Canon Case Study
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Corporate strategy is the pattern of decisions that guide an organization’s activities to reveal the principal objectives purposes and resources. In other words it refers to the range of business the company is to pursue, with the nature of the activities it intends to be and the nature of the economic and non-economic contribution it intends to make to its shareholders and stakeholders”. In effect, it corporate strategy maps out a sense of direction for a company’s activities. Corporate strategy in effect maps out the businesses in which an organization intends to compete in. To formulate its corporate strategy, many researchers have call on organization to assess their strengths and weaknesses, as well as its environmental threats and opportunities, so as to give the organization an edge in chosen among alternative courses of action. Thus, it is recommended that an organization performs a SWOT (strengths, weaknesses, opportunities and threats) analysis prior to formulating corporate strategy. Today’s numerous challenges have pushed companies not to compete as individual companies but to try and corporate with other businesses in their activities.
Established in 1933 by Goro Yoshida and Saburo Uchida, Canon began as company called Precision Optical Instruments Laboratory. In the company’s beginnings, their major goal was to develop a 35mm camera. In 1934,the Kwanon camera was released yet it never actually hit the marketplace. Due to their inability to develop a lens of their own, the Precision Optical Instruments Laboratory used one from Nippon Kogaku Kogyo, the predecessor company of Nikon Corporation. Three years following the initial start up of the company, the Hansa Canon was released in 1936 to the public. The following year, Canon as we know it today was founded. Nowadays, Canon makes cameras, printers, copiers and many other office products and their most profitable area involves the sale of digital copiers for offices. It’s funny because most people think of their cameras before their office products, but numbers don’t lie! Besides its current financial strongholds, Canon is still venturing out into new avenues all the time. They are currently forging ahead into the digital display field and have since bought the shares Toshiba had in joint venture for the manufacture of flat panel television screens.
Canon an electronic company began in Japan with a typical and traditional Japanese business form having customer’s satisfaction and profit as its center of attention while specializing in the production of business machines, cameras, optical and other electronics. The company was founded by the first Chief executive officer Gerard in Japan and the father who later recruited a team of outstanding professionals to support its activities. In less than three decades of operation, the company assumed leadership role in the electronic market. Thanks to its innovative focus ideas, huge investment on research and development, good employee’s retention, and differential focus strategies, Canon innovative ideas and the company’s cost focus and differentiation strategy earned it that position. Canon case has been analyzed using some analytical models.
3.Vision, mission and corporate values
“Simple advanced solutions freeing people to live their dreams and lead enriched lives at home and at work.” This is the vision of the Japanese company ,based on this beliefs they managed to be the leaders in a very competitive market by creating simple solutions for the constant rising standards of the needs of the consumers. The most important corporate values are based on two concepts San-ji and Kyosei, together this concepts form a general ethos of the company that ensures the fact that they re proactive, take responsibility for their actions and work with shared purpose.
Canon’s corporate philosophy is founded on a responsible approach to working. In 1988, they encapsulated this approach in the word kyosei, which can be translated as ‘living and working together for the common good’. “Our sense of responsibility for the way we operate our business and the effect we have on our world has grown with Canon’s business over the past 70 years. Through our kyosei philosophy we aim to make the world a better place by attempting to correct the imbalances brought about by trade, income and our impact on the environment. We believe that each step we take in trying to work for the common good – as individuals and as an organization – does make a real difference. Of course, actions speak louder than words. We aim to act morally, in accordance with our own code of conduct and our worldwide ethical compliance framework; but more than this, we aim to make a positive difference to all we come into contact with and, through our behavior, contribute to positive change.”(Canon ‘s management)
San-ji is a Japanese phrase that describes the “Three Selfs” – Self motivation, Self management and Self awareness. It was introduced in 1952 by Canon’s first president, Dr Takeshi Mitarai, and reinforces the kyosei philosophy to ensure that at the heart of their organization they share a common set of beliefs. In practice, San-ji is best summed up as “It’s up to me!”
Protecting the environment
The Canon organization is very interested in protecting the environment they are concerned about the changing climate, so they are preoccupied for reducing theirs and their clients environmental impact by investing in technology in order to protect the environment. The kyosei philosophy says that” “All people, regardless of race, religion or culture, harmoniously living and working together into the future.”
Strategic Planning has been on the business scene since 1960 and increasingly, business managers use it as a way to communicate their vision, maintain a flexible managerial approach and predict future trends thereby creating a competitive edge over time. Consequently, a Strategic Plan can give a business the opportunity to generate a new sense of purpose and direction. Canon’s technological prowess innovations turn into core competencies that acted as an entry barriers and a threat to new entrants. It focus on Its global strategy with foreign countries gave suppliers a low bargaining power. New products were launched at the right time. The Five Forces set the rules of competition in any industry and at the same time set pace for understanding a company’s success. Canon strategic planning was not all about vision, but emphasis was on customer’s satisfaction, market share and core competencies. While acknowledging the assertion that having the right Strategic Plan can enable a business to realize its full potential, the assertion here is: How does Strategic Planning help a business to attain its objectives and consequently differentiate itself from competition?. Here, Canon management has not only used this to create and lay emphasis on its vision and objectives, but has capitalized on customer’s satisfaction, and gaining and maintaining market shares coupled with the needs for differentiation.
The subsequent evolution of Canon’s strategy from the photocopying business to the more general imaging industry suggests that the strategic planning process has been influenced by the resources-based view of the firm. This perspective considers the firm as a bundle of resources and capabilities that can be used to create value by meeting a wide variety of customer needs. Canon’s effective approach to matching resources to strategy conforms to the general theory of the resource-based view of the firm. In this model, the resources available to the firm are the foundation of the firm’s ability to effectively execute the strategy. The firm began to acquire and develop resources related to the photocopying industry in the 1970s. This approach involved increasing the depth of a single type of knowledge resource to achieve sufficient competencies in new product development to enter a specific niche in the industry. The approach is commonly used by businesses using a focused differentiation strategy in a single business unit. The resources developed to enter the photocopier market provided the foundation and strategic implementation model allowing the firm to increase the breadth of its resources. Over the long run, the firm entered new markets in office automation and video in the 1980s, and the audio visual, energy savings and information markets in the 1990s. In practice, Cannon effectively matched its strategy to available resources and used strategic planning to identify the resources it would have to acquire to reach strategic objectives.
5. Analysis of external competitive business environment (Porter’s model)
Porter’s five forces analysis is a framework for industry analysis and business strategy development developed by Michael E. Porter of Harvard Business School in 1979. It uses concepts developed in Industrial Organization (IO) economics to derive 5 forces that determine the competitive intensity and therefore attractiveness of a market. Porter referred to these forces as the microenvironment, to contrast it with the more general term macro environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the marketplace. Canon rise to leadership position in the period 1950s to 2000 in the electronic market can be explain using Porters five forces. Canon owns 70 per cent of the world laser beam printer engine market, 40 per cent of the world bubble jet printer market, second only to Hewlett-Packard. Overall, it has a strong global base in its major product areas: photocopiers, computer peripherals, computer and Fax equipment, cameras, video recorders and optical products. Thanks to its long term relationship, innovative ideas, product differentiation and cooperative behaviors entered into with it suppliers and customers. Its position in the industry sector was greatly enhanced by the company’s ability to identify the photocopier’s market as an area of growth that created its competitive position in the sixties with strategic planning and actions channeled through this direction. This vision was marked by its intentions to catch Xerox through technological differentiation.
An increase in Canon’s brand equity within these periods acted as some form of insulation; consequently consumer’s propensity to substitute was almost zero; this was insulated by Canon’s technological prowess innovation that added new product with new functionalities and features. It cost focus, quality and differentiation focus built on an efficient strategic planning enable the company to develop technology that was totally different from the Xerox patents and pursuing the small photocopier market niche, which remained poorly served by Xerox. Its extension of its product line from photocopiers, to laser printers, digital scanners, color bubble jet printing, digitized optical images and other areas made matters worse for competitors. This created core competences and core products that became cash cow given Canon a consistent ten years record of profitability. It will be noted that printing was only one of Canon’s areas of competence by the 90s.
At the most fundamental level, it has repeatedly been argued that firms create competitive advantage by doing things in a better way. Other researchers have referred to this as doing ordinary things in an extra ordinary way. To the researcher, such an act pushes the firm to compete in an industry better which is ultimately an act of innovation. It’s being assumed that, by being innovative, innovative firms are better placed to shift competition and gain a competitive advantage when rivals either fail to perceive the new way of competing or are unwilling or unable to respond. This situation explains Canon’s rise to leadership position in the electronic industry in which their innovative ideas shifted it in to a generic focus and built its innovative resources and capabilities. It’s being argued that having control of the five forces in an industry is the beginning of assuming leadership position in the industry.
6. SWOT & PEST ANALYSIS
CANON INC. SWOT ANALYSIS
* Having alliances with other strong and popular businesses; by this bringing in new customers and making business more effective; * Competitive pricing – vital element of success, keeps Canon in line with rival corporations; * Keeping costs lower than their competition and keeping the cost advantages helps Canon pass on some of the benefits to consumers; * The services/products offered by canon are original, meaning many people will return to canon to obtain them; * The market strategy is very effective, raises profit and profiles; * Canon’s innovation keeps the company a front-runner in camera as it is regularly turning out new patents technology; * The experienced employees are the key to the success of Canon; * High quality machinery, staff, offices and equipment ensures the job is done right; * Extensive customer base;
* Good reputation among customers;
* Strong financial stability;
* Online presence;
* Canon’s R&D work is low, though the company is creating new products; * Problems with stock, not having enough products on stock to satisfy the demand; * The absence of an unique product with total differentiation from those of competitors; * Dissatisfied customers;
* Lack of ownership on of exclusive patents;
* Lack of integration of marketing, production and R&D
* Benefit from governmental support in form of grants, allowances and trainings;
* Export opportunities to increase profit and open new markets;
* Expanding online presence;
* Constant improvement in technology;
* Growth of the markets where the company is present;
* Expanding products/services;
* Structural changes in industry can open new possibilities of Canon;
* Changes in the lifestyle of the customer;
* Tax increases, that means additional financial burdens;
* New products/services from competitors;
* Price wars between Canon and competitors;
* Slow economy and an economical crises that affects the market where Canon is present;
* Structural changes in the industry;
* Presence of substitute products on the market.
CANON INC. PEST ANALYSIS
The PEST Analysis looks on the political, economic, social and technological headings of the company. Political Analysis:
* Costumer protection legislation;
* Advertising must be original, not copy competitors advertising;
* Canon ensures for its employee a five-day work week with no extra hours; * Canon has patents for products;
* The economic crisis affect the sale of products, decreasing purchasing power;
* Infrastructure quality is good;
* Canon is has a global presence;
* Different taxes and fees because of the sales in different countries;
* Notoriety is high among consumers;
* Training for employees;
* Allowances for employees;
* With the modern technology and equipment that the company is equipped with, the company has the possibility to track the effectiveness of product quality, which is constant;
* Progress in Next-Generation Domains;
* Medical Imagining;
* Intelligent Production Robots;
Canon has been trying since the emerge of the company on the market to achieve a dominant position. As Canon has expanded the range of products/services, the need to be ahead of the completion, and have a No. 1 position in all current core businesses has been established. To do so, Canon has to compete and develop using advantages like: lower cost, competitive pricing, wider expansion of markets, and the best quality for products/services.
The key strategies for Canon are:
1. The overwhelming No. 1 position worldwide in all current core businesses 2. Expanding business operations through diversification
3. Identifying new business domains and accumulating required technologies 4. Establishing new production systems to sustain international competitiveness Nurturing truly autonomous and strong individuals promoting everlasting corporate reform
8. Strategy Implementation
In achieving the No.1 position on the business has implemented Cross-Media Imaging Strategy with an IT Reform thus obtaining Quality and Speed for the product/services sector. In alliance with IT vendors and establishing new business models Canon has realized the expansion of sales.
Furthermore Canon has integrated itself in new range of business, thus trying to overcome competitors: the integration and linkage of various Canon products at home, office, commercial printing, and medical institutions – thus capturing all needs of the costumers.
Canon has realized progress in Next-Generation Domains – The intelligent production robots:
* development & design 3D-CAD, CAE ;
* MR Simulation Prototype;
* Production: Robot Systems, Super-Machine Vision;
Canon has put an accent in establishing security and safety technologies so appears the Management based on total commitment to “Quality First”. Another implementation of strategy of Canon is to show a big interest for environmental issues and accommodating the product/service sector to them, thus implementing the following strategies:
I. Optimize the organizations for promoting the Canon Group’s global environmental efforts, and promote environmental assurance activities for the Group as a whole. II. Promote the research and development of technologies and materials essential for environmental assurance and share the achievements with society. III. In procuring and purchasing necessary resources, give priority to materials, parts and products with lower environmental burden. IV. Establish an Environmental Management System (EMS) and establish and periodically review environmental objectives and targets to prevent environmental pollution and damage, and steadily reduce environmental burden. V. Raise the environmental awareness of employees and educate them to take the initiative in environmental protection. VI. Maintain close relationships with governments, communities, and other interested parties, and actively support and participate in environmental protection activities.
Nurturing strong individuals, reforming the employee’s structure and working hours are the best way to promote increased productivity in business operations. Canon has introduced such initiatives like a five-day work week and shorter working hours. In July 2008, Canon Inc. launched the new slogan “Work hard, rest well–establish an efficient work style within company hours.” This exemplifies the rationale of our action plan to promote a healthy work-life balance.
The implementation of this strategy has meant:
* Reducing Overtime;
* Supporting the Dual Responsibilities of Work and Childcare;
* Establishing an Authorized Day-Care ;
* Hosting Cultural Research Seminars at Operational Sites in Europe;
* Respecting Human Rights: Prohibiting Discrimination and Preventing Harassment;
* Personnel Promotion and Deployment;
* Making Group Companies a Part of the Local Community;
* Optimizing Workforce Configuration.
9. Possible resistances analysis and methods of over passing resistances
Setting high goals as becoming No.1 in current core business, expanding business through diversification, entering new markets and establishing new production systems, has it risks. There is possible that Canon will encounter resistance from the new markets where it has entered, resistance from the customers when introducing a new product, resistance from employees when facing new technology, new production systems, overall the resistance, fear to new. To overcome that resistance Canon must undergo technical analysis, environmental and social analysis, realize a survey among customers to see the reaction to new and prevent any fear that would keep the customer away from the product. This analysis can be done within the company or with help from specialized companies.
This analysis must be able to report on the costumer’s relation with Canon and with its products/services, the customers lifestyle and how Canon affects it, the need of the customer for new Canon products, what are Canons weak points when it comes to its presence on the market. When entering a new market, Canon has the position on the new comer. A market is going to have already a competitive sector, a pricing list, companies with notoriety, companies that have the monopole. For Canon to overcome those resistances it will have to be able to provide an innovative product, that is different from the ones the competitors have, but still presence all features needed on the market, have a very good marketing and advertising plan, a price that would place Canon in the competitive firms. The resistance encountered when introducing new technology, new production systems from the employs can be overcome by getting the employee to know the technology. This is done by in house training or at specialized institutions. Also the employee lives with the fear that the way technology is evolving nowadays not very soon from now he will be replaced by machines and will lose his job. The company can overcome this resistance by sure contracts, enforced employee legislation.
In conclusion we can say that the good reputation among consumers and the high quality of Canon`s products may not be sufficient to keep it`s leader position but with constant improvement of their technology, an expansion of their product line and by implementing correctly its strategies Canon should be able to keep its position and overcome the financial crisis and the very strong competitors. The strategy of Canon can be termed as dynamic competence building in which distinctive competencies are renewed with the objective of dynamically maintaining its competitive edge.
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