Suntech Power Holdings: How to Avoid Bankruptcy

In 2013, Suntech Power Holdings Co., Ltd. (STP) was facing the threat of bankruptcy. The chief executive officer (CEO), who had founded the company in China in 2001, was aware of the complexity and challenges of an emerging global industry (solar energy) and economy (China). Fears of energy shortages had fuelled the growth rate for the global solar energy industry, and governments in many countries had introduced subsidies for solar energy initiatives. Consequently, the company had grown from a technology start-up to the leading global producer of photovoltaic solar cells and modules in 2011. However, by 2013, the company was facing financial distress and the threat of bankruptcy. Many factors, including the fluctuating cost of silicon, difficulty finding a stable silicon supplier, the 2008 economic downturn, an uncooperative management team, and the subsequent decline in the solar energy market had caused major problems for STP. How could the CEO turn this company around and avoid bankruptcy?

The case is suitable for modules in organizational decline in second-year MBA and EMBA elective courses on corporate turnaround or organizational design and change. It is also suitable for modules on corporate governance in a standard or advanced strategic management course. The case illustrates governance issues in an emerging economy with relatively underdeveloped institutions and organizational and managerial capabilities. It is especially applicable in China–Europe international business school environments. At the completion of this case, students will be able to<br><ul><li>understand the common external (environmental) and internal (organizational) <br>causes of organizational decline in a rapidly changing emerging market <br>environment;</li><li>evaluate how external environmental changes affect organizational decline;</li><li>assess the impact internal organizational actions (or inactions) have on an <br>organization’s decline;</li><li>analyze the challenges faced by an entrepreneur and an emerging multinational <br>corporation; and</li><li>propose plausible corporate turnaround strategies.</li></ul>

• Decline, PV Industry, China