Toshiba 2013 Annual Report Download - page 88

16 TOSHIBA Annual Report 2013
Management's Discussion and Analysis
its efforts to create “World-First” and “World No.1” products that deliver surprise and inspiration to customers, ahead of
the needs of customers. However, due to the rapid pace of technological innovation, the emergence of alternative
technologies and products and changes in technological standards, the optimum introduction of new products to the
market may not be accomplished, or new products may be accepted by the market for a shorter period than anticipated.
In addition, any failure on the part of the Group to continuously obtain sufficient funding and resources for development
of technologies may affect the Group's ability to develop new products and services and to introduce them to market.
From the viewpoint of enhancing concentration and selection of managerial resources, the Group now selects research
and development themes more rigorously, with a primary focus on developing original and advanced technologies, with
close consideration for the timing of market introduction. More rigorous selection of research and development items
may impair the Group's technological superiority in certain products and technological fields. In order to avoid these
risks, the Group intends to enhance the efficiency of research and development activities by sharing intellectual property
through the promotion of common platforms and using overseas resources more efficiently in system development.
7. Risks related to laws and regulations
(1) Information security
The Group maintains and manages personal information obtained through business operations, as well as trade secrets
regarding the Group's technology, marketing and other business operations. Even though the Group makes every effort
to manage this information appropriately, the Group's business performance and financial situation may be subject to
negative influences in the event of an unanticipated leak of such information and such information is obtained and used
illegally by a third party.
Additionally, the role of information systems in the Group is critical to carrying out business activities. While the Group
makes every effort to ensure the stable operation of its information systems, there is no assurance that their functionality
would not be impaired or destroyed by computer viruses, software or hardware failures, disaster, terrorism, or other
causes.
(2) Compliance and internal control
The Group is active in various businesses in regions worldwide, and its business activities are subject to the laws and
regulations of each region. The Group has implemented and operates necessary and appropriate internal control systems
for a number of purposes, including compliance with laws and regulations and strict reporting of business and financial
matters.
However, there can be no assurance that the Group will always be able to structure and operate effective internal
control systems. Furthermore, such internal control systems may themselves, by their nature, have limitations, and it is
not possible to guarantee that they will fully achieve their objectives. Therefore, there is no assurance that the Group will
not unknowingly and unintentionally violate laws and regulations in future. Changes in laws and regulations or changes
in Management's Discussion and Analysis interpretations of laws and regulations by the relevant authorities may also
cause difficulty in achieving compliance with laws and regulations or may result in increased compliance costs. On these
grounds, the Group makes every effort to minimize these risks by making periodic revisions to the internal control
systems, continuously monitoring operations, and so forth.
(3) The environment
The Group is subject to various environmental laws, including laws on air pollution, water pollution, toxic substances,
waste disposal, product recycling, prevention of global warming and energy policies, in its global business activities.
While the Group pays careful attention to these laws and regulations, it is possible that the Group may encounter legal or
social liability for environmental matters, such as liability for the clean up of land at manufacturing bases throughout the
world, regardless of whether the Group is at fault or not, with respect to its business activities, including its past activities.
It is also possible that, in future, the Group will face more stringent requirements on the removal of environmental
hazards, including toxic substances, or on further reducing emissions of greenhouse gases, as a result of the introduction
of more demanding environmental regulations or in accordance with societal requirements.
The Group's operations require the use of various chemical compounds, radioactive materials, nuclear materials and
other toxic materials. The Group takes maximum care of such materials, giving first priority to human life and safety.
However, the Group may incur damage, or the Group's reputation may be adversely affected, as a result of a natural
disaster, the threat or occurrence of a terrorist incident, or of an accident or other contingency (including those beyond
the Group's control) that leads to environmental pollution or the potential for such pollution.
(4) Product quality claims
While the Group makes every effort to implement quality control measures and 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 recall, lawsuits or other claims relating to product quality due to unforeseen reasons or circumstances.