Canon strategic analysis case study Essay

This report examines the warlike dodging that enabled the photographic camera participation from Japan1 not only to break d avouch the monopoly enjoyed by xerox in the copier employment in the 1970s but to a fault to grow into a passing diversified, multi- harvest-festival and multinational premier party.Specifically, the report considers (1) the combative st wandergy of canon (2) the major resources and capabilities of enactment (3) guidance of the instruction and transfer of capabilities throughout the agreement (4) Canons strategic emplacement (5) is Canon successful? (6) last and key discipline pointsCompetitive strategyThe dominant generic competitive strategy adopted by Canon is differentiation. The company deployed its technological capabilities and know-how in fine optics, precision mechanics, microelectronics and fine chemicals to develop innovative and state of the art products, which were of better quality than those of its competitors. These products resu lted mainly from the strong, decentralised look into facilities of the company and the incredible ability of its engineers to convert enquiry findings to new products and technological innovation. Although Canon surveyed in manufacturing products at low cost, it did not deliberately compete on the basis of low price. The quality of its products combined with significant amount of marketplaceing and deliberate brand victimization efforts have established a sound reputation for Canon in the market and these underlie the competitive return of Canon.Resources and capabilitiesThe major resources of Canon are as follows(1) Financial capacity product innovation and confederate festering in sales and profits enabled provided Canon with the finance required for additionalresearch and product growth which resulted in further increases in revenue in a virtuous cycle.(ii) Decentralised R&D and new product development in addition to the companys main research centre which supports sta te-of-the-art research in optics, electronics, new materials and information technology, each product division has development centres (manned by its own R&D personnel) where 80% to 90% of the companys patentable inventions are disc everywhereed. three roughly incorporated research centres are responsible for applying the research findings to new products development. The company withal introduced course of instructions to reduce the era for taking new technology to market by 50%. Innovative products provide the company with competitive advantage through new sales and patents, which serve as entry barriers to competitors.(iii) Marketing expertness the effectualness of Canons marketing expertise derived from an effective product introduction strategy, a strong principal internet, large advertising spend and brand development. New products are first introduced in the dwelling house market in the beginning they are sold overseas in order to enable the learning and experience f rom the home market to be transferred to international markets. Even then, new products are only introduced into the market through proven, breathing channels, to minimise the risk of failure. The Company also built up a strong dealer network which supported both sales and service of copiers. Dealers had to complete a service training course before they are allowed to sell copiers. Canon regards dealers as a vital asset through which it is able to go steady and reply to customers reads on a timely basis. Brand development efforts are undertaken through advertising, corporate sponsorship and a deliberate effort to only associate unique and quality products with the brand. This was demo when Canon pertinacious not to market the inferior CPC technology licensed from RCA under the Canon name.(iv) Partnerships and mutual venture relationships despite Canons strong technological capability, it acknowledges that it has neither the resources nor the time to develop all the technolog ies needed for its products. This resulted in the development of strategic alliances and joint ventures inEurope and in the US, with companies such(prenominal) as CPF Deutsch, Eastman Kodak and Texas Instruments. These relationships were not only sources of required technology, they also served as strategic tool for market development for the companys products and for mitigating foreign trade tensions.(v) gamey quality, low cost manufacturing Canon has a philosophy of producing quality products at the lowest cost. Strong ferocity is placed on inventory management, waste reduction, material and production planning. Continuous improvement in productiveness was achieved through mechanization and innovative process improvement. The commonality of parts between adjacent copier models also contributed to low cost of manufacturing due to standardisation. High quality, low cost manufacturing combined with premium prices provide Canon with an opportunity to earn good margins.(vi) Highly m otivated work-force employees are held in high regard at Canon. This was applicable to both business unit managers as well as production line workers. The business unit managers were empowered to act as surrogate CEO of their units and to make quick business decisions. A number of initiatives were implemented to motivate production workers. These include the break dance and fix it programme (which empowers any employee to stop the production line if he or she believes there is a quality problem), responsibility for maintenance of own machine and on-line feedback on quality and production targets. The take of motivation was reflected in the suggestion programme implemented by the company which resulted in more than 70 suggestions per employee per year, with a 90% implementation rate of suggestions offered. These resulted in significant corporate savings relative to the cost of the programme.(vii) Visionary leadership the companys president, Mr. Kaku, was a very effective and vision ary leader. He introduced the diversification drive, corporate entrepreneurship and was very think on the long barrier direction of the company.(viii) Suppliers relationship the long-term relationship developed with suppliers enabled the company to outsource the manufacturing of over 80% ofcopier parts to suppliers.(ix) Long-term approach Canon always takes a long term view when making management or strategic decisions. This was demo for instance when the company developed the undulate jet printers which was capable of cannibalising its well established laser jet printer. This approach enabled a consistent and focused implementation of strategic choices rather than short term panic reaction to crisis and challenges.These resources and capabilities are extremely substantial for Canons competitive advantage over its competitors.Management of development and transfer of capabilities throughout the government activityAs Canon grew into a multi-product, multinational corporation, t he companys management took the following steps to discipline the continued development and transfer of capabilities throughout the organisation(i) Implementation of mugwump entrepreneurial business units independent operating units were created for cameras, office equipment and optical instruments. The business units were empowered to act on their own but were disposed clear profitability targets and highly ambitious growth objectives.(ii) Functional committees three functional committees were established by management to oversee the company-wide administration of new technology and product development, manufacturing and marketing. These committees were chaired by members of Canons management committee, which gives them the ability to ensure consistency and communicate improvements throughout the organisation and into the different business units.(iii) Development of a orbicular information system Canon developed the GINGA system to interconnect all parts of the organisation int o a global database to facilitate the timely flow of information among managers in all the companys locations around the world.Canons efficient vertical communications structure with a lateral unrivalled will facilitate direct information exchange among managers across businesses, countries, and functions1.Strategic perspectiveThe strategic perspective of Canon has traditionally been inside-out orientated. The company had a product focus whereby it deploys its technological capabilities to develop a diverse melt of products, which it then markets on the strength of its brand through a wide range of dealer network and direct sales channel. The advantage of this method for a company like Canon is that it is able to leverage its expertise to develop a wide range of unique products. The costs associated with such developments would relatively be lower as it leverages on existing capabilities. The experience gained in the use of the cardinal technology should result in high quality p roducts. There is however the capability danger that the company may be unaware of changing trends and requirements in the market and therefore be unable to respond swiftly, giving competitors an advantage.It would appear however that Canons strategy is not exclusively inside-out, but has some elements of market focus. The development of the personal copier market for instance was found on an identified need in the market, with a clear description of the features of the product that would meet the need. This was clearly base on an outside-in approach. In addition, one of the major reasons that Canon values its dealer network is because it enables that company to understand and respond to customers needs.variegation into the computer industryBased on the capabilities of Canon in the early 1990s, the company should have a good chance of doing well if it focused on the computer industry for the following reasons(i) The company has demonstrated a strong ability to develop new technolo gical innovations on the back of its existing technologies. With itsexpertise in electronics, optics, fine chemicals and semi-conductors, Canon has the potential to develop quality computer systems that will compete favorably in the market.(ii) Canon already has a well-established brand name in home and office automation products through its range of copiers, facsimiles, electronic typewriters, laser printers and word processing equipment. The company will probably succeed in linking these discrete products into a multifunctional system. With the quality associated with the brand, its strong dealer network and direct selling experience, the market is very likely to give such a system a chance.(iii) Canon has also demonstrated the ability to buy in technology through its strategic alliances. This capability, with its low cost, high quality manufacturing should enable Canon to develop competitive computer systems.Apart from computers, the company should consider products that can util ise the companys existing technological capabilities and dealer networks, such as DVD, televisions and similar products.Is Canon successful?From a variety of perspectives, Canon can indeed be regarded as successful. It effectively damaged the dominance of turn back over the copier market, developing its market shares during the period. It also successfully diversified from being a camera company into a multinational, multi product company offering a range of high quality products to its global customers. The Canon brand name is well respected across the globe. Financially, the company recorded consistent growth in sales and profits over the review period. A review of the companys pecuniary statements from 1998 to 2002 showed that Canon has continued to grow its turnover and net income.Conclusion and key learning points(i) Resource based approach Canons success was largely driven by thecompanys ability to utilise its core competences to develop innovative products as a means of gai ning competitive advantage.(ii) Continuous learning and innovation Canon demonstrated the benefits of continuous learning. As it succeeded with the AE-1 camera, its researchers and engineers further developed new expertise in microelectronics (to produce the electronic calculator), the new process (for copiers), cartridge based technology (for the personal copier and later the desktop printer) etc. These enabled the company to diversify its range of products which was one of the reasons for its growth and success.(iii) Strategic value of partnerships and joint ventures Canon effectively used these for acquiring technologies, developing markets, mitigating foreign trade tensions and reducing costs.(iv) Corporate level strategy as the company developed into a multi-product and multinational corporation, the corporate level strategy remained the fomite through which the global organisation was managed and integrated.(v) Strong monopolies can be humbled with over 93% market share in th e 1970s and a brand name that was synonymous with copying, it would appear that the positional advantage of Xerox was unassailable. Canon demonstrated that such monopolies (when not imposed by government) can be broken through the introduction of innovative and quality products. By introducing the personal copier, the company also demonstrated the potential impact of one firm to completely change an industry.