1. Evaluating Canon’s strategies and explaining how they have managed their strategic challenges and strategic changes within this.
It is essential to consider the position at Canon where the company has successfully established itself in both the camera and photocopier businesses. Many of the strategic assets which underpin these respective strategic business units (SBUs) cannot be shared directly. The dealer networks and component manufacturing plans are largely specific to each SBU. But in the course of its operations producing and marketing cameras, the camera division has extended this initial asset stock by a mix of learning-by-doing and further purchases of assets in the market. As a by-product of this asset accumulation process, the camera business also developed a series of competences like knowledge of how to increase the effectiveness of a dealer network, how to develop new products combining optics and electronics and how to squeeze better productivity out of high-volume assembly lines (Lynch, 2006).
Because Canon is in two businesses, cameras and photocopiers, where the processes of improving dealer effectiveness, speeding up product development or improving assembly-line productivity are similar, it can improve the quality of the strategic assets in its photocopier business, by transferring competences learned in its camera business and vice versa. This type of strategy, associated with similarities in the processes required to improve the effectiveness and efficiency of separate strategic assets in two businesses, opens up opportunities for asset improvement.
Another strategic advantage of Canon is its ability to utilize a core competence developed through the experience of building strategic assets in existing businesses. For example, in the course of operating in the photocopier market, and building the asset base required to out-compete rivals, this SBU also accumulated its own, additional competences that the camera SBU had not developed. These may have included how to build a marketing organization targeted to business, rather than personal buyers, and how to develop and manufacture a reliable electrostatic printing engine (Lynch, 2006).
When Canon diversified into laser printers, this new SBU started out with an endowment of assets, additional assets acquired in the market and arrangement to share facilities and core components. But even more important for its long-term competitiveness, the new laser printer SBU was able to draw on the competences built up by its sister businesses in cameras and photocopiers to create new, market-specific strategic assets faster and more efficiently than its competitors (Lynch, 2006). This kind of strategy, where the competences amassed by existing SBUs can be deployed to speed up and reduce the cost of creating new market-specific strategic assets for the use of a new SBU, we term the ‘asset creation’ advantage of related diversifiers. Again, only where the processes required to build the particular strategic assets needed by the new SBU are ‘related’ in the sense that they can benefit from existing core competences, will this type of diversification advantage be available (Mintzberg, 2005).