Canon Europe: Pan-European Transformation - Essay Example

Senior general manager Steffan Pilotti of the European organizational development in Canon headquarters admitted that "We found that we would not be able to sustain our leadership position in the market if we continued to function the way that we had been used to. It mean Canon Europe had to stop functioning as a middleman between Canon, Inc. in Japan and the European national sales organizations or NSOs. Prior to the change, primary tasks of NSOs were to consolidate sales results, provide product information, logistic support and encouraged a shared direction.

The value was a vague since real business was done at country level. Decentralized structure in Europe. The NSOs each had their own country president, worked independently or were autonomous, that gave rise to decentralized structure. This also resulted in different information technology, financial, management information and enterprise resource planning (ERP) systems, and each had also its own marketing strategies, campaigns, advertising and promotional materials. David Woolston who was then vice president of Canon Europa NV or CENV said, "The classic feeling of most national sales organizations towards headquarters was that it was the place you went to for nice lunches and large meetings and you went home and did exactly what you had been doing before.

It was abit like an old fashioned kingdom where people came to pay court to the king, like the shoguns." Canon had 13 kingdoms in Europe, and each with a king as one senior manager observed. "Some of these kings were used to negotiating directly with Japan"Delayed product introduction - as part of the internal findings, Canon entered the digital market later than other players. Pilottie admitted that "We did not follow the technology change fast enough. We were faced with a problem that was beyond out control, that is, no next generation products on the market.

"Highly fragmented supply chain management - which is the effect of the decentralized autonomous structure which was also costly and non-competitive having five information technology platforms and contracts with numerous third parties across Europe.Questionable role of headquarters or CENV - whereas Canon needed to redefine its HQ function to provide a common vision and strategic direction for its European operations. Competitors like Xerox already had addressed the issue and had achieved lower operational costs and more dynamic structures.

Leveraging of distribution - many wholesalers expected suppliers like Canon to work with them across Europe with a consistent approach to pricing, logistics, advertising and promotions.Competitive pricing and promotion - the advent of the internet increased competition and limited regional differences in pricing abnd promotion. The Euro also complicated things further so that Canon's decentralized structure became a severe obstacle to addressing these issues.Slowing growth rates and eroding gross margins - photocopy growth rates used to be 20 % to 30 % per year, but it dropped down to 10% due to oversupply in the low-end segment and maturation in the