Ricoh 2010 Annual Report Download - page 32

31 ANNUAL REPORT 2010
operation and provide prompt service to such copiers. The total
number of Ricoh's sales and service personnel in Japan is
approximately 22,100. Similar to Japan, Ricoh employees and
contracted maintenance providers provide repair and maintenance
services to end-user customers in the overseas market who
purchase Ricoh products. The total number of Ricoh's overseas
sales and service personnel is approximately 45,900.
Competition
The office equipment industry in which Ricoh primarily competes
remains highly competitive and Ricoh continues to encounter
intense competition in its Imaging and Solutions segment.
Furthermore, competition in each of the product categories in the
Imaging and Solutions segment is expected to increase in the future
as Ricoh’s competitors enhance and expand their product and
service offerings. For example, in response to the trend in the office
equipment market towards digital networking systems and the shift
in customers’ demands towards color products, Ricoh’s
competitors are introducing a range of color products and digital
networking systems, thereby increasing the level of competition in
these products. This increase in competition may result in price
reductions and decreases in profitability as well as market share in
these products. Ricoh seeks to prevail over the intense competition
in the office equipment market by providing customers with
equipment that optimizes the TCO of such equipment and
enhancing office productivity and efficiency. However, Ricoh cannot
provide assurance that it will be able to compete successfully
against existing or future competitors. Moreover, Ricoh may face
competition from some of its current customers and companies
with which Ricoh has strategic business relationships.
The size and number of our competitors vary across our product
categories, as do the resources allocated by our competitors to the
markets Ricoh targets. Ricoh’s competitors may have greater
financial, personnel and other resources than Ricoh has in a
particular market or overall. These competitors may have greater
resources available to them to respond quickly to new technologies
and may be able to undertake more extensive marketing campaigns
than Ricoh. Competitors may also adopt more aggressive pricing
policies for their products and make more attractive offers to
potential customers, employees and strategic partners. These
competitors may also make strategic acquisitions or establish
cooperative relationships among themselves or with third parties to
increase their ability to gain market share.
Despite the intense competition in the office equipment industry,
Ricoh’s management believes that Ricoh will be able to maintain
and enhance its position in the global market because of its
sales subsidiaries and the Marketing Group of the Company into
one domestic sales subsidiary during fiscal year 2011, which
subsidiary is expected to be known as RICOH JAPAN Corporation.
Outside of Japan, Ricoh has organized its marketing and sales
channels to accommodate its four operating regions: (1) the
Americas, (2) Europe, Africa, and the Middle East, (3) Asia and
Oceania and (4) China. One of Ricoh’s strategies in expanding its
overseas marketing and sales channels has been to acquire office
equipment sales companies in various locations around the world
through which it can sell its products. Accordingly, in addition to
selling Ricoh brand name products through its overseas sales
subsidiaries, affiliates and independent dealers (similar to the
marketing and sales channels used for the distribution of products
in Japan), Ricoh also sells its products through the following two
marketing and sales channels in the overseas market: (1) sales of
products under brand names that Ricoh purchased through
acquisitions (i.e., the “Savin” brand, the “Lanier” brand and the
“Infotec” brand) and (2) sales of Ricoh’s products by other
companies under their brand names where Ricoh is the original
equipment manufacturer (“OEM”). Savin and Lanier were originally
Ricoh’s OEM distributors prior to their acquisition. During fiscal
year 2009, Ricoh acquired the U.S.-based IKON and its
subsidiaries, who supply and service a wide range of office
equipment in the U.S., Canada and the Western European markets.
The purpose of this acquisition was for Ricoh to strengthen and
broaden its business opportunities and infrastructure in the U.S.,
Canada and Europe by capitalizing on IKON’s broad sales and
service network and gaining access to IKON’s customer
relationships, which includes large private corporations as well as
U.S. government and public sector entities/organizations.
After-sales Service
Ricoh provides repair and maintenance services for its products to
end-user customers based on the belief that periodic and timely
maintenance services are essential in preserving Ricoh's market
share in the relevant products. These maintenance services are
provided to customers pursuant to maintenance service contracts
customarily entered into at the time the equipment is originally
sold.
In Japan, repair and maintenance services are generally provided by
Ricoh's service specialists. Ricoh's service network in Japan
includes service centers operated by Ricoh and its affiliates and
service outlets operated by other companies. Ricoh's Customer
Support System is available on a nationwide basis in Japan in order
to enhance customer satisfaction and service efficiency. This
system allows Ricoh to remotely monitor copiers that are in