Problem face by canon

Canon is still banging away at the document reproduction market. The company
makes printers and other computer peripherals for home and office use. Its other
well-known lines include copiers, fax machines, and scanners. Canon's optical
segment features products used in such diverse applications as semiconductor
manufacturing equipment, TV broadcast lenses, and devices used for eye
examinations. Canon still operates its original camera business, which makes
digital cameras, camcorders, LCD projectors, lenses, and binoculars. The
company, which generates about three-quarters of its revenues outside of Japan,
continues to emphasize its product development and marketing efforts in Europe
and North America.
and now, from the "Canon on the Loose" article , canon was face the big problem
are other competitive are overtaking canon . example Xerox, Fujio Mitarai was
targeting Fuji and Kodak
想不到canon面对什么问题
think 2 or 3 problem canon was faced.

question 2 and 3
Strategy Used
trategic Analysis of Canon - course: SM3027

1. Canon's strategies have been very effective in balancing growth of market share with
profitability, with the firm controlling a significant share of focused niche markets in the
imaging industry (see Exhibit 1). Cannon's strategic challenges involved identifying the
markets in which it intended to compete and developing competitive advantages to allow
the firm to balance market share and profitability growth within these markets. In the late
1960s, the firm initially adopted a business-level strategic vision of focusing on the small
photocopier niche that was underserved by its major competitors using a technology that
was totally different than the existing technologies used by competitors. The strategic
vision provided direction for the firm's strategic planning process. At the same time, the
corporate planning process was flexible enough to allow Cannon to recognise and exploit
opportunities in related markets over the long run, with the firm eventually adopting a
corporate-level strategy of horizontal diversification based on the evolution of its core
competencies. Over the long run, the development and application of Cannon's strategy
has made the firm a leader in the imaging industry group.

The strategic planning process at Cannon appears to have relied on a SWOT analysis to
identify opportunities and threats, and the internal strengths and weaknesses of the firm
that would allow it take advantage of the opportunities and avoid the threats (see Exhibit
2). The strategic planning process at the business or centre level at Canon established the
general planning procedure of identifying markets that were likely to grow in the future
and entering the market if the firm possessed or could acquire core competencies
sufficient to obtain a competitive advantage in the market. These markets represented
opportunities. At the same time, the markets were served by existing firms, which
constituted a threat to Canon because of competitive rivalry. In effect, Canon would be in
the position of a new market entrant with existing firms controlling the market.

The initial application of this planning approach in 1967 led the firm to identify an
opportunity in the photocopier market as likely to grow in the future, which appears to
have used an assessment of industry attractiveness (see Exhibit 3). The firm determined
that it had a weakness in insufficient competencies to effectively compete in this market.
At the time, Canon had core competencies in electronics and fine optical, which were
related, but were insufficient to obtain a competitive advantage. As a result, the firm had to
acquire or develop additional competencies in printing, materials technology, and
communications, which were necessary to compete in the market. Acquiring the
necessary competencies became a fundamental component of the firm's medium-range
strategy.

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 (Grant, 2005). 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
(Wernerfelt, 1984). 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 practise, 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.

As second aspect of the approach to strategic planning at Canon fundamentally involved

identifying areas in the market that are not well served by existing members of the
industry and allocating resources to exploit the market opportunity. This aspect of the
strategy was an attempt to avoid competitive threats by exploiting opportunities in market
niches ignored by competitors. Strategic groups of firms in an industry constitute a
cluster of firms following a similar strategy with the firms in different clusters not
necessarily in direct competition with each other (Henry, 2008). Firms in the same
strategic groups tend to have similar market share and respond similarly to changes in the
external environment, which results in higher competitive rivalry among members of the
same strategic group. Canon's initial strategic vision involved minimising competitive
rivalry by positioning the firm in a strategic group that was comparatively small with no
firm dominating the market. As a result, Canon's initial strategic vision involved indirect
competition with Xerox in the copier market, with Canon pursuing a market niche in which
Xerox chose not to compete. To some degree, this decision provided additional focus for
the medium-range plan by identifying the specific type of research and development the
firm should conduct to occupy the market niche for small copiers.

A third aspect of the strategic planning process improving its effectiveness was the
decision to independently develop a new technology for photocopiers unlike the existing
technologies available in the market. This decision allowed Canon to differentiate itself
from competitors on the basis of the technology incorporated into its product. It also
increased the switching costs for customers who purchased Canon copiers because the
difference in technology prevents interchanging supplies such as ink with the products
produced by competitors. In addition, it provided a resource in the form of a proprietary
technology that could be used to support future evolution of the strategy. This resource
was in the form of dynamic capability in research and development that could be used in
other markets to develop new types of products, which could be used for vertical
expansion in the imaging market (Eisenhardt & Martin, 2000).

The approach to implementing strategy at Canon over the long run appears to have
incorporated elements the process theory. In the process theory, strategic implementation
involves change, with the employees of the organisation required to make adjustments to
practices and perspectives to conform to the strategy (Whittington, 2001). Firms using the
process approach to strategic implementation make incremental changes to the strategy
rather than radically altering the strategy. The incremental approach allows the employees
responsible for implementing strategy to participate in the process through feedback
loops are every stage of implementation. The feedback loops also provide information to
allow adjustments in strategy based on the alignment of resources with the strategic plan
and changes in the external environment.

Canon appears to have been very effective in its approach to implementation. In the
strategic planning model established by the firm, the centre or corporate strategic
planning unit established the long-range strategic plan, but with input about resources
and capabilities from divisions. The centre provided information about the plan to the
divisions, who created medium range strategic plans at the divisional level that were
consolidated at the centre. The divisions were free to establish the short-range strategic
plans based on the medium range plans focusing on budgeting, which is a resource
allocation tool. Feedback to centre occurs at all stages of strategy implementation. In
practise, Canon's method of strategic implementation used a bi-directional
communications system to support future planning and monitoring of implementation
rather than a directive approach in which centre established strategy without input from
the managers responsible for executing strategy. The approach allowed the organisation
to continue evolving over time to adjust to changes in the external environment (see
Exhibit 5)

2. While the specific strategies used by Canon may not be applicable to firms outside the
photocopy and imaging industry, the approach used by Canon to strategic planning and
implementation could be used by to firms in other industries. The generic strategy
selected by Canon for its initial penetration of the photocopier market was focused
differentiation, which required the firm to develop the technical competencies necessary
to create a new type of photocopier technology (see Exhibit 6). The focused differentiation
strategy gradually expanded to be general differentiation strategy in the broader imaging
market. This strategy was suitable for Canon's specific situation by matching the
conditions in the external environment with the resources the firm had available or could
acquire in a reasonable period of time. The strategy may not be suitable for other
industries because of differences in the nature of the industry, the conditions in the
external environment, and the resources available to the firm.

The general strategic planning and implementation process used by Canon could be
valuable in other industries, but the value may depend on the organisational structures
and cultures of the firms. Canon adopted a process approach to strategy formulation and
execution in which the business units responsible for implementing strategy had some
degree of input in the strategy formulation process. In this model, strategy formulation
and strategy implementation are a dynamic and interrelated process. This approach,
however, may be viable for organisations with similar structures as Canon, which appears
to have had several product divisions but operating in different segments of the imaging
industry. In effect, adopting the strategy to penetrate the photocopier market involved
greater vertical integration in the imaging industry. The approach used by Canon may not
function well for firms that are horizontally diversified across industries, such as a
multidivisional conglomerate or M-form organisation. The multidivisional structure with
divisions functioning as strategic business units (SBUs) creates a barrier between senior
management and operations because of the differences in the resources and
environmental conditions for each SBU (Whittington, 2001). As a result, a firm can have
difficulty with establishing more than a generic strategy for the organisation as a whole. In
addition, the feedback loop used by Canon to obtain input in the strategy formulation
process and to monitor strategy implementation may increase in complexity to the point of
reducing its effectiveness. Nonetheless, firms in other industries with similar structures to
Canon could use the approach to strategic formulation and planning.

The strategic planning process at Canon also had two organisation culture elements
contributing to its success in formulating and executing strategy consisting of
participation of product divisions and the acceptability of debate and risk taking among
managers (see Exhibit 7). The firm used a participative process in the formulation of
strategy rather, which contrasts to the approach in which senior managers formulate
strategy in isolation and implement strategy by directive. The participative approach used
by Canon separated the functions of setting strategy, which was performed by the centre,
from planning strategy, which was performed jointly by the centre and the divisional
managers. In addition, the participative or collaborative approach used by Canon for
planning strategy fostered a closer connection between the realities of the internal
environment of the organisation and the ability of managers to execute the strategy
(Mintzberg, Quinn, & Ghoshal, 2003). To use the participative approach, however, the
organisation must have a two-directional communication system in which divisional
managers are encouraged to provide information and perspectives to senior managers to
support the strategic decision-making process. An organisation with a highly bureaucratic
and authoritative culture could have difficulties using the participative approach to
strategic planning employed by Canon. An additional organisational culture element
necessary to use the participative approach is reward for innovation and risk-taking.
Strategic change often involves the risk that the strategy or the methods used to
implement the strategy will not be successful. Managers from the divisional units
providing input to the strategic plan should be encouraged to develop innovative
solutions to the challenges inherent in the plan such as resource development. The
cultural factors suggests that firms in other industries could use the approach to strategic
planning followed by Canon if their organisations have a collaborative and innovative
culture encouraging acceptable risk taking by managers.

Exhibit 1
SWOT Analysis: Cannon used this process in its initial assessment of the environment
and its resources.

Exhibit 2
Although the formal Porter methodology for assessing the attractiveness of the industry
had not been developed at the time Canon entered the photocopier market, the firm
appears to have used a formal procedure for evaluating the attractiveness of the market.

Exhibit 3
Canon appeared to have used a strategic mapping process similar to the one below to
identify the way in which the firm could leverage its competitive advantage in a market
dominated by Xerox.

Exhibit4
Canon appears to have addressed the problem of the time lag between environmental
scan, strategy formulation and organisational change by adopting a continuous strategy
formulation and implementation process. The participative approach to strategy
management allowed frequent adjustments to implementation according to changes in the
external environment.

Exhibit5
Firms establish a generic strategy based on the match between resources and the external
market.

Exhibit 6
The theoretical relationship of strategy to organisational structure and culture suggests
there is an interrelationship in which strategy influences organisational structure and
culture, but organisational structure and culture have a long-term influence over strategy.