A Report on the Strategic Culture and Marketing Strategy of Canon

A Report on the Strategic Culture and Marketing Strategy of Canon This is a report and detail analysis of internal structure and culture of Canon. Canon is an established international firm in the photocopy and imaging industry. It operates in diverse range of markets which includes business solution, computer imaging, broadcast and communication, medical system and industrial product. This report further evaluates the overseas opportunities of Canon using PESTEL framework. PESTEL is used to analyse the macro environment and to indentify the key drivers of change affecting the company. The analysis of the internal structures and culture of Canon was carried out by using the McKinseys 7S model and SWOT framework to analyze the company internal capabilities. This report is divided into three parts. The first part focuses on the analysis of internal structures and culture of Canon. The McKinseys 7S model and SWOT framework are used in this section for the analysis. The second part relies on Ansoff matrix to assess the overseas growth options available to Canon. The last segment is an analysis of the overseas opportunities for Canon and recommend a suitable overseas market for the company to entry. 2.0 An assessment of Canon internal structures and culture The structure in organization arises as a result of the necessity of the people in organization to know who is in charge, what their role is and who to turn to if there is any concern. Therefore, whether small or large, local, national or multinational, an organization has to have a structure. Henry Mintzberg (1983, p.2) submits that the structure of an organization is the sum total of the ways in which its labour is divided into distinct tasks and then its coordination is achieved among these tasks. Canon as a horizontal organisation includes worldwide Group companies and management committees which are established to address important management issues, and serve a mutual-check function complementing its system of products and operations  [1]  . In this regard, the structure of Canon significantly affects how the company pursue and realized its strategic objectives. It allows or constraints workers (as the case may be) to actually makes changes and get culturally align with the company strategy. All of the company strategic initiatives rely on the ability of the worker to manipulate the culture of the company that guide employee behaviour in the organization. Cooperate culture is the sum of the sociological markers and behaviours of those within an organisation. The degree to which this aligns with the organisation core values is a powerful driver for success. In using the McKinseys 7S model and SWOT framework, the analysis of Canon internal structures and culture are further expatiated. 2.1 Canon Global: McKinseys 7-S and Swot analysis Introduced by McKinsey and Company in the 1970s, the 7-S model has revolutionalised the way management thinks about organisation effectiveness. It is essentially a framework developed to address the critical role of coordination, rather than structure in an organisation. The 7-S that is strategy, structure, staffing, style, skills, system and shared value are used to analysed Canon simultaneously below. 2.1.1 Analysing Canon: The Mckinseys 7S model In terms of strategy, Canon aims to achieve and sustain its goal of becoming a truly excellent global photocopy and imaging company through its five key strategies for growth. Particularly, its strategy follows from the company adoption of the kyosei philosophy in a global corporation plan. Canon operates a flat structure. It is a horizontal organisation which includes worldwide Group companies and management committees (Refer to Appendix 1). It is important to note that different firms are structured in different ways depending on their size, their culture, their activities and their history. Canon represents what Boje and Dennehy submits as a post modern organisation (2000) and therefore able to strategically respond to the contemporary business environment. A post modern organisation comprises a networked set of diverse, self-managed, self-controlled teams with poly-centres that is many centres of coordination that fold and unfold according to the requirements of the tasks. Being a post modern organisation not only explains the systemic nature of Canon, the ability of the company to implement the kyosei philosophy in every segment of the company is also a clear example. Likewise, teams are organized in flat design, employees are highly empowered and involved in the job, information is fluid and continuous improvement is emphasized throughout. Canon is a flat organization that values and entrust the experience of its staffs to do what is right in the organization. As of December 31, 2009 Canon staff strengths stood at 25,683 globally. It is has highly technical and talented staffs. Canon recognises that learning and development is an important aspect of an organisation growth and development (Sadler-Smith, E 2006, p.2), it has invested on training its staffs and this has leads to an improved skills and knowledge by its staff and in particular area of staff expertise. Canon approach to the articulation of its value is based on aligning individual and organisational goals. Therefore with well trained staff, Canon has developed the ability overtime to compete favourably in the industry. Canon has sustains a vitalised culture among its employee for a long period of time (Kono and Clegg 1998, p. 176). The company ability to ensure that its shared value are integrated into the company as a whole and that they are limited to the management levels explains its style and shared value. Furthermore, the style at which an organisation chooses to pursue its objectives is crucial to the successful realization of those objectives. The core values are foundational to everything that the company does, and organisational style of doing things is part of the core values. It helps defines how the employee, dealers and suppliers are going to help the company contribute to achieving the organisation vision. Canon is an organisation that prides on excellence and technology. Canon of invention is an invincible powerful force that gently nudges the workers into compliance with being continuously innovative. Canon marketing campaign often takes account the local consideration and languages. The kyosei corporate philosophy symbolizes the corporate value which is the shared value of the company. Kyosei means living and working together for the common good which embody the broader share value of the organisation All people regardless of race religion or culture, harmonising living an d working together into the future. 2.1.2 The Swot analysis of Canon This section involves the identification of strengths, weaknesses, opportunities and threats as regards to Canon. The SWOT analysis is a management instrument for developing structured response options to deal with external threats and exploit opportunities. 2.1.2.1 Strengths The unique concept and quality of the services offered by Canon is its one major competitive strength. It has been able to sustain this through its focus on inventions and also continuous management innovative reforms. Improved management quality refers to the achievement of real-time management that immediately puts into practise strategies based on well-horned decision-making process (The Canon Story, 2009/2010). The strength of the company to maintain its competitiveness also emanates from good customer relationship it has established with its customers overtime. It has succeeded in transforming the mindset of its employee to be focus on total optimization and profit and has thus enable the employees to relate to customers in an effective and efficient ways. In addition, it has multi skilled labour that cut across all segment of the organisation expertise and they are very effective in matching both the tangible and intangible company resources to its strategies. 2.1.2.2 Weakness Despite the fact that Canon is a global name, it has not extensively exploits other business areas and domains outside its traditional markets of Europe, United States, China and Japan. It should not only restrict its participation to exhibitions in markets outside its traditional zones, it has to be seen to establish production lines in such emerging economies like Brazil and South Africa. This has the potential of sustain its global competitiveness and these markets are rapidly growing with major global impacts. It will also bolster the company diversification process. 2.1.2.3 Opportunities Although, the company expansion into China is also applicable to all major brands in the imaging industry, Canon major opportunity for competitiveness stems from this expansion into Asian countries. In this light, it will be able to benefits from the rise in the demand for digital product in these countries. It bolsters its capability to capture growing demand worldwide for digital products. By focusing on China and other Asian markets, Canon can benefits from the growth potential of these rapidly emerging markets. 2.1.2.4 Threats The major threats to Canon in the industry are from its competitors products. There are intensive competitions among the major players such as Sharp, Toshiba, Sony, Samsung and others each striving for excellence. This creates intensive competition for substitutes products that Canon has to deal with. However, it should be noted that Canon is responding adequately by establishing fully automated production lines built around automated machinery and robot to sustain international competitiveness. 3.0 An examination of Canons strategic business growth In this section, the Ansoff Matrix is used to analyse the process of Canon strategic business growth. The Ansoff growth matrix is a tool for strategic business planning. Although, it must be used along with other decision making tools, the Ansoff Matrix is a tool that can be used to formulate growth strategy for business and market. Table 1 shows the matrix as developed by Igor Ansoff below: As shown in the above diagram, the matrix formulation considers two growth areas which could be the launch of a new or existing product in the markets and growth of a new or expansion of the existing markets. Therefore the growth strategies are developed based on the formulation of growth strategy for the business concerning the products and markets. These are: One, existing product in an existing market, which is indicated as market penetration. Two, new products in an existing market, this is indicated as product development. Three, existing product in new markets, this is market development, and four, new product launch in new markets which is the diversification strategy. Canons Ansoff Matrix 3.1.1 Market Penetration The market penetration strategy of Canon is focus on selling the existing product in existing markets. The company in selling its existing products in the markets can embark of product price cuts in other to increase the sales in existing products. The primary objective is to continue to achieve higher market share in existing markets which of course involve improving the elements of the marketing mix. 3.1.2 Market Development This will involves launching the existing products into a new market overseas or targeting new segments in the home market. For example, Canon launch its products in various countries with different purchasing powers therefore the company will have to match the cost of production of their product in competition with others existing business in the same county. 3.1.3 Products development This simply involves the development of a new product for their loyal customers in the existing markets. This mainly is been carried out by creating new products with modified feature to attract customers. Canon uses this as strategy of continuously developing and upgrading its products while at the same time aiming to ensure the loyalty of its customers. 3.1.4 Diversification Diversification involves that Canon enter a new market with completely new products. This strategy may be suitable for Canon as it has gained a market share in established markets and are seeking new growth opportunity of business which has reach saturation in their markets. Therefore, it can invest completely in new areas as it is doing now medical imaging and other advanced technologies. 4.0 An evaluation of overseas opportunities for Canon The PESTEL framework is used here to analyse Canons overseas opportunities and its suitability for overseas market entry. The market environment where an organisation stands contains both the micro and macro aspects of the environment. PESTEL is used to analyse the macro environment and to indentify the key drivers of change affecting customer buying behaviour in the photography and imaging industry. The PESTEL framework for Canon in three countries is first tabulated below before the short analysis is done. Factors (PESTEL) China USA Brazil Political Attract Investment Investment friendly Attract investment Economic High consumer demands High consumer demand High consumer demand Social Rapidly expanding middle class Large middle and buoyant middle class Growing middle class Technological Growing rapidly Established Growing Environmental Conducive Conducive Conducive Legal Unstable Stable Stable Table 2: PESTEL Analysis The above table shows a simple evaluation of how the political, economic, social, technological, environmental and legal factors affect Canon business expansion in three countries. In terms of the political factor, China, USA and Brazil political environment are conducive for investment. They are attractive for investment and as such there is opportunity for expansion by Canon. In China, the economy has been growing between 9%-11% every year since the 1980s. Chinas rapid economic growth is reflected in a high concentration of Ultra-High Net Worth Individual (Ultra-HNWIs); it raises the peoples standard of living. This is also similar to Brazil where consumers purchasing power is on the increase. Therefore the Chinese economic development over the past three decades, Brazil growing consumer consumption and United States large middle class are indications of market opportunities for Canon. The rapidly and upper class in China seeks to enhance its identity and quality of life with luxury goods which is a good opportunity for Canon as its concentrates into high-tech products. China is not only an attractive market because of its large population, Chinese consumer markets is increasingly tending towards high-tech products. The growing demand for medical imaging products in China is an opportunity that Canon has to tap into. In regards to the environmental factors, a keenly awareness of the industry, market, trends, demographics and burgeoning technologies is important for Canon strategic business development. For instance, there is growing global need for technology that protects the environment and as such Canon can seek to expand its capacity in this area. The tremendous opportunities that springs from globalization should be balanced by the need to remain vigilant of changes in the societal, political and business climate of the world at large. While the existing laws in China which is in various jurisdictions governing issues such as taxes, personal privacy of China is uncertain and unstable, the legal factors in USA and Brazil are very conducive for Canon rapid business growth and expansion programmes. 4.1 Canon market entry strategy The market entry strategy pursue by a company depends on its vision, the company attitudes towards risks and importantly the available investment capital. The level of risks and financial rewards increases as a company moves from market entry strategy such as exporting to joint venture to licensing and ultimately to direct investment. Canon evaluates the revenue channels such as licensing, investment and strategic alliances/partnership and uses that as a market entry strategy with minimal risks. A firm choice of mode of entry to a market is central to the implementation of its international strategy (Pehrsson, 2008). Canon has often taken a broad approach to international market entry. This is because most of its products are often available through distributors in many major capitals. It makes the company an already existing entity even before any major entry into such markets. With the advantage of first player in the market, Canon has build up a strong reputation to maintain market position. However, when existing company seeks to enter developing markets, there are additional strategies and issues to address. Canon usually replicates its style and the strategy that have serves it well without significant adaptation. Therefore, Canon normally enters new markets with the objectives of achieving greater market penetration. Largely, this approach has been successful for the company in China.