Business Case Studies, Leadership Case Study, Tata Group,Ratan Tata

Code : LDS0014

Year : 2005

Industry :Home Appliances and Personal Care Products

Region : Japan

Teaching Note:Not Available

Structured Assignment :Not Available

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Introduction: For the year-ended March 31st 2005, Sanyo Electric Co. (Sanyo), Japan’s third-largest consumer electronics manufacturer reported a loss of $1.1 billion. Itwas the biggest financial shortfallwitnessed by the company in its 58-years of history. Its semiconductor plant inNiigata prefecture was damaged following an earthquake inOctober 2004, hampering the production formonths. The sales at its digital camera division were lower than expected. Appliances division was in heavy loss and fallingmobile prices had taken a toll on itsmobile handset business. The grave financial position in turn spurred a change in the topmanagement. Tomoyo Nonaka (Nonaka) was appointed the new chairman and CEO, while Toshimasa Iue (Iue), grandson of Sanyo’s founder and son of the current chairman Satoshi Iue was appointed the president. The new appointments were a surprise tomany. Nonaka was a former TV journalist, with little knowledge about electronics and no senior management experience. As for Iue, even though he had turned around the batteries division of Sanyo in 1999, critics felt that revivingSanyowould be a challenging task, especially in thewake of prevailing economic conditions in Japan.

Sanyo Electric Co. was established as Sanyo ElectricWorks in 1947 inMoriguchi City, Osaka tomanufacture bicycle generator lamps. Nickelwas one of the key components used in these lamps. The Nickel scarcity following the KoreanWar in 1950 prompted Toshio Iue, the founder of Sanyo to diversify into radios, small electronic appliances and washing machines, as thematerial required tomanufacture themwas available in the localmarket. The name ‘Sanyo’means three oceans based on the company vision tomarket on a global scale. And the new company quickly built a solid foundation for its philosophy of “becoming an indispensable element in the lives of people all over the world.