation may also be necessary to enforce
Matsushita’s intellectual property rights or to defend against
intellectual property infringement claims brought against
Matsushita by third parties. In such cases, Matsushita may
incur significant expenses for such lawsuits. Furthermore,
Matsushita may be prohibited from using certain important
technologies or liable for damages in cases of admitted viola-
tions of intellectual property rights of others.
Changes in accounting standards and tax systems may
adversely affect Matsushita’s financial results and condition
Introduction of new accounting standards or tax systems, or
changes thereof, which Matsushita cannot predict, may have
a material adverse effect on the Company’s operating results
and financial condition. In addition, if tax authorities have
different opinions from Matsushita on the Company’s tax
declarations, Matsushita may need to make larger tax pay-
ments than estimated.
Payments or compensation related to environmental
regulations or issues may adversely affect Matsushita’s
business, operating results and financial condition
Matsushita is subject to environmental regulations such as
those relating to air pollution, water pollution, elimination of
hazardous substances, waste management, product recycling,
and soil and groundwater contamination, and may be held
responsible for certain related payments or compensation.
Furthermore, if these regulations become stricter and an addi-
tional duty of eliminating the use of environmentally hazardous
materials is imposed, or if the Company determines that it is
necessary and appropriate, from the viewpoint of corporate
social responsibility, to respond to environmental issues, the
payment of penalties for the violation of these regulations or
voluntary payment of compensation for consolation to parties
affected by such issues may adversely affect Matsushita’s
business, operating results and financial condition.
Leaks of confidential information may adversely affect
Matsushita’s business
In the normal course of business, Matsushita holds confidential
information mainly about customers regarding credit worthi-
ness and other information, as well as confidential information
about companies and other third parties. Such information
may be leaked due to an accident or other inevitable cause,
and any material leakage of confidential information may result
in significant expense for related lawsuits and adversely affect
Matsushita’s business and image. Moreover, there is a risk that
Matsushita’s trade secrets may be leaked by illegal conduct or
by mere negligence of external parties, etc. If such is the case,
Matsushita’s business, operating results and financial condition
may be adversely affected.
Matsushita Electric Industrial Co., Ltd. 2008 59