Canon strategic analysis Essay

Founded in Japan, Canon has successfully expanded worldwide and become multi-nationally recognised. The corporation’s philosophy on operating (or kyosei in Japanese) is “living and working together for the common good”. Canon has built its prestige and now as a well-known enterprise, it aims for higher goal, to improve the standard of living for our human race. Therefore, its business activities have to maintain effectively with its customers, suppliers, the public as well as the environment. 1.2 PRODUCT DEFINITION

Canon specialized into the categories of optical and related digital devices. In addition, it differentiates its products as two groups: “for you” groups, “for home office” and “for business” groups. Details of Canon’s product can be found in Appendix A. Canon’s direction has always been to offer the world a camera with the best quality; in fact it is a symbol in market for cameras. Canon also orients towards other customer and market base, therefore, it developed other products to steal a proportion of market share from it competitors. 1.3 SCOPE AND LIMITS

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Canon understands that New Zealand is a potential market. This report will provide some suggestions for Canon about this target market for five years onwards. 1.4 COMPETITORS
Although Canon in New Zealand has its largest market share for Optical and Imaging Industry, it needs to be aware of its competitors, which are Samsung, Nikon, Sony, Olympus … It has most of its products sold are cameras, but it also sold a large amount of other digital-related products that it diversified too. In part 2.1.3, it will analyse the competitive scenario in the digital market of New Zealand 1.5 TARGET MARKETS

Canon’s target for the camera market in New Zealand:
– High-quality and multi-functional products with well-designed models
– High-quality and high-resistance products using long-durable materials – Standard and ordinary products with well-designed models and average price

2. ENVIRONMENTAL ANALYSIS
2.1 NEAR ENVIRONMENTAL ANALYSIS
2.1.1 MARKET REVIEW
A. CHANGES IN DIGITAL CAMERAS MARKET IN RECENT YEARS
Recently there was a Canon’s report based on its study about the general of Australians digital lifestyle, it showed that the number of units sold has fluctuated year by year. There was a rise by 14% during Q3 2009 to Q2 2010, however, it did not help the rate of growth change into positive figure as it stood at -5% from 2010 to 2011 (Details on figures can be found in Appendix B). The likely fall in sales of fixed lens was assumed to be the cause, and the addition of the decrease in average selling price of digital cameras. B. CUSTOMER BEHAVIOURS

– Upgrading cycle becomes shorter for digital camera
Customers in New Zealand are now getting used to the habit of purchasing variety products of camera for varying purposes. They also increase their demands for a new upgrade although the previous models have not worn out and still last for long. It has been said the reason behind this trend is caused by a drop in average price in general and repeated innovations and development. That technically has resulted in a new lifestyle of shortening devices’ life cycle.

– Expectation for technology and innovated products
Customers interested in photography now demand innovative and friendly products. To be specific, cameras that are progressively fast and have useful features would be attractive.
– Quality as main determinant of consumer behavior.
A survey was carried out and received a feedback, with 62% of them said images quality is more critical and would be their first priority when purchasing a new camera, whereas just 26% of them responded that they would be more aware of the selling price. Clearly, people have been demanding quality as their living standard increased. (Appendix D). 2.1.2 FUTURE MARKET ATTACTIVENESS

Another report shows that customers were more willing to select products of Canon. However, statistics in that report demonstrates that most of respondents were in the age of 18-29 group, which accounted for 67%, and
also not so surprisingly, most of them were female, outnumber males or middle-aged people. This reflected the common trend quite exactly in the current society. Considering information collected from the analyzed data, potential target for the markets are:

– High-quality and multi-functional products with well-designed models.
– Standard products which balance quality and prices equally.
– Youth-oriented products.
2.1.3 COMPETITORS ANALYSIS
Competitors in New Zealand, which are not any strange to us, are Samsung, Nikon, Sony, etc … Canon and Nikon are clearly specializing in technical and quality issues, whereas Sony and Samsung design more on models, appearance and the heaviness of the cameras. Canon has its own market share according to what it is specializing into. Appendix C includes competitors’ strength/weaknesses of Nikon, largest competitor of Canon in New Zealand. As consumers in New Zealand focus on quality, the products made by Sony or SamSung, despite of low prices, are not preferred as Canon’s or Nikon’s product. 2.1.4 TARGET MARKET ANALYSIS

New Zealand has an aging population as most people are in the age of 30-54 group (from: Statistics New Zealand, 2011). However, they have been contributing towards sales revenue for Canon. Although median hourly incomes in 2011 was fall, the figure for weekly from the working people rose by 4%, and therefore there would be more people who were more willing to purchase a device from Canon. Then it could be concluded that working-aged and working class people in New Zealand are potential customers for Canon. Canon can also aim for teenagers and students, they can act as an driver that increase revenue as they change cameras more frequently, only lack of money will stop them from buying deluxe products. 2.1.5 DISTRIBUTION

215 respondents participated in the survey: “Where would you most likely to go to purchase a new camera?” and half of them preferred a electronic stores rather than a specialist or online retailer stores. 2.2 REMOTE ENVIRONMENTAL ANALYSIS

2.2.1 ECONOMICS
Camera market is clearly affecting by economics factors as camera itself is a superior product. According to New Zealand data (Statistics New Zealand, 2012), in 2008-2009 New Zealand went through an economics recession, a global effect that hit all countries. However, New Zealand managed to turn around, and its economy has started to move from 2010 onwards. In recession time, Canon’s sales may decrease caused by high unemployment. Despite that, New Zealand and Australia still had better economy condition in the tough time, as such, interest for digital products remain quite stable and high. However, with interest rates rose in both countries, hinder customers’s spending during that time.

2.2.2 POLITICAL
Government in Oceania region has been putting interest on trade liberalisation and open policies, as a result more threats will come from international companies. However, Canon will not be as much of a potential threat, since it is a multinational company itself. 2.2.3 SOCIAL

A. POPULATION GROWTH
Population has experienced a loss in number since New Zealand has a low birth rate as well as a net loss of immigrants. Future demand depends significantly on the population rate of growth, and the current rates give a negative indicator about future demand for the products. However, the case may not be true in five years from now, so prediction may not as accurate as it sounds. B. AGING POPULATION

Aging population is the most negatively predictable scenario for the future of Canon specifically and for cameras in general. However, aging may not be so affecting as only five years are taken under consideration. C. TECHNOLOGICAL

It is considered as the most important issue for technology industry, camera market included. Cutting-edge technology is obviously the key to success in this fast-pace and technological world. Recently, smart phones, which most are equipped with good quality camera lens within, has threatened the camera
industry totally. The fact that smart phones can connect to the internet and social network is a huge advantage over camera, uploading a picture right after taking it. Ordinary customers also tend to prefer smart phones as it also proposes multi-media feature as well as a moderate method of communication. D. ENVIRONMENTAL

New Zealand customers are becoming more green eventually, therefore material for the products are important such as lenses, plastics, etc … Furthermore, it has to be harmless or the least harmful it can be towards the environment. 3. CRITICAL SUCCESS FACTORS

To success in the industry that Canon is following, key factors that should be carefully looked at are (from McKinsey Value Chain Analysis, by Porter, 1980):
– PRIMARY ACTIVITIES
Porter (1980) pointed out that primary activities were in tight relationship with physical creation, safe, maintenance and service for a product.
– Inbound logistics:
+ Strengthen relationship with suppliers by applying efficient communication strategies. According to an article, it is said that “in order for an enterprise to prosper, among other things, it needs to focus on supplier relationships. These relationships are no less than crucial—maintaining excellent relationships with an enterprise’s suppliers can, for instance, lower product development costs and shorten manufacturing schedules, and by doing so increase profitability.”

– Operations:
+ Operate productive manufacturing processes to save cost and ensure product quality of digital cameras made by Canon.
+ Guarantee on endurability because although the life cycle of digital cameras has shortened, some customers are still looking for endurability and long usage life of the product.
– Outbound logistics:
+ Distribute more products into the usual place where people want to buy cameras from: electronic stores, specialized camera stores … These will not
only encourage sales revenue but also improve brand awareness.

– Marketing and sales:
+ The brand name is critical as most customers are aware of it when they purchase a well-known brand of camera.
+ Marketing to improve communcations towards customers, by convincing them the quality of Canon’s products and its responsibility in service and the social aspects.
– Customers service:
+ Satisfy customers’ demands as customers are lifeblood of any company. They will act as sources of profitability and methods of marketing (through word-of-mouth marketing).
+ Enhance with marketing strategies to put more priority for customers (Day, 1994)
– SUPPORT ACTIVITIES
– Firm infrastructure
+ The company should have strong financial performance to invest in research and development and implement marketing strategies to support the company’s development and popularity.
+ Enhancing quality is prioritized
+ Well-performed management system
– HR management
+ Create a powerful relationship between company’s culture and its core value and objectives
+ Create a working environment that encourage corporations and developments

– Procurement
+ More use of endurable material is guaranteed for production.

4. INTERNAL CAPABILITIES
4.1 WORLDWIDE BRAND AND LONG HISTORY IN CAMERA MARKET
Canon is a large enterprise in the camera markets, its success is from its successful accomplishments in the past which has eventually built up its reputation for Canon. People are fully aware of the existence of Canon. A survey in NewZealand asked if respondents would choose a Canon for their
cameras, and up to 77% of them would say yes to Canon. Canon’s cameras therefore are very popular in New Zealand 4.2 QUALITY OF PRODUCT

Canon has aimed its goal to offer the world its best cameras since it was founded. Canon therefore focused heavily on quality and added more features, enhanced on the recording quality too. People would agree that Canon’s cameras are recognisable worldwide for its qualified quality. 4.3 PRODUCT INNOVATION – RESEARCH AND DEVELOPMENT

In New Zealand, Canon has remained its tradition to the development of its technology for cameras. Innovations have been a main objectives for offering new products towards customers to meet their demands and satisfaction, therefore attracting more customers with loyalty to choose Canon’s cameras. Besides, Canon has also oriented its targets towards families and corporations other than just individuals. About the competitive aspects, being innovative and concentrated on R;D has given Canon a huge benefit for both short-term and long-term. That is because New Zealand customers choose Canon’s cameras for it value of quality. 4.4 SERVICES

Top-notch services is another hugh plus point from Canon, offering Online Support, Canon Finance, Dealer and Sevice Locator … Clearly, Reputation of Canon does not just come from its well-made quality from a wide range of products but from its service as well. 4.5 SOCIAL RESPONSIBILITIES

The company’s kyoseiremained as it grows, as Canon desires to improve the standard living, but most importantly, to reduce the imbalances and create more connection for people and societies. In fact, Canon has given sponsorship many times to commmunity and many charity organisations, such as Make-a-wish Foundation, Red Cross Samoan Earthquake ; Tsunami Appeal … The image of Canon is enhanced further by doing those social activities, giving out attention to the public.

4.6 ENVIRONMENT
In New Zealand, Canon’s profile expressed that they were interested in protecting the environment. Canon desires to grow considerably to have more
ability to promote for a green environment but still provide satisfaction to customers. In fact, its division of Environmental Management has always been attempting keeping the effect of production and it products on the environment at minimum. 4.7 CULTURAL VALUES

The success of Canon is the success of its cultural value that it has built up, an inspiration kyosei to effectively operate the business, and its precise objectives both for present and its future. Canon’s actions are nowadays made by following those values and philosophy from itself.

5. PROBLEMS AND OPPORTUNITIES STATEMENT
Canon has certain success in New Zealand market and the international market overall. Building up its images through years and decades, its brand and position is fully recognised in the public. Now that Canon has become financially and socially strong, it will grow further as it has the ability to improve development in long term and therefore increase its revenue. Initially, Canon reputation is approved by customers who have tried Canon’s high-quality products and it has built up for many years. Moreover, the company can focus heavily on R;D since it has been productive; it has enough funds to constantly introduce new and innovative products to meet the increasing demand in the market. In addition, with the help from marketing strategies, its images are greatly enhanced. However, in general Canon’s products price is more superior, and therefore, will face intensive competition from Sony or Samsung because their models are more attractive and less heavy. New Zealand people have surely been adapting to technology life and so demand for digital devices is expected to become remarkable. Smart phone, however, is still greatly threatening the camera market, and to be more specific, a danger that Canon has to face

APPENDICES
APPENDIX A: CANON’S RANGE OF PRODUCT
“For you” line
A. Digital cameras
B. Compact System Cameras
C. Digital SLR Cameras
D. Lenses
E. Digital Video Cameras
F. Cinema EOS System
G. Printers
H. Speedlites
I. Faxes and Scanners
J. Calculators
K. Binoculars
L. Accessories
M. Consumables
“For home office” line
1. Home office printers
2. Large Format Printers
3. Faxes and Scanners
4. Calculators
5. Projectors
6. Accessories
7. Consumables
“For business” line
Canon offers a wide range of products to small, medium an dlarge-sized business.

APPENDIX B: DIGITAL CAMERAS SALES VOLUME

APPENDIX C: COMPETITOR STRENGTH/WEAKNESS GRID
APPENDIX D: CAMERA SURVEY PUBLIC – LAST MODIFIED 08/02/2012 1. Do you own or have full use of a camera that you have used to take pictures during the last six months? This can include your cell phone camera. #

Answer

Response
%
1
Yes

293
98%
2
No

7
2%

Total

300
100%

2. Interest in photography How much do you enjoy taking pictures? #
Answer

Response
%
1
Don’t really enjoy it

9
3%
2
Enjoy it a little

39
13%
3
Enjoy it

86
29%
4
Enjoy it a lot

67
23%
5
I love taking pictures

92
31%

Total

293
100%

11. Frequency of camera use
#
Question
all the time
quite often
sometimes
hardly ever
never
Responses
Mean
1
cell phone with camera
50
72
75
50
5
252
2.56
2
compact digital camera (CDC)
14
48
76
43
4
185
2.86
3
digital single-lens reflex (DSLR)
27
36
21
4
2
90
2.09
4
mirrorless interchangeable lens (MILC)
2
1
1
1
2
7
3.00
5
High Def video camera
1
4
7
7
2
21
3.24
6
video camera
1
2
12
18
5
38
3.63
7
film camera compact
1
0
5
3
5
14
3.79
8
film camera SLR
2
4
7
11
7
31
3.55
9
iPad or tablet with camera
4
7
14
13
6
44
3.23

33. When choosing a camera, please rate the importance of each of the following. #
Question
Extremely important
Very Important
Somewhat Important
Neither Important nor Unimportant
Somewhat Unimportant
Very Unimportant
Not at all Important
Responses
Mean
1
Brand reputation
78
128
65
8
4
0
6
289
2.16
2
Camera size & weight
52
107
100
19
1
3
5
287
2.44
3
Display screen size & quality
60
137
73
11
2
0
2
285
2.18
4
Ease of use (menus, buttons, managing images etc)
69
127
66
20
3
0
2
287
2.20
5
‘Look and feel’ (design, body colour etc)
44
103
88
34
10
3
4
286
2.61
6
Megapixel count
88
110
58
23
8
0
2
289
2.17
7
Multiple lenses
39
61
81
64
18
6
17
286
3.16
8
Optical zoom power
61
114
73
25
7
1
5
286
2.39
9
Price of camera
81
110
81
15
1
0
1
289
2.13
10
Quality of images
184
82
14
4
1
0
1
286
1.46
11
Special features (waterproof, ultra zoom, etc)
35
83
101
46
8
7
5
285
2.82
12
Other (please specify)
6
6
4
5
1
0
2
24
2.88

37. How satisfied are you with your Canon compact digital camera(s)? #
Answer

Response
%
1
Very Satisfied

21
41%
2
Satisfied

19
37%
3
Somewhat Satisfied

4
8%
4
Neutral

4
8%
5
Somewhat Dissatisfied

2
4%
6
Dissatisfied

0
0%
7
Very Dissatisfied

1
2%

Total

51
100%

38. If you were buying a new compact digital camera then would you buy a Canon? #
Answer

Response
%
1
Definitely buy a Canon

8
16%
2
Probably buy a Canon

27
53%
3
Might buy a Canon

8
16%
4
May or may not buy a Canon

8
16%
5
Might not buy a Canon

0
0%
6
Probably wouldn’t buy a Canon

0
0%
7
Definitely wouldn’t buy a Canon

0
0%

Total

51
100%

REFERENCES.
1. Keika Fatakia. (2012). Sony Corporation: Strengths, Weaknesses, Opportunities and Threats. Daily Finance. Retrieved from http://www.dailyfinance.com/2012/03/02/sony-corporation-strengths-weaknesses-opportunitie/. 2. Reid, P.(2010). Strategic Marketing: Decision Making &
Planning. Third edition. Cengage Learning: Australia, 2010. Chapter 13. 3. eHow contributor. (2011). The Importance of Supplier Relationship Management. Retrieved from http://www.ehow.com/about_6521804_importance-supplier-relationship-management.html. 4. Statistics New Zealand, 2011. Population survey.

5. Statistics New Zealand, 2011. Employment and Unemployment survey. 6. Statistics New Zealand, 2012. Gross domestic product survey. 7. Boyer, M. (2010). Canon – Consumer Digital Lifestyle index: Reporting period: 2nd half, 2010. GfK Retail and Technology Australia PTY ltd. 8. Boyer, M. (2010). Canon – Consumer Digital Lifestyle index: Reporting period: 2nd half, 2011. GfK Retail and Technology Australia PTY ltd. 9. Nikon annual report, 2011. http://www.nikon.com/about/ir/ir_library/ar/pdf/ar2011/11annual_e.pdf 10. Canon New Zealand, Corporate profile. Retrieved from http://www.canon.co.nz/. 11. Porter’s value chain. Retrieved from http://www.mindtools.com/pages/article/newSTR_66.htm

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