Casio 2014 Annual Report Download - page 17

Business Risks
The management performance, financial position and share price of the Company are subject
to the following risks. We have prepared a list of items that might have an impact on the fore-
casts included in this report as of the consolidated reporting period ended March 2014.
1) Japan’s economy and the global economy
The Group’s products are sold in Japan and in markets around the world, and demand is thus
subject to the economic trends of each country. Given that the majority of our products are
marketed to consumers, the Group is especially affected by trends in consumer spending.
2) Downward pressure on product prices
In the industries in which the Group is active, competition is intensifying as many companies
make aggressive efforts to increase their shares in Japan and in overseas markets. There is the
possibility that a rapid decline in product prices will have a negative impact on the Group’s busi-
ness performance.
3) New products
In the event that the Group is unable to speedily bring to market popular new products at a
steady pace, or in the event that competitors release products similar to those being launched
by the Group, especially in the case where the launch of competing products coincides, there is
a possibility that the Group may see an erosion of the competitive advantage achieved as part
of the first-mover advantage enjoyed by the pioneer of a new product.
4) Transactions with major customers
Any changes in strategy or product specifications made by major customers, and any cancella-
tion of orders, or changes in their schedule, could have a negative impact on the earnings per-
formance of the Group.
5) Outsourcing
With the aim of improving the Group’s production efficiency and the operating income margin,
we have outsourced a substantial portion of our manufacturing and assembly work to outside
service suppliers. There is a risk, however, that quality control will become difficult to enforce.
Moreover, problems may arise concerning violations of laws, regulations, and intellectual prop-
erty rights of third parties, by the outside supplier. Such occurrences could have a negative
impact on the Group’s earnings performance, and might possibly hurt the product’s reputation.
6) Technology development and changes in technologies
In those business areas in which the Group is active, the pace of technological development is
quite rapid and the swift pace at which the market’s needs evolve brings with it the risk that the
Group’s products may be rendered obsolete more quickly than expected. This, in turn, would
cause an unexpected sudden sharp decline in sales.
7) Risks associated with international developments and overseas operations
The majority of the Group’s production and sales activities take place in locations outside Japan.
Consequently, overseas political and economic developments and revisions of laws and legisla-
tion may have a significant impact on the Group’s financial position. In particular, the amend-
ment of laws or the enactment of new laws in foreign countries is difficult to predict, and such
developments might have a negative impact on the Group’s earnings performance.
Profile / Contents CASIO’s StrengthHistory To Our Stakeholders At a Glance Special Feature CSRCorporate Governance
PAGE 16
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