Strategic Planning at Canon - Essay Example

Strategic planning at Canon Read Case Study, Strategic planning at Canon with a co-operative corporate style and answer the following TWO questions:1. Evaluate Canon’s strategies and how they have managed their strategic challenges and strategic changes within this. In your evaluation you will need to consider the key factors of success in relation to the different strategic groups within the industry. Support your evaluation with relevant theory and academic models. 2. Debate whether companies outside this industry sector can draw any useful lessons from the strategies used by Canon in this industry. Provide examples of strategic areas that might be of interest to other industries and any limitations of using such information. Question 1 Canon is a firm that is already well established in the global market. The success of the firm can be considered as the result of a well structured strategic planning process where the needs of the firm’s departments are aligned and are appropriately served through flexible strategic measures. At the time when the firm established – in 1957 – the use of strategic planning for the promotion of a firm’s interests was limited. Through the years, the firm managed to improve its strategic plans responding to the customer demands but also to the global competition – which has been increased at quite high levels the last decade. The firm has chosen to apply three different – in terms of their duration - strategic plans. In the short term, the improvement of the firm’s finances has been set as a priority – the pressure of the global competition is clear. In the medium term, however, the firm chooses to focus on its goals and its resources (both capital and human resources). In the long term, the criteria for the development of the firm’s strategic choices are going to be reviewed; the improvement of the firm’s position in the global market (1st position in the specific industrial sectors worldwide) would be then an achievable target. The success of the strategic planning process used by the firm can be proved primarily by its performance. In accordance with the figures related with the firm’s activities – as included in its financial statements – the sales of Canon have been increased to 3,468 billion (2004) from 4.2 billion in the first year that the firm entered the particular industry (in 1950). The particular elements of the firm’s strategic planning process can be identified in Figure 5 (Appendix). The range of the firm’s products is significant including computer, optical products, photocopiers and cameras. The significant advantage of the firm towards its competitors can be identified to its strategic vision: when the photocopying market was in its initial phases, Canon managed to foresee its growth and expanded its activities in the particular sector. Despite the fact that Xerox had already dominated the global market – referring to the photocopying industry - Canon kept on fighting for the increase of its share on the particular sector. The use of innovative technology in its products – compared to the similar products of Xerox – was thought to be an effective method in order for the firm to improve its position in the particular industry worldwide. In this part of the firm’s strategic development, innovation was the most important factor – along with vision - of the firm’s success – referring to the photocopying industry. Another factor supporting the development of the firm’s strategic planning has been the importance given by the firm’s managers to the satisfaction of customers. In any case, the evaluation of the firm’s strategic choices can be developed only through the identification and the examination of its strategic priorities; for Canon the improvement of the firm’s position in the global market has been quite important; however, this achievement should be followed by the increase of the business profitability; otherwise, there would be no value of the strategic initiatives taken. In other words, increase of the percentage of the market share – referring to the sectors in which the firm operates – should be followed by the increase of the profits. If there is no such issue, then different strategic options should be made – the firm would have to choose different industrial sectors as potential paths for its growth. The firm’s advantage towards its competitors could be identified in the following features – parts of the firm’s strategic planning process: ‘a) highly automated manufacturing plant that takes year to design, install and bring to full efficiency, b) High-technology products that take years to develop and perfect and c) Synergy and core competencies that provide linkages across a number of product areas’ (case study, pages 3, 4). Another important feature of the firm’s strategic planning process is the fact that through the decades the firm has expanded its activities in many industrial sectors including electronics, communication, biotechnology and energy saving). Still the stability of its financial performance is among the firm’s priorities – taking into consideration the strong turbulences that characterize the global market. The development of strategic alliances would help the firm to increase its share in the global market; however, if such a plan is attempted the risks can be many. In accordance with Lynch (2001, 466) the firms could avoid the trap of being involved in an acquisition plan with a high premium by emphasizing on the use of due diligence throughout the development of the specific strategic decision. In accordance with the above, the following factors/ features have led the firm’s strategic planning process to significant success: a) strategic vision, b) innovation, c) continuous development of the technology used in the various operational activities, d) incorporation of innovative technology features in the firm’s products and e) continuous expansion in different industrial sectors. The above elements of the firm’s strategic planning process can be evaluated using the relevant theory. In the literature, the priorities set by strategic managers have been thoroughly analyzed. The following features have been found as necessary in the strategic planning process of modern businesses:‘1. Finance, 2. Process, 3. Offering and 4. Delivery’ (Kesler, 2000, 26). Modern firms can choose among different strategic plans when trying to expand their activities. The merger and acquisition strategic plan is preferred by most firms worldwide – the specific plan has been found to have more advantages than disadvantages. In accordance with Lynch (2001, 466) ‘financial reasons associated with purchase of undervalued assets could be another advantage’. A firm can set its own strategic priorities taking into account the fact that customer needs tend to change continuously and that market trends usually follow the development of technology but also the consumer patterns set by multinational corporations. Canon is a firm already well established in the global market. The firm’s strategic planning process can be analyzed using appropriate models – at the level that their features respond to the firm’s characteristics and its strategic priorities. At a first level the firm could simply make specific updates in its strategies – avoiding the extensive re-organization of its operations. This solution would be less costly and could be completed within a short period of time. In this context, it is noted that ‘an organization could increase productivity simply by increasing the happiness and satisfaction of its employees, and both organizations and employees would benefit’ (Landy, 1989, R. Wright, 2000 in Barrick et al., 2003, 30). On the other hand, it is made clear that ‘organizational culture is an important factor influencing relationship skills, defined as a firm’s ability and behavioral tendency to actively cultivate and manage its ties with other firms’ (Beugelsdijk et al., 2006, 833). In other words, the firm could focus on the increase of the motivation of its employees in accordance with its culture and its strategic vision. The increase of the motivation of employees in Canon could be achieved using the Hertzberg model (Figure 4) in which motivation is closely related with satisfaction. The benefits provided to the firm’s employees would be significant in analogy with their contribution in the firm’s success. The firm could proceed to specific strategic choices following the policies included in the Industry attractiveness/ business strength matrix (Figure 1). Under current market conditions, expansion in new markets would be avoided; rather emphasis should be put on the identification of key industrial sectors – others from the ones already chosen by the firm – and the improvement of the firm’s R& D department. The above suggestions are in accordance with the features of Porter’s five forces model. In accordance with the specific model, Canon has to face the pressure of five forces, i.e. its competitors, the customers, the suppliers, the substitute products and the threat of new entrants. Having in mind that the firm’s strategic planning process has been proved quite successful up to now, managers in Canon would decide to increase the performance of their employees – increasing in this way their strength towards their competitors and further develop their products in order to avoid being threatened from substitute products that would appear in the market; in fact the range of substitute products in the sectors in which the firm operates are many – quality and customer service would be the major advantage of the firm towards its competitors. Question 2 When operating in the global market, there are no standard criteria of success; risk is involved in all business activities conducted worldwide especially during periods of financial crisis. Under these terms, modern firms need to develop competitive advantages towards their rivals ensuring the feasibility of the relevant plans even in the long term. In accordance with Robertson et al. (1995, 547) ‘because private sector organizations are driven primarily by market or consumer preferences, organizational effectiveness is more readily measured in terms of efficiency and profitability’. From another point of view, it is noted by Steyn (2004, 615) that ‘successful organisations are knowledge-creating organisations, which produce, disseminate and embody new knowledge in new products and services’. It is clear from the above views, that the evaluation of effectiveness of strategic planning processes used by firms worldwide can be a challenging task. However, when a pattern of business performance is set then it is easier to follow the practices that have been already tested and proved successful – the potential threats are then known and there is no major risk in taking additional initiatives. When deciding to update their existing practices, firms worldwide need to ensure that they have effectively identified – primarily – their strengths and weaknesses. The findings of the literature could help to the successful development of this task; however additional support would be required. We could indicatively refer to the study of Carley et al. (1994) who supported that ‘organizational structure is measured by features such as organizational degree of hierarchy, organizational connectivity, organizational least-upper-boundedness and organizational communication level’ (Carley et al., 1994, p.124-125). The models developed by researchers – like the ones presented in the Appendix section - could be particularly helpful. Firms that operate outside the specific industrial sector could be significantly benefited by the practices followed by Canon. The model of Porter (Value Chain Analysis, Figure 3) would be used in this case in order to identify the elements of Canon’s strategic choices that would be valuable for the firms operating in other industrial sectors. Canon has developed the technology used in its production units. Its infrastructure is under continuous review and update almost since the firm’s establishment. In accordance with the information provide in the case study, the firm’s technological development is also significant. In fact, technology used in the production units as well as the technology incorporated in the firm’s products is continuously updated, a fact that helps the procurement to be kept at high levels. On the other hand, there is one key strategic element (in accordance with the specific model) that is not yet quite developed in Canon, i.e. the firm’s human resources. As noted above, the specific sector of the organization should be reviewed – the HRM policies used should be update and being aligned with the firm’s needs and the customers’ demands. Another important part of the firm’s strategic planning process is the development of a three- periods plan; similar plans would be adopted by firms operating in other industrial sectors for the satisfaction of the following organizational needs: in the short term, emergent issues, like the cash flow of the firm would be addressed. In the medium terms, targets easily to be achieved would be incorporated. In the long term, the position of firms’ in their market – or the global market – would be set under examination. The success of Canon may hide a risk for the interested followers of the firm’s strategic planning process: Canon is a firm that has set a specific rule regarding the development of its strategic decisions: the strategic plans chosen have to be profitable – otherwise they should be abandoned. For this reason, firms that may attempt to follow Canon’s strategic planning process should take into consideration the above rule ensuring that all their strategic decisions would lead to the accumulation of profit – at least this is the rule adopted by Canon – otherwise alternative plans would be applied. Current market conditions – with the extremely strong financial turbulences – make the application of the above rule quite difficult. The adoption of Canon’s strategic planning process by modern firms would be feasible only if being combined with the development of powerful – financially – strategic alliances. Bibliography Barrick, M., Ryan, A. (2003). Personality and Work: Reconsidering the Role of Personality in Organizations. Jossey-Bass. San Francisco Beugelsdijk, S., Koen, C. (2006) Organizational Culture and Relationship Skills. Organization Studies, 27(6): 833-854 Buck, T, Shahrim, A 2005, ‘The Translation of Corporate Governance Changes across National Cultures: The Case of Germany’, Journal of International Business Studies, 36(1): 42-69 Carley, K., Prietula, M. (1994) Computational Organization Theory. London: Routledge Kesler, G.C., Law, J.A. (1997). Implementing Major Change in the HR Organization: The Lessons of Five Companies. Human Resource Planning, 20(4), p. 26-37 Korman, A., Kraut, A., London, M. (1999). Evolving Practices in Human Resource Management: Responses to a Changing World of Work. San Francisco: Jossey-Bass Loree, D (2008) ‘Density – dependent strategic action: Outcomes of structural market commitment in the global integrated circuit industry’, Journal of engineering and technology management, 25(1-2): 23-57 Lynch, R. (2006), Corporate Strategy (4th. Edition), FT Prentice Hall Magee, S (1981) ‘The Appropriability Theory of the Multinational Corporation’ The ANNALS of the American Academy of Political and Social Science, 458(1): 123-125 Palich, L, Gomez-Mejia, L 1999, ‘A Theory of Global Strategy and Firm Efficiencies: Considering the Effects of Cultural Diversity’ Journal of Management, vol., 25, no. 4, pp. 587-606 Porter, M. (1985) Competitive Advantage: Creating and Sustaining superior Performance. Harvard Business School Press Porter, M. (1998) On Competition. Harvard Business School Press Ramaseshan, B., Bejou, D., Jain, S., Mason, C. (2006) Issues and Perspectives in Global Customer Relationship Management. Journal of Service Research, 9(2): 195-207 Robertson, P. J., Seneviratne, S. J. (1995). Outcomes of Planned Organizational Change in the Public Sector: A Meta-Analytic Comparison to the Private Sector. Public Administration Review, 55(6): 547-558 Shay, J., Rothaermel, F. (1999) Dynamic competitive strategy: towards a multi-perspective conceptual framework. Long Range Planning, 32(6): 559-572 Sheth, J., Sisodia, R. (2000) The Antecedents and Consequences of Customer-Centric Marketing. Journal of the Academy of Marketing Science, 28(1): 55-66 Steyn, G. (2004). Harnessing the Power of Knowledge in Higher Education. Education, 124(4): 615-623 Appendix RANK HIGH MED LOW Business strength High Identification of key industrial sectors Deletion of activities that are costly Close monitoring of strategies applied Med Improvement of technology Seek for strategic alliances Monitoring of strategies of competitors Low Development of new marketing features Development of R&D sector Expansion in new markets Figure 1 - Industry attractiveness/ business strength matrix (Canon) Figure 2 - Five forces of industry competition (source: Porter, 1998, 22) Figure 3 - Porter, Value Chain Analysis model (Porter, 1985, available from http://www.provenmodels.com/26/value-chain-analysis/porter) Figure 4 – Employees’ motivation, Hertzberg (Hertzberg, 1959, available from http://tutor2u.net/business/people/motivation_theory_herzberg.asp) Figure 5 – Strategic planning process in Canon (source: case study) Read More