A Critical Evaluation of Canon Incorporation's Strategy for UK Entry

This essay provides a critical evaluation of Canon Incorporation's strategy for entering the United Kingdom (UK) market. It begins by introducing Canon as a prominent Japanese electronic goods company with global operations, including those in India and the UK. The essay highlights Canon's motives for expanding into the UK, such as maximizing profit and accessing natural resources. It discusses the impact of globalization on Canon's decision and the company's extensive market research prior to entry. The analysis includes an examination of Canon's financial performance, focusing on revenue, operating profit, net profit, and cash flow from business operations, to assess the effectiveness of its expansion strategy. Despite revenue growth, the essay notes a decline in operating and net profits, suggesting areas for strategic improvement. The study uses income statements and cash flow statements to evaluate the impact of Canon's business expansion strategy.

Running head: MANAGEMENT STRATEGY
Management Strategy
Name of the Student:
Name of the University:
Authors Note:

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MANAGEMENT STRATEGY
A multi-national company is one that has its operations spread to different countries in
the world, i.e. at-least the operations are spread to two countries or more. The objective behind
expansion of operations by an organization to different parts of the world is to maximize the
amount of profit. In order to successfully expand the business operations a multi-national
company must have an effective strategy at place and implement the strategy efficiently to
achieve objectives of the company. In this document a detailed discussion on the impact of
Canon Incorporation entering the United Kingdom market shall be explained here.
Before critically discussing the strategy of Canon Incorporation for entering India and the
United Kingdom (UK) market a brief discussion on the company and its business operations
shall be made. This will enable the readers to correctly assess the business strategy of the
company.
A Japanese company Canon Incorporation, here in after to be referred to as Canon in this
document, is one of the most popular electronic goods companies on the face of the planet. The
company is involved in manufacturing and selling of electronic goods in the different parts of the
globe including India and United Kingdom. The company has huge operating structure in
Australia, United States, United Kingdom and other parts of the globe. Founded more than
(Christmann et. al. 2017).
The strategy to go global of Canon is discussed here with the objective of evaluating the same
from different perspectives. Canon came into existence after its formation in Japan. The
company today largely recognized as one of the most popular face in electronic goods market in
all across the globe. The company had an effective strategy from the beginning to expand its

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MANAGEMENT STRATEGY
operations. A critical discussion on the strategy of the company to enter UK and India market is
elaborated in this document (Dodgson, 2018).
Expansion of business operations of the company has helped number of organization to achieve
different objectives. One of the motives behind entering into the UK and India market was to
expand the operations of the company. The management understanding the importance of
expansion in the fast changing business world entered the UK market to extend the operations in
different parts of UK along with its already flourishing Australia and US market (Clark and
Wójcik, 2018). It is imperative for an organization to conduct a detailed study on the market
before determining whether to enter the market or not. Detailed study of the market helps an
organization to assess the potential of the market. The objective behind entering into any new
market by a business organization is to earn significant amount of profit from business
operations apart from spreading the operations of the organization.
The potential of extracting natural materials and metal in the UK market was investigated by the
company before taking a decision to enter the market. The decision of the management was
based on the objective that entering the market would enable the company to extract huge
quantity of materials from mine as the country is full of natural resources. The expansion
strategy of the company from the very beginning included complete research of markets before
taking any final decisions in relation to entering into the markets or not (Grant, 2016). Almost
about the time when the company was formed in 2001 the concept of globalization came into the
forefront with many countries opening their economies to the foreign corporations. The effects of
globalization on the decision of the company to enter the UK market was significant.
Globalization allowed large corporations to enter countries which was earlier not possible. UK

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MANAGEMENT STRATEGY
allowed a perfect opportunity to the newly formed Canon Inc. to expand its business operations
to different parts of the world (Watts, 2018).
The opportunity to increase the amount of revenue of the company by expanding the business
operations by entering the market in the UK was available for the company. The company used
the opportunity by implementing an effective strategy to enter the market in the country to
ensure that the possibility of failure to expand the business in UK is minimum.
Extensive study of the market helps an organization to gather important information about the
market in a country to take important decisions in relation to business of the organization. The
research and development wing of the company conducted an extensive study on the UK market
and whether the market provides an opportunity to the company to improve its financial
operations in the future. Since the decision of entering a new market which is also a new country
is a huge decision the management kept no stone unturned to gather all necessary information
before taking the final decision in relation to the UK market. The research and study showed that
the UK market presents a huge opportunity to the company to extract natural resources from the
naturally enriched country to use these in the business operations of the company. The findings
from the study also showed that the company will be able to achieve huge benefits from the UK
market as the other companies in the industry are yet to establish themselves in the market
(Storey, 2016).
Accessing the UK capital market was part of the overall strategy to enter the UK market. Canon
Billiton has its shares listed in the New York Stock Exchange, here in after referred to as NSE, as
well in the London Stock Exchange. The company is an important constituent of FTSE 250
index. The opportunity to raise necessary capital required for the business operations from UK

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MANAGEMENT STRATEGY
capital market has been used by the company effectively. The availability of funds has helped the
company to achieve its objectives of expanding its operations to different parts of UK.
As already mentioned that the objective behind expansion of business operations to
different parts of UK was to increase the market share of the company. At present the company
is one of the largest companies in terms of market share in mining and metal industry. Thus, the
objective of increasing its market share has been achieved by entering into different markets of
the world including the UK market (Sallis, 2014).
The objective of the management behind all the operating decisions are directly or indirectly
related to the objective of maximizing the revenue of business. The company has over the years
been able to achieve significant growth in its revenue. The objective of revenue generation has
always been at the forefront of all operating decisions. An in-depth analysis of the financial
performance of the company over the years shall be helpful in critically evaluating the impact of
expansion of business operations in the UK (Burns, 2016). The income statement of the company
over the last five financial years to understand the impact of its business expansion strategy in its
financial performance.
CANON INC INCOME STATEMENT
JPY millions 2013-12 2014-12 2015-12 2016-12 2017-12
Gross revenue 3,731,380
.00
3,727,252
.00
3,800,271
.00
3,401,487
.00
4,080,015.
00
Less: cost of revenue 1,932,959 1,865,780 1,865,887 1,727,654 2,087,324.

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MANAGEMENT STRATEGY
.00 .00 .00 .00 00
Gross profit 1,798,421
.00
1,861,472
.00
1,934,384
.00
1,673,833
.00
1,992,691.
00
Less: Operating expenses
R&D Expenses 306,32
4.00
308,97
9.00
328,50
0.00
302,37
6.00
330,053.
00
Sales and
administrative
expenses
1,154,820
.00
1,189,004
.00
1,250,674
.00
1,142,591
.00
1,297,247.
00
Total operating
expenses
1,461,144
.00
1,497,983
.00
1,579,174
.00
1,444,967
.00
1,627,300.
00
Operating earnings 337,27
7.00
363,48
9.00
355,21
0.00
228,86
6.00
365,391.
00
Interest Expense 55
0.00
50
0.00
58
4.00
1,06
1.00
818
.00
Other income
(expense)
10,87
7.00
20,25
0.00
(7,188
.00)
16,84
6.00
(10,689.
00)
Earnings before taxes 347,60
4.00
383,23
9.00
347,43
8.00
244,65
1.00
353,884.
00
Less: Income taxes 108,08 118,00 116,10 82,68 98,024.

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MANAGEMENT STRATEGY
8.00 0.00 5.00 1.00 00
Profit after tax 239,51
6.00
265,23
9.00
231,33
3.00
161,97
0.00
255,860.
00
As can be seen in the above table that in recent years the ability of the company to
generate amount of revenue from business activities have increased significantly. Despite the
efforts on the part of the management of the company to take all necessary precautions before
taking business related decisions to such as expansion in India and UK and other markets around
the globe the increase in revenue has not been substantial (Storey, Basterretxea and Salaman,
2014).
The operating profitability of an organization is one of the most important perspectives of
business. The profitability of an organization often is considered as a key yardstick to decide
whether a strategy of business is successful or not. In this case the extract from the income
statements of the company for the last five years provided below shows that the operating profit
and net profit of the company since last few years have decreased. Extract of income statements
of the company over the last five years to assess the profitability of the company (Welford,
2016).
CANON INC INCOME STATEMENT
JPY millions 2013-12 2014-12 2015-12 2016-12 2017-12
Gross revenue 3,731,380. 3,727,252. 3,800,271. 3,401,487. 4,080,015.

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MANAGEMENT STRATEGY
00 00 00 00 00
Operating
earnings
337,277.
00
363,489.
00
355,210.
00
228,866.
00
365,391.
00
It is clearly visible from the above table that along with the revenue of the company the ability of
the company to generate profit from business operations have affected positively in last five
years. Compared to operating profit of JPY 337,277 million of 2013 the company earned an
operating income of JPY 365,391 million in 2017 in 2018. The net income of the company
deteriorated as the company earned only JPY 255,860 million in 2017 compared to JPY
265,239million in 2014 (Kono, 2016).
Net cash flow from business operations is another important yardstick used by an organization in
evaluating the business strategy of an organization. An organization requires liquidity to run the
business operations effectively and pay off its liabilities on time. In addition the shareholders and
investors are expected to receive cash dividend and returns periodically. An organization would
struggle to meet its obligations towards the creditors, investors and shareholders if it does not
have ability to generate positive cash flows from business operations. The extract of cash flows
from business operations of Canon shall be helpful in assessing the impact on the ability of the
company to generate cash from business operations in last five years (Crane and Matten, 2016).
CANON INC CASH FLOW STATEMENT
Fiscal year ends in
December. JPY in
2013-12 2014-12 2015-12 2016-12 2017-12

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MANAGEMENT STRATEGY
millions except per
share data.
Cash Flows From Operating Activities
Net income 239,516.00 265,239.
00
231,333.
00
161,970.
00
255,860.
00
Depreciation &
amortization
275,173.00 263,480.
00
273,327.
00
250,096.
00
261,881.
00
Investment/asset
impairment charges
39.00 12
.00
33,912.
00
Deferred income
taxes
16,791.00 8,929.
00
4,672.
00
7,188.
00
(17,603.
00)
Change in working
capital
(35,179.00) 34,316.
00
(42,136.
00)
76,716.
00
68,604.
00
Accounts receivable 45,040.00 9,323.
00
22,720.
00
(4,155.
00)
3,563.
00
Inventory 85,577.00 59,004.
00
14,249.
00
6,156.
00
2,967.
00
Accounts payable (108,622.00) (24,620.
00)
(17,288.
00)
56,844.
00
4,951.
00
Accrued liabilities (15,635.00) 11,124. (25,529. (5,256. 18,503.

9
MANAGEMENT STRATEGY
00 00) 00) 00
Income taxes payable (9,432.00) 3,586.
00
(8,731.
00)
(16,456.
00)
46,296.
00
Other working capital (32,107.00) (24,101.
00)
(27,557.
00)
39,583.
00
(7,676.
00)
Other non-cash items 11,302.00 11,951.
00
7,528.
00
4,313.
00
(12,097.
00)
Net cash provided
by operating
activities
507,642.00 583,927.
00
474,724.
00
500,283.
00
590,557.
00
Cash Flows From Investing Activities
Investments in
property, plant, and
equipment
(233,175.00) (218,362.
00)
(252,948.
00)
(206,971.
00)
(189,484.
00)
Property, plant, and
equipment reductions
1,763.00 3,994.
00
3,824.
00
6,177.
00
26,444.
00
Acquisitions, net (4,914.00) (54,772.
00)
(251,534.
00)
(649,570.
00)
(6,557.
00)

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MANAGEMENT STRATEGY
Purchases of
investments
(18,550.00) (14,534.
00)
(1,318.
00)
(4,544.
00)
(3,148.
00)
Sales/Maturities of
investments
4,528.00 2,606.
00
48,469.
00
16,595.
00
4,343.
00
Other investing
activities
136.00 11,770.
00
(112.
00)
1,188.
00
3,392.
00
Net cash used for
investing activities
(250,212.00) (269,298.
00)
(453,619.
00)
(837,125.
00)
(165,010.
00)
Cash Flows From Financing Activities
Debt issued 1,483.00 1,377.
00
717
.00
610,552.
00
1,570.
00
Debt repayment (2,334.00) (2,152.
00)
(1,350.
00)
(856.
00)
(126,578.
00)
Common stock issued 790
.00
Common stock
repurchased
(50,007.00) (149,813.
00)
(14
.00)
(50,034.
00)
Dividend paid (155,627.00) (145,790.
00)
(174,711.
00)
(163,810.
00)
(162,887.
00)
Other financing (15,696.00) (4,508. (35,648. (90,180. (2,535.

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MANAGEMENT STRATEGY
activities 00) 00) 00) 00)
Net cash provided by
(used for) financing
activities
(222,181.00) (300,886.
00)
(210,202.
00)
355,692.
00
(340,464.
00)
Effect of exchange
rate changes
86,982.00 41,928.
00
(21,870.
00)
(22,270.
00)
6,538.
00
Net change in cash 122,231.00 55,671.
00
(210,967.
00)
(3,420.
00)
91,621.
00
A business organization is mainly concerned with the amount of profit earned by the business
from business operations. Thus, success and failure of different strategies of business are
evaluated from the perspective of revenue, profitability and cash flow position of such business
organization. In case the financial performance is improved, i.e. an organization earns higher
amount of revenue from business operations consolidated by higher amount operating and net
profit then the strategy shall be claimed as a success. The strategy will be levelled as a failure if
the revenue and amount of profit from business operations of an organization decline subsequent
to any business strategy (Shenkar, Luo and Chi, 2014).
Revenue and profitability of Canon Inc. since 2014 as discussed earlier has gone down
significantly. Irrespective of its extensive research and study before taking any business
decisions the significant decline in the amount of gross revenue and operating profits of the