Sanyo's 'Think GAIA' Vision and Turnaround Efforts
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Case Code: BSTR251 Case Length: 21 Pages Period: 2004-2006 Pub Date: 2007 Teaching Note: Not Available |
Price: Rs.400 Organization: Sanyo Electric Co. Ltd. Industry: Electricals and Electronics Countries: Worldwide Themes: Turnaround Strategies, Sustainability |
![Sanyo's 'Think GAIA' Vision and Turnaround Efforts](../../../images20/line-png-16800.png)
Abstract Case Intro 1 Case Intro 2 Excerpts
"If management is not willing to be daring, the company will not be able to survive."
- Mitsushige Akino, Chief Fund Manager at Ichiyoshi Investment Management commenting on Sanyo's need for a change in strategy, in 2006.
"My "Think GAIA" vision - people just take it lightly, calling it too naive, or green, or childish, or womanly. But this is a fundamental thing for Sanyo."
- Tomoyo Nonaka, Executive Chairperson and CEO, Sanyo Electric Company Ltd., in 2006.
"I wasn't surprised at this appointment - I was amazed. Given the lack of a track record, I'm not sure how Nonaka's going to turn Sanyo around."
- John Yang, a Standard & Poors equity analyst in Tokyo, in 2005.
Introduction
In November 2006, Sanyo Electric Company Ltd. (Sanyo) revised its earnings guidance for the financial year ending March 2007 from ¥ 20 billion in profit to a loss of ¥ 50 billion. On this news, the share price of Sanyo fell to ¥ 180 (US$ 1.44), a 31-year low for the company. The revised earnings guidance was made as the company's main business areas of mobile phones and digital cameras were seeing another year of poor sales. Sanyo commenced operations in the 1940s as a manufacturer of bicycle lamps. It went on to become a major manufacturer of household appliances and batteries. In the late 1970s, it started research on alternate energy sources. In the mid-1990s, intense competition and an inept management saw Sanyo struggle to maintain its profitability.
An earthquake in 2004 completely destroyed the company's semiconductor plant and pushed the company into losses. In the mid-2000s, the company faced adverse market conditions in its main businesses of digital cameras and mobile phones and struggled to manage its diverse businesses.
In July 2005, amid strong resistance, Tomoyo Nonaka (Nonaka), a journalist by profession, was made the new Executive Chairperson and CEO of Sanyo to bring in major changes and to define a new direction for the company. She was only the second woman in Japanese corporate history to rise to this position. Almost immediately, Nonaka announced a corporate vision for Sanyo called 'Think GAIA', which sought to develop environment-friendly products and to bring in major structural changes at the company. Over the next year, in keeping with this vision, Sanyo launched several environment-friendly products. It also cut jobs, paid off its debts, and restructured operations in an effort to turn itself around.
Though some of the company's environment-friendly products were successful, the sales of its mainstream products continued to fall. In January 2006, after a major management reshuffle, Sanyo decided to exit from the organic light-emitting diodes (OLED),4 CRT television (in Japan and Europe), DVD and VCR businesses. Among other reasons, this was done so that the company could allocate more resources to developing and marketing environment-friendly products.....
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