Canon: Modifying a Successful Strategy Essay

Canon is a Japan-based manufacturer, with worldwide sales exceeding US$45 billion, and profits of almost US$3 billion. Canon’s well-known product lines include business machines, medical equipment, semiconductors, cameras, video equipment, and broadcast equipment. Business products account for 75 per cent of Canon’s total annual sales, cameras represent 18 per cent of sales, and optical equipment and other products comprise 7 per cent of sales. In most of its markets throughout the world, Canon’s major competitors are other Japan-based manufacturers, such as Sharp (which has a strong line of inexpensive photocopiers and other products aimed at the same small-business market that Canon often pursues, Minolta ( Japan’s largest camera manufacturer and Nikon (known for its technologically advanced products).

It also competes against such U.S. firms as Xerox, Kodak and RCA. In 1985, Canon was the 125th largest firm in Fortune’s ranking of industrial corporations outside the United Stats; today it is in the top 100,

Because it is highly committed toward maximizing its long-term performance (as are most Japanese companies), Canon re-evaluated its overall Marketing approach and strategy – so that it may prepare properly for the future.

In particular, Canon addressed these two areas: its need to be more market-oriented; and the need to maintain its strong level of foreign sales, particularly in North America and Europe.

Over the years, Canon viewed itself as a technology-driven company. According to its corporate communications manager, “we aim to develop our own unique technologies, which can then form the basis of our products.” As a result, Canons new – product development has been considered a function of Research & Development, not Marketing. But then, the firm realized that this approach must be modified:

Canon must change from a product-oriented company to a market-oriented one. Until now we have been more concerned with production and sales than Marketing. We will be focusing more closely on the needs of different consumer groups in each country and less concerned with the traditional production-oriented way of thinking.

As part of the need to be more market-driven, Canon restructured from its present three product-based divisions (business machines, cameras, and optical equipment) to a more market-driven structure.

In giving Marketing a greater role, Canon is also keeping this in mind: “As Marketing is made stronger, there is the risk it will weaken the motivation of the engineers who both pilot the new technologies and develop the new products.”

With regard to its international efforts, Canon relies on overseas markets for 70 per cent of its total annual sales; this is a much higher percentage than for its competitors. For example, North America and Europe are Canons largest markets; each of these markets comprises 30 per cent of Canon’s sales. Annually, the company spends millions on media advertising, point-of-sale displays, and other promotion materials in North America and Europe.

To be more responsive to foreign-market needs, Canon introduced a global Marketing system in recently. This system allows Canon to have similar products and Marketing approaches in various overseas markets while it better tailors business plans to the specialized needs of major market areas. For instance, Canon could develop a computer system with standardized hardware for all market areas, but with software that is tailored to each specialized market.

To reduce the impact or trade barriers (such as trade-protection laws restricting the sales of foreign products in domestic markets) and the high value of the Japanese yen relative to other currencies (thereby making Japanese products more expensive in other markets), Canon has begun opening more Research & Development and production facilities abroad. The objective of such a strategy “is to make Canon a company with no national identity and free from trade friction, keeping production facilities close to the place of consumption.”

1aDescribe the potential areas of conflict between the research-and-development department and the Marketing department at Canon.

1b How may potential conflicts be minimized?

2a Evaluate pros and cons of Canon’s proposal to switch from product-based to market-based business units.

2bWhat are Canon’s new business unit names? Briefly describe the target segment for each business unit.

3.What are the advantages and limitations of using the Boston Consulting Group for business analysis? How can Canon use the BCG matrix in planning its Marketing strategy?

4aCritically assess Canon’s recent international Marketing decisions.

4bIn light of the restructuring, devise a new vision statement for Canon. (Hint: “A vision is a guiding image of success formed in terms of a contribution to society. If a strategic plan is the “blueprint” for an organization’s work, then the vision is the “artist’s rendering” of the achievement of that plan. It is a description in words that conjures up a similar picture for each member of the group of the destination of the group’s work together.”)

5.Why might is be necessary to modify a successful strategy?

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