Achieving Sustainable Competitive Advantage: A Case Study of Canon

This essay focuses on the case study of Canon and how it managed to attain sustainable competitive advantage in the market using the Resource Based View model (RBV). It discusses the internal resources of an organization in order to achieve sustainable market advantage. By utilizing internal resources along with a dual cost and differentiation strategy, Canon has been able to achieve competitive advantage over their contemporaries such as Xerox, and has been able to sustain its competitive advantage in the market.

Running head: STRATEGIC MANAGEMENT
Strategic Management
Name of the Student:
Name of the University:
Author Note:

1STRATEGIC MANAGEMENT
In the year 1933, Canon was founded with an aim to build a 35mm camera that would
be a market rival for the Leice model of Germany. Its aim was partially fulfilled when in only
two years since its release; it became Japan’s most popular producer for high quality cameras
(Wagner III and Hollenbeck 2014). The company began moving into the copier territory in
1959 and formed a research group in the year 1962 to conduct extensive research into the
technology of the industry. At that time, Xerox patents protected all copier technologies. Due
to this, Conan decided to not use their company name on its product and brand its product
under the Confax 1000 name in the country of Japan only. Therefore, by adopting alternative
business as well as production strategies, Canon tackled the business market of Xerox not
only in Japan but also throughout the world. This essay will focus on the case study of
Canon, and will address how it managed to attain sustainable competitive advantage in the
market using the Resource Based View model (RBV).
In the 1970’s the patent of the Xerox Company began to expire resulting in a surge of
new companies to launch their brand of PPC copiers into the market. Canon marketed their
own PPC copier through their own PPC copier technology in their selected markets.
However, the Canon brand name could only be seen in the NP copier released by the
company in the year 1970 (Schilke 2014). The following generation of the NP copier called
as the NPL7 was released worldwide by Canon except for the North American countries.
Canon continued to gain a much wider market space through its innovative productions. In
1973, it became one of the earliest companies to add a color feature to the NP system.
Moreover, in 1975 it added the laser technology for printing. In 1978, it took a leap into
manufacturing volume copiers by releasing the NP200, which later on at the Leipzig Fair
won the gold medal for being the most economic as well as the productive copier in the
market. Thus, Canon successfully built its market through technological innovations along

2STRATEGIC MANAGEMENT
with marketing expertise. In addition to that, Conan also increased its consumer base by
focusing on producing low price yet high quality products.
The Resource Based View focuses on the internal resources of an organization in
order to achieve sustainable market advantage (Day 2014). According to the resource-based
view, at first, a VRIO analysis has to be done which involves a few steps (Seidi et al. 2014).
When applied to the Canon case study, these steps show that, the technology employed by
Canon in the late 1970s to add laser printing to its NP system and then developing the
technology to manufacture volume copiers were both rare as well as inimitable (Urbancova
2014). Moreover, at that time due to these innovations it not only gained a distinct market
advantage, but also held its position in the market for quite some time. In addition to that, the
last step of the VRIO analysis also dictates that, Canon was organized enough to capture the
market value generated by its resources (Vanpoucke, Vereecke and Wetzels 2014). The
VRIO analysis depicts that, it was due to these factors that Canon was able to achieve
sustainable competitive advantage.
In the next step, the resource-based view (RBV) divides the resources into tangible
resources and non-tangible resources. Non-tangible resources offer much more competitive
advantage than tangible resources, as they are much harder to buy. In the case of canon also,
a non-tangible resource helped them to attain sustainable market competition. The RBV
further assumes that, the resource liable for sustainable competitive advantage should b
immobile at last in the short run. This will ensure that, no other company can copy the
resource and that due to this feature; the competitive advantage will be sustainable in nature.
The RBV model also states that, in comparison to external competitive factors,
companies can much easily gain sustainable competitive advantage by concentrating on
development and utilization of their internal resources. When Canon aimed to capture a

3STRATEGIC MANAGEMENT
market value in the era of Xerox, it followed the same rule of focusing on its internal
resources rather than external market factors. For an instance, instead of devising a plan to
dethrone the ruling company Xerox from the market, Canon focused on creating innovative
products and launched them in the market to achieve competitive advantage. The NP200 was
at its time the first copier able to make bulk copies at a much cheaper rate than that of Xerox
9200. Therefore, Canon attained sustainable competitive advantage due to its products being
both innovative as well as economic at the same time. Because of such a sustainable
competitive advantage, by 1982, Canon’s copiers emerged as the highest revenue generating
products in the company, surpassing its cameras as well.
On of the pillars of establishing a sustainable competitive advantage is to ensure the
possession of strategic assets by a firm. Strategic assets refer to the properties owned by a
company, which would guarantee bulk customer engagement using either one of patents,
domain names, or brands. Canon managed to create a brand in the market of the 1980s by
using an innovating introduction strategy, which employed the systematic process of
introduction. Generally, back in the 80s, while introducing a new product into the market, the
product is at first launched into the domestic market of the company, where it would be
allowed to gain considerable market value before releasing it in abroad. The time span
between the domestic and the abroad release processes would be very long often extending to
two years. However, canon had learned in what ways the Japanese market could be easily
captured, so that the time span between its domestic and foreign release of products is
reduced by a huge margin often by months.
Further, Canon would never release its new products simultaneously through all its
distribution channels, it would at first release its products through its trusted channels only,
and allow the products to gain a significant market value. It would then release the products
through the other distribution channels, which would be created by it. This process of

4STRATEGIC MANAGEMENT
distribution of a new product starkly reduced the market risk of the product. Reflecting on
this strategy, Canon’s NP copier would not be released in the US until it gained a significant
market in Japan through Canon’s own Business Machines Sales channel. Other marketing
strategies utilized by Canon were to integrate backwards, to build long-term relations with all
of its suppliers, and to hold back a couple of suppliers always.
Canon’s competitive advantage can be thought to be comprised of two components
such as, cost advantage and differentiation advantage. The cost advantage is that advantage
which is gained by a company by producing a similar quality of product in comparison to that
of their contemporaries but at a lower selling price. However, the differentiation advantage is
that advantage, which is gained by a company because of manufacturing high quality
products in comparison to their contemporaries in the market, and then charging an exotic
price for them. Though the price remains very high, however the high quality of the product
ensures that it gains a significant advantage over its contemporaries. Canon, on the other
hand, utilized both of these advantages in order to rapidly progress in the market of the
1970s, which was occupied by the Xerox Company. Canon made unique innovations to
increase the quality of their product while still keeping the selling prices of these exclusive
products much cheaper than all the copiers available in the market. This unique strategy was
the first one of its kind and catapulted Canon to gain a significant dual competitive advantage
and occupy a secure position in the market of the 1970s as well as 80s.
Therefore, from this essay it can be concluded that, due to employing internal
resources rather than focusing on external market factors, Canon was successful to create a
sustainable market according to the Resource Based View model. It can also be deduced from
the above discussions that, according to the VRIO analysis, Canon ensured sustainable
competitive advantage by innovating its products in such a way so that other business firms
are unable to replicate it. In addition to that, Canon also ensured a dual competitive advantage

5STRATEGIC MANAGEMENT
by combining both the strategies of manufacturing high quality products with low selling
prices. This unique strategy helped them to progress rapidly despite of Xerox Company’s
strong foothold on the market. Moreover, this dual strategy was the reason behind the
reception of gold medal by Canon in the Leipzig Fair for being the most economic as well as
the productive copier machine of that year. Therefore, it can be concluded that, by utilizing
internal resources along with a dual cost and differentiation strategy, Canon has been able to
achieve competitive advantage over their contemporaries such as Xerox, and has been able to
sustain its competitive advantage in the market.

6STRATEGIC MANAGEMENT
References
Arseculeratne, D. and Yazdanifard, R., 2013. How green marketing can create a sustainable
competitive advantage for a business. International business research, 7(1), p.130.
Day, G.S., 2014. An outside-in approach to resource-based theories. Journal of the Academy
of Marketing Science, 42(1), pp.27-28.
Hinterhuber, A., 2013. Can competitive advantage be predicted? Towards a predictive
definition of competitive advantage in the resource-based view of the firm. Management
Decision, 51(4), pp.795-812.
Huang, K.F., Dyerson, R., Wu, L.Y. and Harindranath, G., 2015. From temporary
competitive advantage to sustainable competitive advantage. British Journal of Management,
26(4), pp.617-636.
Saeidi, S.P., Sofian, S., Saeidi, P., Saeidi, S.P. and Saaeidi, S.A., 2015. How does corporate
social responsibility contribute to firm financial performance? The mediating role of
competitive advantage, reputation, and customer satisfaction. Journal of Business Research,
68(2), pp.341-350.
Saeidi, S.P., Sofian, S., Saeidi, P., Saeidi, S.P. and Saaeidi, S.A., 2015. How does corporate
social responsibility contribute to firm financial performance? The mediating role of
competitive advantage, reputation, and customer satisfaction. Journal of Business Research,
68(2), pp.341-350.
Schilke, O., 2014. On the contingent value of dynamic capabilities for competitive advantage:
The nonlinear moderating effect of environmental dynamism. Strategic management journal,
35(2), pp.179-203.

7STRATEGIC MANAGEMENT
Srivastava, M., Franklin, A. and Martinette, L., 2013. Building a sustainable competitive
advantage. Journal of technology management & innovation, 8(2), pp.47-60.
Urbancova, H., 2013. Competitive advantage achievement through innovation and
knowledge. Journal of Competitiveness, 5(1).
Vanpoucke, E., Vereecke, A. and Wetzels, M., 2014. Developing supplier integration
capabilities for sustainable competitive advantage: A dynamic capabilities approach. Journal
of Operations Management, 32(7-8), pp.446-461.
Vanpoucke, E., Vereecke, A. and Wetzels, M., 2014. Developing supplier integration
capabilities for sustainable competitive advantage: A dynamic capabilities approach. Journal
of Operations Management, 32(7-8), pp.446-461.
Wagner III, J.A. and Hollenbeck, J.R., 2014. Organizational behavior: Securing competitive
advantage. Routledge.