Fujitsu 2008 Annual Report Download - page 76

4. Suppliers, Alliances, etc.
In the course of its operations, the Fujitsu Group conducts business with a range of different companies, including suppliers and alliance
partners. Accordingly, any significant changes in relationships with these and other business partners could affect the Group’s business.
1) Procurement
The Fujitsu Group utilizes sophisticated technologies to provide a range of products and services. There is therefore a risk that we may
encounter difficulties in procuring a stable supply of certain key components or raw materials, or in cases where regular supply channels
are unavailable, that we may be unable to secure alternative procurement sources. There is also the risk that the Group may be unable to
sufficiently procure certain parts or raw materials in the large volumes required. Moreover, natural disasters, accidents and other events, as
well as any deterioration in business conditions at suppliers, could hinder the ability of business partners to provide the Group with a
stable supply of required components or raw materials. These and other events could cause delays in the provision of products and ser-
vices, resulting in postponement of deliveries to customers and opportunity losses, among other problems. With respect to component
procurement, foreign exchange rate fluctuations, tight supply and demand conditions, and other pressures could drive procurement
costs higher than initial estimates, leading to diminished returns on products and services, as well as lower sales due to the need to raise
prices. Additionally, while we make every effort to ensure the quality of procured components, we cannot guarantee that all components
purchased will be free of defects. The discovery of such issues could result in processing delays, as well as defective products, opportunity
losses, repair costs, and disposal costs for defective goods, plus the potential obligation to pay damages to customers.
2) Collaborations, Alliances and Technology Licensing
To enhance competitiveness, the Fujitsu Group works with a large number of companies through technology collaborations, joint
ventures and other means, a practice that we intend to continue for the foreseeable future. If, however, as a result of managerial,
financial, or other causes, it becomes difficult to establish or maintain such collaborative ties or to gain sufficient results from them, the
Group’s business could be adversely affected. Moreover, many of our products and services employ other companies’ patents, tech-
nologies, software, and trademarks with the consent of their owners. However, there is no guarantee that other companies will con-
tinue to grant or license the right to use their property under terms acceptable to the Fujitsu Group.
5. Public Regulations, Public Policy, and Tax Matters
The business operations of the Fujitsu Group are impacted by a variety of public regulations and trends in public policy, as well as laws
pertaining to taxation. Specifically, wherever it operates, the Group must comply with a variety of regulations, such as authorizations
for business or investment, import/export regulations and restrictions, as well as laws pertaining to antimonopoly policies, intellectual
property rights, consumers, the environment and recycling, labor conditions, and taxation. Earnings might be affected by increased
compliance costs associated with measures to make stricter or otherwise revise such laws and regulations. We also provide solutions
in certain fields and business domains such as healthcare and communications that are subject to other public regulations, meaning
that regulatory trends in these sectors may potentially impact the Group’s business.
6. Other Operational Risks
The Fujitsu Group makes every effort to eliminate known risks but can offer no guarantee of its ability to always achieve every desired
outcome in the course of executing business operations. Some of the specific risks faced in this respect are detailed below.
1) Deficiencies or Flaws in Products and Services
Quality is a core value of the Fujitsu Group. We are committed to improving quality at the design and development stages as well as in
manufacturing. We are also promoting stricter quality control when purchasing components from external suppliers. These efforts not-
withstanding, it is impossible to totally eliminate the possibility of deficiencies or flaws occurring in products, including software. While
the Group is also promoting software modularization, standardization of development work, and enhanced security measures in order
to improve the quality of system development and other services, the possibility of defects arising cannot be excluded. With respect to
systems that play a critical role in supporting social infrastructure, following the incidents involving system problems at the Tokyo Stock
Exchange in November 2005, we have been checking for any potential problems in these systems, including the operating environment,
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ANNUAL REPORT 2008FUJITSU LIMITED
BUSINESS AND OTHER RISKS