Reengineering & Restructuring at Canon|Business Strategy|Case Study|Case Studies

Reengineering & Restructuring at Canon

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Case Details:

Case Code : BSTR091
Case Length : 19 Pages
Period : 1990 - 2003
Organization : Canon Inc
Pub Date : 2004
Teaching Note : Available
Countries : Japan
Industry : Office Equipment

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excellent Global Corporation - Phase II

The objectives of Phase II were to: to become number one in all core product categories, build strong R&D facilities to fuel the company's growth by developing new businesses, strengthen the finances of the company, and foster innovation among employees.

To achieve the objectives of phase II, Canon announced that it would set up more manufacturing bases overseas, increase its R&D spending and focus on chip technologies such as CMOS sensors for digital cameras and cordless systems like Bluetooth. In an interview with BusinessWeek, Fujio named globalization and diversification as the two basic principles on which Canon's phase II would be implemented. He announced that the company would be concentrating on new technologies such as networking and semiconductor chips to boost the bottomline of the company. Commenting on the shift in emphasis from Phase I to Phase II, Fujio said, "If I were to characterize them, I would say that Phase I was a time for improving our "corporate quality," those factors that ensure high income and increase corporate value...

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Future Prospects

By 2002, with net sales of 2,151,062 million, Canon reported record earnings for the third consecutive year (Refer Exhibit IV for financials of Canon). Canon emerged as number one in the copier segment and was placed among the top five in its other product categories (Refer Table VII for 2002 market share).

Analysts attributed Canon's success to the management's foresightedness and its focus on profits rather than market share. However, not everyone was convinced about the success of Canon. They pointed out that Canon was able to surge ahead of Xerox in copiers only because of the internal and regulatory problems faced by Xerox. They also pointed out that with Xerox showing signs of turnaround it would be tough for Canon to retain its lead.

Also, Canon's optical products business registered a loss of $10 million on a revenue of $1.03 billion in the first half of 2003. However, Fujio was not considering quitting the optical business as it provided technological inputs to other product divisions...

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Exhibit I: A Note on Xerox
Exhibit II: Kyosei - Canon's Corporate Philosophy
Exhibit III: Canon Financial Summary For 1996-2000
Exhibit IV: Canon Financial Statements For 2001-2002

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