Introduction

Canon started in Japan in 1937 as a small camera manufacturing company. It grew rapidly after
World War. Canon had diversified into many areas in the 1950s and 1960s, including office
micro graphic equipment in 1959, copiers in 1962, and electronic calculators in 1964. It had also
expanded globally during that period, with USA, Japan and Europe each accounting for roughly
one third of its business. Although it was the worlds largest camera company in 1982, less than
half of its revenue came from cameras and more than a quarter of its revenues came from large
copiers. Understanding how Canon evolved its business around its core competencies is really
important.

Copier Market Background

Before introducing the new type of the Canon PC copiers in 1982, the world copier industry was
characterized by rapid market growth, major advances in technology, and increasing
competition. The market favored plain paper copiers over coated paper copiers. Before PC
copiers became available in 1982, copying was done on a departmental basis within companies
and through commercial copy centers. Satisfaction of copying needs depended on a copiers
performance, features, quality, maintenance, price and after-sales support. Those factors became
the bases for defining various market segments which are shown in the table.

Low Usage
Characterized by low usage (no more than 5,000
copies per month)
A need for clear copies
Simple features such as enlargement and
reduction
Moderate price sensitivity
Minimal need for after-sales support from the
vendor

High Usage
Characterized by high usage (more than 25,000
copies a month),
A need for high resolution copies
Use of numerous copying features
High price sensitivity
Extensive vendor maintenance requirement

Canon PC copier development process

The achievement of the company rest on the ability to hold the core competence and develop it
continuously. Canon planned to tap the untapped segment at that time viz. Low Usage. A
development plan was formed. As part of the plan, a small team was formulated which
developed the core concept of the copier and defined key benefits viz. an affordable price of
about $1000, worlds most compact copier, ease of use and free maintenance. The team faced
two major hurdles. One was providing the affordability at the tight cost. The other one was from
the competitors notably from Xerox. Xerox had tight patent protection on many features of
copier technology. A clear formulated strategy around core competence was formed.

What Canon Achieved?

After the launch of new PC copier, Canons Sales reached a point at which Canons
manufacturing facilities were operating near capacity. The market share doubled in USA since
the launch of PC copier in 1982 in just 9 years. Canon PC copier targeted a previously ignored
market segment. It also enabled Canon to secure major technological know-how and patent
rights. Canon leveraged this technology through many new and successful products, including
the laser. By the PC copier business Canon achieved market expansion, organization renewal and
technological benefits. Subsequently, Canons worldwide sales of business equipment tripled
merely in 10 years, and during that time Canon became the worlds largest copier company in
units sold. This feat was not only financially satisfying, but also strengthened the Canon
organization.

How Canon achieved this Success?

The sole reason behind Canons success was the Canons core competence spread across diverse
businesses such as camera, copiers and the area of microelectronics are shown in the following
image. Each of the Canon products has at least one of these core competencies. When Canon

identified the opportunity in PC copier business, the managers pulled together a group of talented
people.

Figure 1 Core Competencies at Canon

The culture of Canon also played a significant part in developing this product. The corporate
philosophy of Canon is Kosei which means living and working together for the company good.
This philosophy is evidently communicated to each employee. So, when given a challenge to
develop a personal copier with certain characteristics, everyone worked supportively to meet it.
Also critical people were moved regularly between the copier business and camera business.
Mid-career assignments to other divisions diffused the core competency, transferring the
essential know-how of the business resulted in creating the strong foundation of Canons core
competence.

References
Han-Kyoung Lee(1999). A Study on Core Competence Management
Henry, A. (2007). Understanding Strategic Management. Oxford: Oxford University Press.
Huang, H.C. (2009). Design a knowledge-based system for strategic planning: A balanced scorecard
perspective. Expert Systems with Applications, 36(1), 209-218.