Toshiba 2005 Annual Report Download - page 54

12 Toshiba Corporation 130th Anniversary
(5) Business environment of Social Infrastructure Segment
A significant portion of net sales in the Social Infrastructure Segment is attributable to government
and local municipality expenditure on public works and private capital expenditure. The segment
monitors these trends in these capital expenditures, and makes best efforts to cultivate new business
and customers, in order to avoid undue impact from any fluctuation in the trends. However,
reductions and delays in public works spending, as well as low levels of private capital expenditure,
can adversely affect Group results. Furthermore, the business of this segment involves supply of
products and services in relation to large-scale projects. Delays, changes in plans, stoppages,
natural and other disasters, and other factors beyond the control of the Group and that affect
the progress of such projects may adversely affect Group results.
(6) Development of new products
It is critically important for the Group to offer the market viable and innovative new products
and services. The Group identifies strategic products that will drive future profits, and defines a
strategic product map to support the timely introduction of successive products. However, due
to the rapid pace of technological innovation, introduction of new technologies or products
that replace current products, or any change of technology standards, introduction of optimum
new products to markets may be delayed, or new products may be received by markets for a
shorter period than expected. In addition, if the Group fails to assure sufficient funding and
resources for continuous product development, it may affect the Group’s ability to develop
new products and services and to introduce them to the market.
(7) Investments in new business
The Group invests in companies involved in new business, as well as developing its own new
business opportunities. Many technological issues need to be resolved and new demand effectively
discovered and captured before a new line of business can become successful, and as such its
progress and success are uncertain. If any new business in which the Group invests or which the
Group attempts to develop does not progress as planned, the Group may not recover the funds
and resources it has spent, and this may adversely affect the Group’s results and financial condition.
(8) Success of Joint Ventures and other business alliances
A key strategy of the Group in many of its businesses is the formation of Joint Ventures and
business alliances optimized for each business, in every area of the business, including research
and development, production, and marketing. If the Group fails to maintain Joint Ventures or
business alliances, due to inconsistency with a partner in financing, technological management,
product development or management strategies, this may adversely affect Group results.
(9) Global environment
The Group undertakes global business operations. Any change of political, economic, and social
conditions and legal or regulatory changes in any region may change market demand or the
Group’s production and thus may affect adversely Group results.
As the Group expands overseas production, particularly in Asia, any occurrence of terrorism
or an illness such as SARS (Severe Acute Respiratory Syndrome), could have a significant
adverse effect on Group results.