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A number of factors could significantly affect the business performance
of the Olympus Group. The following are the main factors, other than
management decisions, that may give rise to changes in the Group’s
business performance. The Group recognizes that these risks may occur
and undertakes to prevent the occurrence of risks and to respond if risks
occur.
Forward-looking statements in this section are based on the Group’s
judgment as of the end of the fiscal year under review.
(1) Risks Associated with Sales Activities
1) In the Medical Business, inability to respond to changes in the busi-
ness environment caused by unforeseeable large-scale changes in
healthcare policy resulting from healthcare system reform may affect
earnings.
2) In the life science sector of the Life Science & Industrial Business, the
supply of systems for research funded by national budgets of coun-
tries accounts for a high proportion of earnings, and curtailment of
national budgets for reasons such as macro-economic changes may
affect earnings.
3) In the digital camera sector of the Imaging Business, price competition
in the market is intensifying, and a sharp decline in market prices that
cannot be absorbed by means of cost-reduction measures the Group
is implementing may affect earnings.
(2) Risks Associated with Production and Development Activities
1) In the Imaging Business, core production operations are located in
China. Accordingly, a rise in the value of the yuan would result in cost
increases, which may affect earnings. In addition, destabilization of
conditions or deterioration of public safety in China, or anti-Japan sen-
timent, among others, may affect production activities.
2) The Group depends on certain specific suppliers for processes from
development to production of products and components that cannot
be developed and produced within the Group. Accordingly, procure-
ment constraints resulting from conditions impacting these suppliers
may affect production and supply capacity.
3) Olympus products, including products consigned to outside suppliers,
are manufactured in accordance with strict quality standards. Never-
theless, the occurrence of product defects may result in substantial
costs, such as for product recalls, as well as loss of confidence in the
Olympus Group, which may affect earnings.
4) The Group is making continuous advances in the development of
products that incorporate cutting-edge technologies. Nevertheless,
technical progress is rapid, and the inability to sufficiently foresee
market changes and develop new products that meet customer needs
in a timely manner may affect earnings.
5) The Group applies various intellectual property rights in its R&D and
production activities and believes that these are rights owned by the
Group or rights for which the Group has legally obtained licenses.
However, assertion by a third party that the Group has unknowingly
infringed on intellectual property rights and the occurrence of a
dispute may affect earnings.
(3) Risks Associated with Stock Investment Activities
Stock prices are determined based upon market principles, and the
Group may not be able to obtain expected returns depending on trends
in the market economy.
(4) Risks Associated with Business Partnerships and Corporate
Acquisitions
1) Olympus has formed long-term strategic partnerships related to
technologies and product development with leading companies in the
industry. Inability to maintain such partnerships due to the occurrence
of financial or other business-related issues with strategic partners,
changes in goals, or other reasons may hinder the Group’s business
activities.
2) Olympus may acquire or take equity positions in companies for the
purpose of business expansion. Inability to integrate acquired busi-
nesses in accordance with the Group’s management strategies or
inability to efficiently utilize the management resources of existing
businesses or acquired businesses may affect the Group’s operations
and may affect business performance or the financial position for
reasons such as impairment of goodwill.
(5) Risks Associated with Financing
The Group obtains financing by means of borrowings from financial
institutions and other sources, and changes in conditions in the financial
markets may affect the Group’s financing. In addition, an increase in
financing costs as a result of factors such as deterioration in the Group’s
business performance may adversely affect the Group’s financing.
(6) Risks Associated with Leakage of Information
The Group possesses important confidential information such as techni-
cal information and personal information of customers and other inter-
ested parties. The Group has taken various measures to prevent leakage
of such information outside the Group, including the preparation of
internal regulations, thorough employee education, and the strengthening
Business Risks
OLYMPUS 󱚈 Annual Report 2012
64