Canon Case Study

Cranefield College

Of

Project and Programme Management

MODULE 4

Transformational Corporate Strategy

I, the undersigned, hereby declare that this assignment is entirely my own work, and that it has not previously been submitted to any other Higher Education Institution. I also declare that all published and unpublished sources have been fully acknowledged and properly referenced. This includes figures, tables and exhibits. Where modified by me, this has also been indicated.        

Table of Contents

1. Contents

1.        Introduction        3

2.        Analysis of the Case        3

2.1        Canons Co-operative approach        3

2.2        Leading Edge in Product Development        4

2.3        Competitive Advantage        6

2.4        Innovation        7

3.        Conclusion        7

4.        Bibliography        8

Table of Figures

Figure 1 – Strategy Management Process        4

Figure 2 - Analysing Resources and Capabilities        5

Figure 3 – Reasons for failure of Strategic Planning (Lynch:466)        8

Executive Summary

Canon, “the Camera Company from Japan” initially started to provide the world with affordable Precision Optical Instruments, begun its business operations in 1937 under the name Seikikōgaku kenkyūsho.

In 1962, Canon established is R&D section to explore the fields of copy Machines, amongst others devices. Through the years, the company went on to develop and improve on its core Camera ranges while adding additional devices such as Calculators to it product range. Canon identified the opening in the global market of photocopying and its potential growth. A market that Xerox Corporation of USA has held dominance over since the 1950s. However, this was not a deterrent for Canon, with their vision ‘to catch Xerox through technological differentiation’.

Canon knew the only known method of plain Paper Copying was protected by numerous Patents owned by Xerox, but Canon pursued a new method that would not infringe on the Xerox Patents.

Canon is today, a world leader and has developed its core businesses around its photocopying and optics competencies.

In this Case Study, we look at what challenges they could have faced being such a large company implementing and managing a strategic Planning Process.

1. Introduction

In analysing the case “Strategic Planning at Canon with a co-operative corporate style”, the evidence that Canons Strategic Planning was not just a vision, but more of an assessment and allocation of its core competencies became clear. The firm believes in the approach that what they can do, they do well.

Planning is done over a long term, taking into account the development and changes in the processes involved to produce a product.

Failure is also taken into consideration and the risks reductions are built around them

The most important facet of the planning is that the resources rely upon each other and divisions of the organisation rely on co-operation from each other.

Most companies have exaggerated plans for market growth, however many never realize them. In their book Profit from the Core, Chris Zook and James Allen report that between 1988 and 1998, seven out of eight companies in a global sample of 1,854 large corporations failed to achieve profitable growth.

1. Analysis of the Case

1. Canons Co-operative approach

Hamel and Prahalad argue that Western based companies focus on trimming their ambitions to match resources and, as a result, search only for advantages they can sustain. Whereas Japanese corporations use resources to their full potential in an attempt to achieve what would be impossible goals. These organisations build the desire to succeed within their employees and maintain it by instilling the vision of global leadership.

(Hamel & Prahalad)

The dominant competitive strategy used by Canon is differentiation.

The company used its technological capabilities and expertise in fine optics, precision mechanics, and microelectronics to develop innovative and state-of-the-art products, which were better in quality than those of its direct competitors.

[pic 2]

Figure 1 – Strategy Management Process

1. Leading Edge in Product Development

The case states Canon takes years to develop, test and perfect High Technology Products that include the risk of failure, but always with a well developed and implemented contingency Plan in place to mitigate the risks associated with it. This allows them to stay ahead of the competition. Short Term plans are more financially orientated, focusing on the budgets obtained from the medium Term plans as a basis for the budgeting direction.

However, these principles are only effective if the organisation aligns the strategies of all its business units, as well as its external collaborators, to develop a complete business Strategy.

Canon exercised cost modelling and because of this, were able to fine tune the processes involved in Production Processes, Material Planning and developing and maintaining strong supplier relationships. One such example is that Canon were able to save 175 Billion Yen between 1976 and 1985 due to a formal waste management process.