Company Research: Canon

Canon is a leader in providing innovative imaging solutions for consumers and businesses, with its headquarters located in Tokyo, Japan. The company has a strong philosophy based on the concept of 'Kyosei', which means living and working together for the good of common. Canon aims to become one of the top 100 global companies through diversification and expansion into new areas. The company faces various risks, including financial risks due to fluctuations in exchange rates, and uses strategies such as geocentric staffing approach to mitigate these risks.

Company research

COMPANY RESEARCH 1
Introduction
Canon headquarters is situated in Tokyo, Japan. The company is a leader in providing innovative
imaging solutions for consumers and businesses. The predecessor of canon is Precision Optical
Industry Ltd., which was founded in 1937. Canon manufactures and develops broad range of
products such as cameras, printers, copying machines, optical products and various other
products for a variety of industrial and individual customers. It a well-established brand and is
trusted by families, individuals, and business in different sectors. A philosophy which Canon
follows for its operations come from the word "Kyosei" which means living and working
together for the good of common. All the operations of the company are based on this
philosophy, from providing the consumer with the wide range of products to development of
imperishable manufacturing methods. Canon main aim is to become one of the top 100 global
companies. Diversification and expansion in new areas like network cameras, medical imaging,
mixed reality, professional cinematography, expansion via mergers and acquisitions will play
important role in becoming a top global company. Canon has various competitors like Xerox,
Hewlett Packard, Toshiba, Sony, Nikon and much more. Net sales of the company have
decreased by $55.1 billion because the volume of sales of digital cameras has decreased.
Operating income has increased by $8.4 billion, which was leveraged by sales of improved
product mix and a decrease in expense. It has approx. 194,000 employees within its subsidiaries
in Japan, America and Asia and R&D companies based in US, Asia, Australia and Europe
(Desmond, E.W., 1998).
Application of Porters Five Force Model
Michael Porter 5 Force Model helps in analyzing the competition of a firm in industry. Those
five forces are competitors in industry, the threat of substitute products, bargaining power of

COMPANY RESEARCH 2
buyers, bargaining power of suppliers and threat of new entrants. Industry Rivalry: Market for
the digital camera is a saturated market and have slow growth. Industry is capital intensive,
having automatic machinery for building a camera. Competition is very high and aggressive.
Products developed by canon 450D is similar to Nikon D90. Most of the profits in this industry
are owned by Canon, Sony and Nikon and other competitors like Kodak, Panasonic, Samsung,
and Casio. The rivalry has been intensified by advertising and exposure for building brand
equity. The threat of New Entrants: Existing firms have very good experience and is led by the
capacity to innovate. Canon provides its customers with high-quality assurance. Switching cost
for buyers is very high, and therefore new entrants might be ignored. Firms in this industry are
less likely to get affected by the entry of new firms, as they strong customer base, and customers
are quality and brand conscious. The uncertainty of success in the industry makes entry of new
firms is less likely. Bargaining Power of Buyers: Bargaining power of the consumer is very low
as they are very quality conscious and will not go for less price by compromising quality. DSLR
consumers using Canon lenses is less likely to switch to another brand like Olympus or Nikon.
Canon is an established brand and cameras of the canon are important for consumers, thus
having low bargaining power. Bargaining Power of Suppliers: Suppliers who want to supply to
Canon should keep up to Canon's "Global Canon Green Procurement Standards," which is in line
with its philosophy emphasizing good of community and environment. Suppliers have to play by
Canon rules and should meet quality standards. The company itself is having full in-house
manufacturing of materials, equipment, and tools. Thus supplier has very less bargaining power.
The threat of Substitute Products: Substitute products like smartphones with enhanced camera
functions, does not have the ability to substitute camera with high image quality as compared to
mobile phones. They can meet the only basic need of capturing and image, but cannot function

COMPANY RESEARCH 3
like a full featured digital cameras. Thus the threat of substitute products is also low (Rugman,
A.M. and Hoon Oh, C., 2008).
Foreign Currency Risk Exposure
Canon is vulnerable to various risks that are created by fluctuations in exchange rates of foreign
currency. Financial statement of Canon is presented in Japan's currency Yen. The currency is
affected by the fluctuations in foreign exchange rates. Thus it can be identified that canon faces
Translation Risk. This kind of risk is related to assets held in foreign currency. Especially, canon
gets affected by the fluctuations in the value of yen. This has an impact on costs and sales of
products, which are managed in foreign currencies. Translation of foreign currencies in Yen,
which is company's currency for reporting expenses, revenues, assets, and liabilities will have to
face fluctuation. Translation risks can be mitigated by borrowings in that specific currency in
which assets are originally purchased, before converting them into Yen (Adler, M. and Dumas,
B., 1984).
Staffing Strategies
Canon uses geocentric approach for hiring and staffing employees across the world in its
subsidiaries. Earlier canon was applying the same approach overseas, what it has been doing
traditionally in Japan. Then realized the value of diversity. They wanted to make the best use of
various types of knowledge, skill, and expertise that was available in other countries where they
had their subsidiaries. Canon wants to establish three Regional Headquarters Management
System in Europe, US, and Japan as part of Excellent Global Corporation Plan. In this strategy,
the company is now broadly searching for human talent across the world for supporting the
system. As part of this strategy, Canon has opened up the door for multinational students as part

COMPANY RESEARCH 4
of staffing activities. Foreign nationals are being hired for working as contract workers for the
positions of specialists for utilizing their skills, knowledge, and experience. The company wants
to apply this strategy so that they can attain the objective of the diversity of skills, knowledge,
and experience that is available in various host countries (Canon.com. 2017).
Other international strategy used by canon as part of Excellent Global Corporation Plan, is the
cultivation of internationally competent human talent, for the performance of their roles and
duties which can meet the needs of international perspective. In this strategy, Canon uses
information and data from HR department, regarding people hired in every region and country so
that they can select and train its multinational workforce. In order to make them competent
globally, the company wants to train them for future needs of the organization, so that company
become globally competitive and become a leader. For increasing employee expertise and
motivation, Canon has career development and assistance program. So that company can develop
specialists and experts in manufacturing and technology development, further developing human
talent who can take leadership on a global scale (Gaur, A.S., Delios, et.al., 2007).

COMPANY RESEARCH 5
Conclusion
Canon is global leader in manufacturing wide range of products like Printers, Copying machine,
Cameras, Optical products and different variety of other products, for industrial as well as
individual customers. All the operations of the company are based on its philosophy of working
together for common good, and is reflected in its actions. Canon has number of competitors like
Sony, Nikon, Kodak, Panasonic and others. Canon provides quality products and has goodwill
among the consumers, thus giving tough completion to its competitors. Canon is trying to make
its working environment better and attractive, with aim of hiring and retaining talent across the
world. Canon aims to become an organization that will achieve growth by working and accepting
people with distinguished perspectives and characteristics (Heller, R., 1983).

COMPANY RESEARCH 6
References
Adler, M. and Dumas, B., 1984. Exposure to currency risk: definition and
measurement. Financial management, pp.41-50.
Canon.com. (2017). Canon | CSR Activities | Management Approach. [online] Available at:
http://www.canon.com/csr/labor/management.html [Accessed 19 May 2017].
Desmond, E.W., 1998. Can Canon Keep Clicking?. FORTUNE, 137(2), pp.98-102.
Gaur, A.S., Delios, A. and Singh, K., 2007. Institutional environments, staffing strategies, and
subsidiary performance. Journal of Management, 33(4), pp.611-636.
Heller, R., 1983. What makes Canon boom. Management Today, pp.62-71.
Rugman, A.M. and Hoon Oh, C., 2008. The international competitiveness of Asian
firms. Journal of Strategy and Management, 1(1), pp.57-71.