Suzuki 2014 Annual Report Download - page 26

24 SUZUKI MOTOR CORPORATION
Risks in Operations
Risks in Operations
Risks that may aect the management results, stock price and nancial situation of The Group include the followings.
Forward-looking statements in this section are based on our conclusions as of March 31, 2014.
Risk relating to markets
(1) Change in economic situations, demand uctuation in the markets
The long term economic slowdown, world economic deterioration and nancial 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. They
may also aect the performance and nancial conditions of The Group.
In addition, we conduct businesses around the world, and our dependency on the overseas manufacturing plants especially in the develop-
ing 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 aect the performance and nancial conditions of The Group. Further, unexpected change or new applica-
tion of tax systems in each country may also aect the performance and nancial 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. As the automobiles and mo-
torcycles industries in the world are globalized further, competitions may get harder. Competitions with other companies include various
aspects such as product quality, safety, price, environmental performance, as well as eciency of product development and manufacturing
system, establishment of sales and service systems and sales nance.
We will make further eorts for maintaining and improving our competitive edges, but there may be risks that impede our competitive 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 economic slowdown and the in-
creased interest in the environmental performance.
In addition, launching of new products will require specic product development abilities as well as abilities to continually manufacture
products in addition to appropriately understanding customer needs.
However, even if we are able to appropriately understand the customer needs, we may not be able 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 aect the performance and nancial conditions of The Group.
(2) Change in product prices and purchase prices, dependence on specic suppliers
Various factors including insucient supply or price rise of specic parts and raw materials, unstable 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 aect the performance and nancial 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 specic 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 aect the performance and nancial 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 ventures with
local companies in accordance with local laws or other requirements. These businesses are restricted by various legal and other regula-
tions in each country (including those related to tax, tari, overseas investment and fund transfer to the home country). Any changes to
such regulations, or management policies or management environment of the joint venture partners may adversely aect the performance
and nancial conditions of The Group.