Restructuring / Turnaround Strategies Case Study

Restructuring at Sanyo

Abstract:

In 2005, Japan’s third largest consumer electronics maker, Sanyo Electronic Co., Ltd., (Sanyo) faced a crisis. The company was making losses in its home appliance business and faced sluggish growth in its digital camera and mobile phone business. To add to its woes, in October 2004, an earthquake measuring 6.8 on the Richter scale caused extensive damage to its semiconductor manufacturing facility in Nigata. For the year ended March 31st 2005, Sanyo reported its biggest ever loss of US $1.1 billion and the company expected yet another loss of US $1.24 billion for the year ending March 31st 2006.

In September 2005, it announced the ‘Sanyo evolution project’ under which the company planned to initiate company wide structural reforms. It included a massive reduction in workforce, closing down some manufacturing facilities, scaling down the unprofitable businesses and other significant measures over a period of time. The top management at Sanyo aimed at shifting the focus of Sanyo from a general consumer electronics manufacturer towards one focused on cutting edge environment and energy products and services. Would these reforms help in turning around Sanyo?.

Pedagogical Objectives:

• To investigate the challenges faced by Sanyo
• To debate whether ‘Sanyo evolution project’ and other structural reforms would help in Sanyo’s turnaround
• To discuss the restructuring strategies of Sanyo.

Keywords : Sanyo; Japan; Consumer Electronics; Semiconductor plant; Sanyo evolution project; Think GAIA; structural reforms; management reforms; Restructuring / Turnaround Strategies Case Study; workforce reduction; Scaling Operations; Core businesses; changing focus; turnaround