German Canon Business Analysis In 1925

In 1925, a German camera maker named Oskar Barnack, developed a new, ground-breaking camera called the Leica. It was not until 1933 that a company responded to the success of Barnack’s creation and produced their own 35 millimeter version of his innovative design. Thus was born the Canon Company. By the 1950’s, Canon attained the title of leading producer of cameras in Japan. Since that time, Canon has made it a point to expand and diversify their company as much as possible.

They are able to accomplish this primarily through a strong Research and Development program. Through this program, Canon has explored many different technologies such as home electronics and x-ray technology. One of the first product areas they explored was in the electronic calculator segment. Due to the complex nature of the technology, Canon’s engineers were forced to adapt and develop the intricate micro-electric processors that were being used. They were very successful in doing this.

In late 1964, one year after their research started, Canon engineers presented top management with the finished product, the Canola 130. This product became the world’s first 10-key numeric pad calculator. However, Canon has not always succeeded in their endeavors. With every triumph comes a failure. One such instance was a printing device that utilized magnetic material that would coat the paper. They called this the Synchroreader. Although it was touted for its use of technology, the application, it was not patented. Another company took the design, improved it, and made it more affordable.

Canon learned its lesson after that instance. Body In 1961, a new technology was developed by the Xerox Corporation. In the following years, with the success of their model 914 office copier, Xerox would enjoy a reported ninety three percent market share world wide. Xerox also had the advantage in that they held approximately five hundred patents. This tactic prevented other companies from intruding on their Plain Paper Copier (PPC) technology. Canon entered the market late in the 1960’s and was looked at with a skeptical eye.

They were the “camera company from Japan” (Mintzberg, et al 2003, p. 75) and were not looked at as serious contenders in the photocopy market. Due to the PPC market being cornered by Xerox and their numerous patents, Canon instead moved into the Coated Paper Copying (CPC) market. This technology transfers the reflection of the original image directly to the special zinc oxide coated paper. This is in direct contrast from the PPC technology which uses regular paper and indirectly transfers the image using a rotating drum and charged particles.

A similar technology is still being used in fax and photocopiers today. In 1962, while still in the inferior Coated Paper Copying and marketing under a separate name, the Top Management of Canon challenged their engineers to create a PPC process that would not infringe upon the patents held by Xerox. The engineers answered with the “New Process” in 1968 and became the first copier to carry the Canon name. Two years later the research came to fruition when the NP1100 was released in Japan. This model utilized dry toner and copied at a whopping rate of ten pages per minute.

This, of course, is slow by today’s standards. Canon had finally broken into the PPC market. Riding on the success of this new technology, Canon released the NPL7 in 1972, marketing it exclusively to Japanese companies. This model contained several noticeable improvements over the first generation NP1100. Most notably is that the model was “More economical, more compact, more reliable,” while still keeping the same quality of copy. (Mintzberg, et al 2003, p. 77) Canon’s Top Management began looking for alternative markets for the Plain Paper Copier in the latter half of the 1970’s.

The small office market was identified as Canon’s next target market. They devised a plan to accommodate this market by producing a photocopier, using PPC technology, and offering it to small businesses that did not require the large volume, high speed machines that were currently being offered on the market. The concept itself had the potential to change the market by decentralizing the office photocopier. Prior to this innovation, the photocopier in large offices were centralized to one corner of the office, primarily due to its mammoth size.

In 1979, Canon’s concept became a resounding reality. They were able to produce a photocopier that not only met and exceeded the cost and reliability targets that were set by Top Management, but in a more practical application, it was able to reduce the need for constant and continual copier maintenance. Based upon previous experience with patent law, Canon employed the use those laws to protect their new found development. Through the years, Canon has demonstrated several core competencies that have enabled them to propel themselves to the top of the market.

First and foremost, Canon has employed a pool of extremely talented engineers who made up Canon’s Research and Development team. Through their research, Canon was able to uncover new and innovative products. This varied product line, which included cameras, calculators, and photocopiers, demonstrates Canon’s diversified product line. This diverse line of merchandise is integral to the company’s survival and has enabled Canon to take a multifaceted approach to technological competition. The more diverse type of products that are offered, the more chances there are for success.

This has not always worked out in Canon’s favor however. An example of this would be in the development of the synchroreader. Although the technology was much more advanced than what was on the market, poor marketing decisions and an ignorance of United States patent laws cost Canon that share of the market. Since that time, Canon has taken a step by step approach to their marketing strategies. This is especially apparent with the development and marketing of the NP110 copier. They began by distributing the unit in Japan only in a direct sales format.

In doing so a company opens themselves up to the threat of collapse due to spreading themselves too thin. Secondly, we can surmise that an isolated marketing strategy, such as the one that Canon employed when marketing their copier to local Japanese dealers first, will be more effective in the long run. By distributing the product locally at first you can focus on close to home customers rather than across seas customers. Finally, a truly cost effective manufacturing process can be more beneficial at times than the products that come off the assembly lines themselves.