CANON: COMPETING ON CAPABILITIES
This report examines the competitive strategy that enabled the "camera company from Japan"1 not only to break down the monopoly enjoyed by Xerox in the copier business in the 1970s but also to grow into a highly diversified, multi-product and multinational premier company.
Specifically, the report considers (1) the competitive strategy of Canon (2) the major resources and capabilities of Canon (3) management of the development and transfer of capabilities throughout the organisation (4) Canon's strategic perspective (5) is Canon successful? (6) conclusion and key learning points
The dominant generic competitive strategy adopted by Canon is differentiation. The company deployed its technological capabilities and know-how in fine optics, precision mechanics, microelectronics and fine chemicals to develop innovative and state-of-the-art products, which were of better quality than those of its competitors. These products resulted mainly from the strong, decentralised research facilities of the company and the incredible ability of its engineers to convert research findings to new products and technological innovation.
Although Canon succeeded in manufacturing products at low cost, it did not deliberately compete on the basis of low price. The quality of its products combined with significant amount of marketing and deliberate brand development efforts have established a sound reputation for Canon in the market and these underlie the competitive advantage of Canon.
Resources and capabilities
The major resources of Canon are as follows:
(1) Financial capacity: product innovation and attendant growth in sales and profits enabled provided Canon with the finance required for additional research and product development which resulted in further increases in revenue in a virtuous cycle.
(ii) Decentralised R&D and new product development: in addition to the company's main research centre which supports state-of-the-art research in optics, electronics, new materials and information technology, each product division has development centres...