ヾ(゜Д゜)ノ"英字新聞

After 6 years of growth, firms must rejig strategy
Many listed companies released earnings reports for the business year ending March 2008 in the past several days, and many more are expected this week.
Increased earnings and profits for the sixth consecutive business year are projected for companies listed on the First Section of Tokyo Stock Exchange on the whole. The business year has been marked by good results, particularly among export-oriented firms that have responded well to economic globalization.
But, since early this year, the business environment has rapidly worsened, with the U.S. economy having slowed down due to the subprime loan fiasco and the yen having appreciated against the dollar. In addition, the world has seen a surge in the price of crude oil and other raw materials. Corporate performances have been hit hard by the headwind created by these three challenges.
The immediate task for Japanese firms is to draw up strategies for ensuring business growth despite the fierce headwind.
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Toyota example symbolic
Toyota Motor Corp. symbolizes how the business account settlement turned out for Japanese firms.
The automaker set record highs in sales and operating profits--a measure of its earning power from ongoing operations--on a consolidated basis.
Sales of Toyota vehicles with good fuel economy were robust in the United States and European nations as well as China and other emerging economies. In terms of sales, Toyota surpassed General Motors Corp. of the United States to become the No. 1 carmaker in the world.
For the current business year ending March 2009, however, the automaker has projected a 5 percent decline in sales to 25 trillion yen from the previous business year. Also, according to its projection, operating profits will be slashed by 30 percent to 1.6 trillion yen. It would be the first major decline in the firm's profits in nine business years.
Toyota forecast the yen's exchange rate at 100 yen against the dollar for the current business year. A strong yen against the dollar and other exchange rate fluctuations would push operating profits downward by as much as 690 billion yen, it said.
The sales of its cars in North America, Toyota's main market, are expected to remain sluggish, and high prices of raw materials are expected to depress its profits further.
This harsh business environment is also affecting Honda Motor Co. and other carmakers, electrical appliance makers and other export-oriented companies.
Steelmakers, including Nippon Steel Corp., which reported its biggest profits ever in the last business year, all project major declines in their profits in the current business year, burdened by projected high prices of raw materials.
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Time to seek other markets
These export-oriented firms had enjoyed business tailwinds--a robust U.S. economy and a weak yen--but those favorable business conditions are now over. In the current business year ending in March, listed companies on the whole are expected to see their first drop in profits in seven business years.
But they cannot just stay idle and lament the deteriorating business environment. All companies should come up with ways to meet the three challenges of the subprime mortgage crisis, the strong yen and high raw material prices in their pursuit of robust corporate management.
It is important for them to devise business strategies to rake in sales globally by not being overdependent on the U.S. market--whose growth has been slowing--and by, instead, expanding markets in growing economies such as China and other Asian nations, as well as resource-rich nations, including those in the Middle East.
Companies must be more selective in choosing which businesses they should pursue or concentrate on so they can better deal with the strong yen and sharpen their competitive edge by cutting costs.
Propping up their domestic markets is another important task for them. That will not be an easy task, but flexible business strategies that can respond promptly to changes in business trends are the key to success.
Some companies, including Matsushita Electric Industrial Co. and Nintendo Co., are projecting increased profits for the current business year.
Each company's strategy for growth is at stake now that the business environment is experiencing a sea change.