Sanyo's 'Think GAIA' Vision and Turnaround Efforts
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Case Details:
Case Code : BSTR251
Case Length : 21 Pages
Period : 2004-2006
Pub Date : 2007
Teaching Note :Not Available
Organization : Sanyo Electric Co. Ltd.
Industry : Electricals and Electronics
Countries : Worldwide
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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"If management is not willing to be daring, the company will not be able to survive." 1
- 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." 2
- 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." 3
- John Yang, a Standard & Poors equity analyst in Tokyo, in 2005.
Introduction
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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.
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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.
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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. |
Sanyo's 'Think GAIA' Vision and Turnaround Efforts
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