Suzuki 2012 Annual Report Download - page 31

Financial review
SUZUKI MOTOR CORPORATION 29
4. Risks in operations
Risks that may affect the management results, stock price and financial situation of the Group include the followings.
Matters in relation to the future mentioned in this section are based on our conclusions as of March 31, 2012.
Risk relating to markets
(1) Change in economic situations, demand fluctuation in the markets
The long term economic slowdown, world economic deterioration and financial crisis, and the reduced buying motivation of the
consumers may lead to a substantially reduced demand for the products of the Group including motorcycles, automobiles and
outboard motors.
In addition, we conduct businesses around the world, and our dependency on the overseas manufacturing plants especially in
the developing countries of the Asian regions has been increasing over the years. The unexpected situation in these markets
such as the rapid change in the economic situations may affect the performance of the Group. Further, unexpected change or
new application of tax systems in each country may also affect the performance and financial conditions of the Group.
(2) Severer competitions with other companies
We are facing competitions with rival companies in every global market where we conduct our businesses. Competitions may
get harder if the globalization of the world’s automobiles and motorcycles industries is further promoted. Competitions with other
companies include various aspects such as product quality, safety, price, environmental performance, as well as efficiency of
product development and manufacturing system, establishment of sales and service systems and sales finance.
We will make further efforts for maintaining and improving our competitive edges, but there may be risks that impede our com-
petitive advantages.
Risk relating to business
(1) New product development and launching abilities
It is very important for an automobile and motorcycle manufacturer to correctly understand customer needs and to develop and
launch to the market new attractive products that satisfy the customers in a timely manner. It has become more important than
ever to understand customer needs that rapidly change, such as the reduced demands caused by domestic and overseas eco-
nomic slowdown and the increased interest in the environmental performance.
In addition, for launching of new products, specific product development abilities as well as abilities to continually manufacture
products will be required in addition to appropriately understanding customer needs.
However, even if we are able to appropriately understand the customer needs, there may be possibilities that we are unable to
develop new products matching the customer needs in a timely manner on account of technical abilities, procurement of parts,
production capabilities and other factors. If we are unable to launch products matching the customer needs to the market in a
timely manner, the sales share and sales may be reduced, which may adversely affect the performance and financial conditions
of the Group.
(2) Change in product prices and purchase prices, dependence on specific suppliers
Various factors including a rapid change in demands, insufficient supply or price rise of specific parts and raw materials, un-
stable economic conditions, revisions of import regulations and harder price competition may rapidly change the product prices
and purchase prices of the Group. There is no guarantee that such rapid price change does not last long or such change does
not occur in the markets where there have not been such changes so far. Rapid changes in product prices and purchase prices
may adversely affect the performance and financial positions of the Group in any market where we conduct our businesses.
In addition, the procurement of some of the parts has been limited to specific suppliers on account of technical abilities, quality,
and price competitiveness. If we are unable to obtain the parts continuously and stably on account of unforeseeable accidents of
the suppliers, it may adversely affect the performance and financial conditions of the Group.
(3) Business development in various countries in the world
We have been conducting our businesses in various countries in the world, and in some of the countries, we conduct joint ven-
tures with local companies in accordance with local laws or other requirements. These businesses are restricted by various legal
and other regulations in each country (including those related to tax, tariff, overseas investment and fund transfer to the home
country). Any changes to such regulations, management policies of the joint venture partners or management environment may
adversely affect the performance and financial conditions of the Group.