Strategic Analysis of Canon: Capabilities and Sustainability

This strategic analysis explores the capabilities and sustainability of Canon Inc., a multinational organization specializing in imaging and optical products. It examines Canon's strategic capabilities, levels of sustainability, and the impact of external factors such as political, economic, social, technological, legal, and environmental factors. The analysis also evaluates Canon's strategic directions and the use of resources to maintain a competitive advantage in the industry.

Running head: STRATEGIC ANALYSIS OF CASE STUDY
STRATEGIC ANALYSIS OF CASE STUDY
Name of the Student
Name of the University
Author Note

1STRATEGIC ANALYSIS OF CASE STUDY
Table of Contents
Introduction....................................................................................................................2
Strategic capabilities of Canon and levels of sustainability...........................................2
Identification and evaluation of the strategic directions of Canon................................7
Analysis and critical evaluation of the strategic methods of Canon..............................9
Conclusion....................................................................................................................11
References....................................................................................................................12

2STRATEGIC ANALYSIS OF CASE STUDY
Introduction
Canon Inc. is multinational organization that operates in Japan and specializes in the
manufacture of different products that are based on imaging and optical activities. The
different products that are offered by Canon in the market mainly include, camcorders,
cameras, printers and steppers. The headquarter of the organization is located in Tokyo,
Japan. Canon was established in the year 1937. The founder of Canon Goro Yoshida has
conducted extensive levels of research in the 1900s based on the European cameras that were
in the market at that time (Global.canon 2019).
The high levels of curiosity that he had based on these products had led to the
development of an organization named Seiki-Kogaku Kenkyusho or “Precision Optical
Instruments Laboratory” in the year 1934. The company has started its operations in Tokyo
and the research that was conducted by the founder on different products had acted as an
important factor that had affected the products that were developed by the organization
(Global.canon 2019).
The report will be built on the analysis of the case study based on Canon and the
strategic capabilities that have been gained by the organization in the industry as well. The
analysis will also be related to the levels of sustainability that have been gained by the
organization in the market.
Strategic capabilities of Canon and levels of sustainability
Canon had been able to develop a major place in the industry with the help of its
capabilities. However, the entry of smartphones in the industry the is considered to be a
major factor that has reduced the revenue levels of the company. The company had thereby
aimed at changing the strategic direction in order to form its place in the industry. The
smartphone based organizations in the industry had affected the sales of Canon in a huge

3STRATEGIC ANALYSIS OF CASE STUDY
manner (Morschett, Schramm-Klein and Zentes 2015). The organization tried to increase the
portfolio of products that were being offered to the customers. The company aimed to
provide its products to a completely new market. The possibilities related to the growth of the
organization are also quite high in this case and have an impact on its operations. The
company had decided to start a completely new division in order to stay profitable in the
market. The external environment based factors that have an impact on Canon can be
analysed with the help of PESTLE framework (Murdock 2017).
Political factors – The political stability of a country has a key influence on the
procedures of Canon. The levels of integrity of the politicians are considered to be highly
significant for developing the operations of Canon. The laws enforced by the government
have been able to play a key part in the methods by which Canon continues its production
process (Nickols 2016).
Economic factors – The economic system of the country is highly important for
development of operations in different sectors. The GDP growth rate is considered to be the
most significant factor that has been able to affect the levels of competition that exist within
the organization. Investments that are made in Canon are also based on the economic system
of the country (Prajogo 2016).
Social factors – The demands and needs of the customers are easily reflected with the
help of social factors of the framework. Class distribution is considered to be of major
importance in case of analysis of different social factors. The demographic factors are able to
affect the ways by which needs of consumers can be analysed. Health based standards need to
be considered by the organization in order to avoid any claims related to harassment
(Shabana and Cavaleri 2018).

4STRATEGIC ANALYSIS OF CASE STUDY
Technological factors – The technological standards are able to affect the competitive
landscape and the price based structure of the organization as well. The products developed
by Canon are affected by new technologies that have been implemented in different
operations. The popularity based levels of the organization will be based on the high
technology based products which Canon is able to offer to the consumers. The revenue levels
of the competitors can be disrupted due to the levels of innovation in the organization (Teece,
Peteraf and Leih 2016).
Legal factors – The laws based on intellectual property are important for the policies
that are developed by Canon. The patents and ideas of the company are affected in a huge
way by the laws and regulations that are developed by the government.
Environmental factors – Environmental protection is a major factor that has an
impact on the regulations implemented by Canon. The production processes of the company
will be formed with respect to the effects that they have on the external environment
(Wheelen et al. 2017).
The external environment based changes have been able to play a key part in the
methods by which Canon Inc. is able to operate and its future strategic direction as well. The
organization has thereby decided to change its direction from the operations in camera based
products to the development of an extensive product based portfolio.
Canon had started its operations in the industry in the year 1937 and showed immense
levels of growth with the help of a strong leadership. The growth and globalisation based
activities of the business continued in the next few years. The headquarters of the
organization had been developed in Tokyo and the international customer base of Canon was
further expanded. The diversification based activities of Canon are considered to be the most
significant capability that has been developed with the help of its operations. The

5STRATEGIC ANALYSIS OF CASE STUDY
organization gained a leadership position in the industry after the completion of 80 years of
its operations (Akter et al. 2016).
The three major business segments of Canon include, office business, imaging
systems based business unit and industry and other business unit. The globalization of
business activities by Canon is considered to be a key factor that is able to influence the
processes of the organization. The internal environment based factors that are can impact
functions of Canon can be examined with the help of SWOT framework (Barros,
Hernangómez and Martin-Cruz 2016).
Strengths –
Reputation developed in the world and the image of the brand.
Top performance levels and use of high end based technologies.
Use of high quality materials.
Leadership position gained in the industry.
Efficient services provided and high levels of customer satisfaction.
Strong presence formed in the industry (Baumgartner and Rauter 2017).
Weaknesses –
High costs of the products.
Market segmentation is not effective for reaching huge number of customers.
Products are big and heavy.
Lack of proper social media based network.
Lack of effective television commercials and use of traditional marketing
based activities as well (Bonnafous-Boucher and Rendtorff 2016).
Opportunities –

6STRATEGIC ANALYSIS OF CASE STUDY
The company has huge opportunities based on expansion in new areas and
markets.
The development of new technologies can play a main part in increasing the
revenues of the organization.
The organization can aim at entering the smartphone based industry and
provide their products.
Expansion of the business operations in new segments and the emerging
markets (David and David 2016).
Threats –
The competition that is provided by the Drone cameras to record from sky has
reduced the effectiveness of DSLR cameras.
The levels of economic recession.
The increase in prices of the raw materials.
Fast changes that have taken place in the technologies (David and David
2017).
Canon has been operating in the industry with the help of its major strategic
capabilities and the ways by which the organization has taken part in the mergers. The
leadership place that has been formed by the organization is also considered to be a key factor
that has an impact on its sustainable operations in the industry (Engert, Rauter and
Baumgartner 2016). The company has however faced major challenges based on the ability to
remain profitable due to the development of smartphones that have reduced the need for
cameras. The VRIO framework is considered to be useful for the analysis of sustainability
levels of the organization and methods by which it will be able to retain its leadership
position (Demir, Wennberg and McKelvie 2017).

7STRATEGIC ANALYSIS OF CASE STUDY
Resources Value Rare Imitation Organizatio
n
Competitiv
e advantage
Access to the
cheap capital.
Yes No Can be
imitated.
Has not been
exploited
totally.
Not
significant.
Successful in
the
implementatio
n of the digital
strategy.
Yes,
without a
digital
strategy the
company
cannot
compete
effectively.
No, many
firms have
already
implemente
d the
strategy.
Can be
easily
imitated.
Is one of
leading
organizations
.
Important
part of the
strategies
implemente
d by the
company.
Opportunities
in adjacent
industries and
requirement of
new resources.
Can prove
to be
valuable for
developmen
t of streams
of revenue.
No Is imitated
easily by
competitors.
All
capabilities
have not been
used totally.
Has huge
potential.
Access to the
critical raw
materials.
Yes Yes, other
organization
have to gain
a dominant
position in
order to gain
access.
Can be
easily
imitated.
Yes Is able to
provide
sustainable
competitive
advantage.
Opportunities
for brand
extension.
Yes, new
niches are
present in
the
emerging
market.
No, most
competitors
have is
targeting the
niche
markets.
Yes, can be
easily
imitated.
High
marketing
related
budget
required for
brand
extensions.
Temporary
levels of
competitive
advantage.
Customer
community
Yes, as the
customers
are able to
co-create
the
products.
Yes, the
organization
has been
able to
develop a
special
relationship
with the
customers.
It is quite
difficult the
culture of
the
organization
and
dedication
of the
community.
The
customers are
able to
provide
major
opportunities.
Provides
strong levels
of
competitive
advantage.
Intellectual
property based
rights.
Yes, they
have high
value.
Yes, the
rights
cannot be
copied by
competitors.
Risk related
to imitation
is quite low.
The
intellectual
property
based rights
have not been
used by the
organization
Provides
strong levels
of
competitive
advantage.

8STRATEGIC ANALYSIS OF CASE STUDY
to the fullest
capabilities.
Customer
loyalty and
network.
Yes Yes, the
organization
has
provided
major
contribution
towards the
loyalty of
customers.
Has been
implemente
d by the
competitors.
The loyalty
of customers
has been
effectively
used by the
organization.
Medium
based
competitive
advantage
has been
used by the
organization
.
The resources of an organization can be divided into tangible and intangible types in
order to conduct the VRIO analysis. The tangible resources that have been gained by Canon
in the industry mainly include, plant, equipment, money, inventory and land. The intangible
resources on the other hand mainly include, skill levels of the administrative managers,
goodwill developed by the organization, the brand names, intellectual property based rights,
trademarks, copyrights (Hitt, Ireland and Hoskisson 2016). The VRIO analysis framework of
the organization can be analysed in the following way,
Valuable – The critical resources are considered to be highly valuable for the
organization and Canon is able to function in a profitable way with the help of proper
implementation of the human as well as the financial resources.
Rare – The stages of rarity of resources that have been formed by Canon in the
industry are high. The present competitors of Canon have been able to play a key part in the
methods by which the organization is able to maintain its position (Kasemsap 2017).
Imitate – The imitation of products provided by Canon can be costly for other
organizations in the industry. The imitability levels of products are thereby low due to this
reason.

9STRATEGIC ANALYSIS OF CASE STUDY
Organization – Canon is able to use the resources that are available in an effective
manner in order to maintain the profitability levels. The expansion of the operations of Canon
is considered to be a major factor that has an impact on the organization (Meyer, Neck and
Meeks 2017).
The tangible as well as intangible resources are used in an effective manner by the
organization in order to sustain a competitive advantage in the industry in comparison to the
other organizations.
Identification and evaluation of the strategic directions of Canon
The strategic business based growth of Canon can be analysed with the help of Ansoff
Matrix. The strategic growth and change in methods used by Canon can be easily analysed
with the help of detailed study of the Ansoff Matrix. The two major growth based areas that
have been considered by Canon include, the launch of new products and the expansion in the
existing markets (Hitt, Ireland and Hoskisson 2016).
Ansoff matrix analysis of Canon is based on the following factors,
Market penetration – The strategy related to market penetration of Canon is based on
the methods by which the organization is able to sell the products in its existing markets. The
increase in sales in the existing markets is facilitated by the price cuts. Gaining higher share
in the market is considered to be a major factor that is related to effective market penetration
(Gurcaylilar-Yenidogan and Aksoy 2018).
Market development – Market development is mainly based on the methods that are
implemented by the company in order to target new market. Canon aims at launching the
products in different countries in which the purchasing based power of the customers are

10STRATEGIC ANALYSIS OF CASE STUDY
different. The cost based on production are considered to be a significant part of the processes
of the organizations in the industry (Shabana and Cavaleri 2018).
Products development – The development of products is based on the launch of new
products in the industry for the loyal customers. Canon makes significant levels of changes in
the features of the products in order to retain the loyal customers in the organization. The
process related to development and upgradation of the products are considered to be a major
part of the strategy (Gurcaylilar-Yenidogan and Aksoy 2018).
Diversification – Canon has always provided major importance to diversification in
order to operate profitably in the existing as well as the new market areas. The share that has
been gained by Canon in the market is built on the levels of growth developed by the
organization. The merger of Canon with Axis Communication and Milestone software are a
major part of the diversification process (Meyer, Neck and Meeks 2017).
Ansoff matrix analysis has been able to depict that the strategic growth of Canon is
able to provide major growth opportunities to the organization in different areas like, the
network security based market.
Analysis and critical evaluation of the strategic methods of Canon
The process of market segmentation has been used by Canon in order to decide the
target customers to whom the products can be offered. Market segmentation has been
implemented by Canon with the help of proper positioning of the brand. The organization has
positioned the brand name in order to differentiate itself from the competitors. The decision
making based process of the organization is highly dependent on the position of the brand of
Canon. The levels of innovativeness are also important for the organization in order to
maintain its place in the existing market and for expansion in new areas as well (Teece,
Peteraf and Leih 2016).

11STRATEGIC ANALYSIS OF CASE STUDY
Buy (acquisition) Ally (alliance) DIY (organic
development)
High urgency Fast Slow Fast
High
uncertainty
Fast Fast Slow
Importance of
capabilities
Lack of
capabilities to buy
a company.
Making allies with
relevant partners.
Development of
proper joint ventures.
The strategic methods that have been implemented by Canon globally are based on
the development of high level production plants and proper integration of design. The
expansion of business activities is an important part of the strategies of Canon that have been
applied on a global basis. Open innovation has been the most important factor that has
influenced the choice the development of research and development based capabilities of
Canon.
Conclusion
The report can be settled by asserting that Canon has always aimed at maintaining a
sustainable place in the industry with the help of proper diversification and increasing the
product portfolio. Acquisition has been able to play a pivotal part in the development of
revenues of Canon in diverse parts of the world. The organization has tried to gain a share in
the market with the help of mergers with different companies like, Axis Communication and
Milestone software.

12STRATEGIC ANALYSIS OF CASE STUDY
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