To all of us, depressed by the fallout in the global economy as a result of the credit crunch, news that even the major players are feeling the downturn can come as a little bit of a consolation. It’s somehow comforting to know that it’s not just the little guys who are hurting.
While it’s certainly not nice to think of the human losses, in terms of jobs, it does reassure us just a little bit that it’s not our fault that we are battling to survive – it’s not something we did or did not do, but rather an external influence on our lives.
Japanese Hardest Hit
Japanese companies, like Panasonic, Sony and Toshiba, among others, seem to be the hardest hit – both because of the global lack of credit access, and the strengthening Yen, which is damaging their bottom line.
So much so, that Panasonic has not only announced huge losses, amounting to billions, but it is being forced to cut 15 000 jobs – clearly a drastic move! Not only that, but more than 20 of its manufacturing facilities are earmarked for closure this year alone, with more to follow.
This is clearly in stark contrast to just a year ago, when the company enjoyed huge profits,
Korean Counterparts Still OK
It may be a further blow to the Japanese that their Asian neighbors, in Korea, such as Samsung, are eating further into their market share, since, due to a weaker won, they are able to be more competitive globally.
Lower prices have meant that consumers have opted to go with their products, even though they may not be world leaders. In tough times like these, it’s almost always price that’s the deciding factor!
What We Can Learn from Panasonic
Clearly Panasonic and its compatriots are in trouble. What we should take from this, across the board, is never to get too comfortable. When things are going well, make preparations for leaner times.
Diversifying is also a good idea. These companies have placed all their faith in high end consumer electronics – great when times are good, the economy is booming, and everyone has lots of spare cash to spend.
When times are tough however, having lots of stock of expensive consumer electronics that aren’t selling is not such a great idea. Had they developed and introduced lower cost lines, they might still have captured some of the festive season market, however, it’s now too late to change their strategies!
What they have done right is to realize that they have a serious problem, and take decisive, if dramatic action to resolve it.
It will be very interesting to see how this situation plays itself out, and how these giants will rethink their strategies, in order to ride out the credit crunch storm, and emerge intact on the other side.
In the mean time, we should all plan for the lean times, diversify, and when necessary, take whatever action is necessary to reduce costs.
Mark Price recommends Creditcrunchnews.org for daily updates of Credit Crunch news and articles on Credit Crunch Related issues, keeping you one step ahead of the Global Recession with articles on how it can affect you and how to avoid being hit too hard by financial strains to come.