Toshiba 2009 Annual Report Download - page 68

16
M anagement ’s Discussion and Analysis
success of new businesses entails substantial uncertainty, and if any new business in which the Group invests in or which the
Group attempts to develop does not progress as planned, the Group may be adversely affected by the incurred investment
expenses that have not led to the anticipated results or otherwise. However, in order to avoid these risks, in the process of
developing new businesses, the Group makes efforts to resolve various technological issues, and develop and capture potential
demand effectively.
(10) Success of strategic business alliances and acquisitions
The Group is actively promoting the formation of joint ventures and business alliances for growing new and other businesses
in research, development, production, marketing and various other areas. If the Group faces any disagreement with its rele-
vant partner in a joint venture or business alliance in respect of financing, technological management, product development,
management strategies or otherwise, such joint venture or business alliance may be terminated. However, the Group will pay
careful attention to optimise the business formation so that it corresponds to the relevant business nature.
(11) Global environment
The Group undertakes global business operations. Any changes in political, economic and social conditions, legal or regula-
tory changes and exchange rate fluctuations, in any region, may impact market demand and the Group’s business operations.
(12) Natural disasters
Most of the Group’s Japanese production facilities are located in the Keihin region of Japan, which includes Tokyo,
Kawasaki city, Yokohama city and its respective surrounding areas, while the key semiconductor production facilities are
located in Kyushu, Tokai, Hanshin and Tohoku. The Group is currently expanding its production facilities in Asia. As a
result, any occurrence of terrorism or epidemic illness, such as a new type of flu, in these areas could have a significant adverse
effect on the Group’s results.
While the Group takes precautionary measures, such as the construction of earthquake-resistant buildings at production
facilities, large-scale disasters, such as earthquakes or typhoons in regions where production sites are located, may damage or
destroy production capabilities, and cause operational and transportation interruptions or other similar disruptions, which
would affect production capabilities significantly.
In order to manage these risks, the Group established the “Business Continuity Plan (BCP)” in a continuing effort to
avoid any impact from such disasters.
(13) Measures against counterfeit products
While the Group protects and seeks to enhance the value of the Toshiba brand, lesser-quality counterfeit products created
by third parties are found worldwide, and may dilute the value of the Toshiba brand and decrease the Group’s net sales.
(14) Product quality claims
While the Group has implemented measures to manufacture its products in accordance with appropriate quality-control
standards, there can be no assurance that all products are free of defects that may result in a large-scale recall, lawsuits or
other claims relating to product quality.
(15) Information security
The Group maintains and manages various personal information obtained through business operations as well as various
trade secrets regarding the Group’s technology, marketing and other business operations. While the Group makes effort to
manage this information properly, an unanticipated leak of such information could occur, and such information could be
obtained and used illegally by a third party. In such circumstances, the Group’s business performance and financial situation
may be subject to negative influences.
Additionally, the role of information systems in the Group is critical to carrying out business activities. While the Group
makes effort to ensure stable operation of its information systems, it is possible that their functionality could be impaired or
destroyed by computer viruses, software or hardware failures, disaster, terrorism, and other factors.
(16) Procurement of components and materials
It is important for the Group’s business activities to procure materials, components and other goods in a timely and proper man-
ner. However, such materials, components and goods, may only be obtainable from limited number of suppliers due to the par-
ticularity of such materials, components and goods and therefore may not be easily replaced if the need arises to do so. In cases of
delay or other problems in receiving supply of such materials, components and other goods, shortages may occur or procurement
costs may rise. It is necessary to procure materials, components and other goods at competitive costs and to optimize the entire
supply chain, including suppliers, in order for the Group to bring competitive products to market. Any failure by the Group to
achieve proper cooperation with key suppliers may impact the Group’s competitiveness.