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Phân tích chiến lược kinh doanh của công ty CANON

FOREIGN TRADE UNIVERSITY

ANALYSIS OF STRATEGY OF
TRANSNATIONAL CORPORATION
(TNC) OPERATING IN VIETNAM

HANOI
September 26, 2012


Contents
Group members:................................ ................................ ................................ .................... 2
Part I.
1.

An introduction- Background to TNC's road to Internationalism ............................ 3
History of Canon Corporation ................................................................ ..................... 3

a. Canon’s corporate philosophy ................................ ................................ ................. 3
b.


Characteristics and the establishment of Canon Inc. ............................................... 3

2.

Canon’s major sectors of operation ............................................................................ 4

3.

Results of Canon’s business activities during the last three years ............................... 4
a. Awards and prizes................................ ................................ ................................ .... 4
b. Assessment about the key performance of Canon Corporation in the period 2009 –
2011 5

4.

Analysis of choice of foreign market ........................................................................... 6

Part II. Business strategies of Canon in Vietnam ................................................................ 7
1.

External analysis ................................................................ ................................ ......... 7
a. Macro-environment analysis................................ ................................ .................... 7
b. Industry analysis ................................ ................................ ................................ ...... 9
c. Some highlights of Canon:................................ ................................ ...................... 14

2.

Analysis of strategies issues of Canon in Vietnam ..................................................... 14
a. International strategies of Canon in Vietnam ......................................................... 14
b.

Business strategy of Canon in Vietnam .................................................................. 15
i.

Corporate- level strategy: ................................................................ ................... 16

ii.

Business- level strategy................................ ................................ ...................... 17

c. Organizational structure of Canon in Vietnam........................................................ 20
d.

Modes of market entry................................ ................................ .......................... 23

e.

Performance of Canon, Inc. ................................................................ ................... 25

Part III.

Conclusion and recommendation ................................................................ ...... 29

1.

Conclusion................................ ................................ ................................ ................ 29

2.

Recommendation ................................ ................................ ................................ ..... 29

References................................ ................................ ................................ ........................... 31

1


Group members:
Class: Strategic Management – QTRE312.1

1. Nguyễn Thanh Hà - 0953040105
In charge of: 2a, 2b – Part 2
2. Nguyễn Thanh Thúy – 0953040082
In charge of: Part 1 and 1a of Part 2
3. Bành Ngọc Hà – 1001030109
In charge of: 2c, 2d, 2e of Part 2
4. Đỗ Thị Mai – 0952050035
In charge of: 1b of Part 2 and Part 3

2


Part I.
An introduction- Background to TNC's road to
Internationalism
1. History of Canon Corporation
a. Canon’s corporate philosophy
What is the meaning of “Canon”? It means “original, official” which shows the source of
bright beginning for a prosperous future. Therefore, it is easy to understand the reason why
Canon Corporation chose this name.
The corporate philosophy of Canon is kyosei. A concise definition of this word would be
“Living and working together for the common good” but our definition is broader: “All
people, regardless of race, religion or culture, harmoniously living and working together into
the future. ” Unfortunately, the presence of imbalances in our world in such areas as trade,
income levels and the environment hinders the achievement of kyosei.
Through corporate activities based on kyosei, Canon strives to resolve imbalances in the
world. Truly global companies must foster good relations, not only with their customers and
the communities in which they operate, but also with nations and the environment. They
must also bear the responsibility for the impact of their activities on society. For this reason,
Canon's goal is to contribute to global prosperity and the well-being of mankind, which will
lead to continuing growth and bring the world closer to achieving kyosei.
b. Characteristics and the establishment of Canon Inc.
Canon Inc. (Kiyanon kabushiki-gaisha) is a Japanese multinational corporation that
specializes in the manufacture of imaging and optical products. The company was originally
founded by Goro Yoshida. Its headquarters are located in Ōta, Tokyo, Japan.
Canon had a modest beginning in a small room, where young people with a big dream
sprang up a great number of creative ideas and earnestly began their work on producing a
high-quality Japanese camera, marking the beginning of Canon.
In 1933, a small laboratory dedicated to making high-quality cameras was set up in a simple
apartment room in the Roppongi area of Tokyo. At the time, all high-quality cameras were
European with the majority coming from Germany.
Through hard work and with an enterprising spirit, in 1934, they eventually succeeded in
building a prototype, which was named Kwanon after the Buddhist goddess of mercy. One
year later, they produced a prototype for Japan’s first-ever 35 mm camera with a focal plane
shutter. During these first years the company did not have the facilities to produce their own
optical glass, so the first cameras came with Nikkor lenses from Nippon Kogaku K.K. (the
later Nikon Corporation ). In 1947 the company name was changed to Canon and the first
own Serenar lenses were made.

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2. Canon’s major sectors of operation
The industry that Canon operates within is an environment which needs creativeness, nonstop changes, high responsibilities to accomplish the task as well as contribute to the
performance of the company’s whole system. Canon is a Japanese company that meets all
these requirements.
There are three major sectors of operation that Canon focuses on:
Consumers’ products
Digital single lens reflex
cameras
Compact digital cameras

Office’s products
Office network multifunction
devices
Laser printers

Digital camcorders
Lens for SLR cameras
Compact photo printers
Multifunction inkjet printers
Inkjet printers
Commercial photo printers
Multimedia projectors
Images scanners
Network cameras

Laser multifunction devices
Solution software
Toner cartridges
Digital production printers
Large – format inkjet printers

Broadcast equipment

Industry and others’ products
LCD lithography systems
Semiconductor lithography
systems
Ophthalmic equipment
Digital radiography systems
Document scanners
Handy terminals
Color label / Card printers
Personal information products
Components
Die bonders
Organic LED panel manufacturing
equipment
Vacuum thin-film deposition
equipment

However, the percentage is unequal among these sectors. Canon Corporation shows the
biggest concern with the office’s products, which accounts for about 56% of total products.
The second is customers’ products that makes up for approximately 39% and a very small
number of products (5%) belong to industry and other fields. Because of a limited time to
accomplish the assignment, our group only focus on “camera” - one of the most typical
products of Canon.

3. Results of Canon’s business activities during the last three years
a. Awards and prizes
Year
2009

Awards and prizes
The image-PROGRAF iPF755 received the Buyers
Laboratory Inc. Pick of the Year award in the
"Outstanding Wide-Format Color Inkjet
Multipurpose" Category.

Images

The EOS 5D Mark II and EOS Rebel XSi received the
2009 "Hot One Award" for best digital SLR $1,000 $3,000 and best digital SLR under $1,000,
respectively.
4


2010

Canon has been selected by Business Solutions
Magazine (BSM) as one of the best channel vendors.
The awards were for:
Image-PROGRAF iPF650
Image-PROGRAF iPF510
Image-PROGRAF iPF710
Image-PROGRAF iPF610
Canon was awarded “Outstanding achievement in
the advancement of the art and science of video
technology” by 2010 NAB Best of Show Black
Diamond Award with 2 products:
XF300
XF305
The EOS 7D was named the 2010 Hot One Award
recipient in the Digital SLR category between $1,000 $3,000.

2011

Canon received 2011 BERTL's Best Award for 2
products:
Image-PROGRAF iPF8300S
Image-PROGRAF iPF6300S
For the 8th year in a row, Canon U.S.A. is proud to
have received the 2011 Readers' Choice Award for
Service & Reliability from PCMag.com for Printers.
PIXMA Pro9000 Mark II
PIXMA Pro9500 Mark II

2012

The Canon Power-Shot G1 X has received the "Best
Expert Compact Camera" from the Technical Image
Press Association (TIPA).
The PIXMA PRO-1 received the 2012 DP Review Gold
Award.

b. Assessment about the key performance of Canon Corporation in the
period 2009 – 2011

KEY PERFORMANCE INDICATORS
Net sales (Millions of yen)
Gross profit to net sales ratio
R&D expense to net sales ratio
Operating profit to net sales ratio
Inventory turnover measured in days
Debt to total assets ratio

2011
3,557,433
48.8%
8.7%
10.6%
46days
0.3%

2010
3,706,901
48.1%
8.5%
10.5%
35days
0.3%

2009
3,209,201
44.5%
9.5%
6.8%
39days
0.3%
5


Canon’s stockholder equity to total assets ratio

64.9%

66.4%

69.9%

4. Analysis of choice of foreign market
A corporation which wants to develop and rapidly become the market leader in a
competitive environment will have to expand the scale in all over the world by opening more
branches in other countries to dominate and gain more market shares than its competitors.
Canon just began from a small room, but how it quickly developed and became one of the
market leaders in imaging and optical technique industry? One of the reasons is that Canon
has a good choice of opening branches in foreign market. Canon focuses on the Asian market
which has most of the developing countries. Take China and India as an example. Although
they are developing countries, they have the prominent development of technology, the
hardship and creativeness of employees who require low salaries as well as the stable
politics, which makes a good condition for Canon to improve and diversify its products, gain
the achievements as well as expand its impact on foreign market.
Why did Canon choose Vietnam to open branches and invest? There are some main reasons:
First, the convenience of geographical area is one of the reasons Canon choose to develop in
Vietnam. Vietnam has the near distance with Japan, 3 directions adjacent to other Asian
countries and a long coastline which is easy to penetrate.
Second, Vietnam has a stable political environment, the Government encourages to
developing the technical industry and willing facilitating to this industry
Third, Vietnam economy is in development stage, if Canon invests in Vietnam market, it may
easily spread and introduce its products to domestic customers to enhance its reputation
and raise profit
Fourth, the nature of Vietnam people is industrious and creative, which can contribute to
the productivity of Canon and spring up more new ideas to diversify products and shorten
time to produce one unit of products
Fifth, the technology of Vietnam is still being improved and needs to apply foreign
technology, so Canon may quickly penetrate to Vietnam Production line and make chance to
widespread the high quality products to Vietnam market.

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Part II.

Business strategies of Canon in Vietnam

1. External analysis
a. Macro-environment analysis
There are lots of macro-environment factors that may impact on the reason why Canon
chooses to open branches to develop in Vietnam and how Canon carries out the business
strategy in Vietnam market. We should focus on four main factors: Political. Economic, Social
and Technological which clearly and directly affect the performance of Canon in Vietnam
Political : Vietnam is a peaceful country (ranking 39 out of 144 in 2009) which has a very
stable political environment, low risk of military conflicts. Political stability is one of the main
factors that have helped Vietnam pursue its economic development policy. Since 1990, most
other regional countries, except Singapore, have experienced coup d’etats or political crises.
Meanwhile Vietnam has achieved political stability – factors that enable Vietnam go ahead
with its renewal process.
Besides, Vietnam also has nearly lowest protection of intellectual property. We cannot deny
the fact that Vietnam has come a long way in protecting intellectual property. To join the
World Trade Organization, Vietnam was required to meet international standards of IP
protection. It passed the new IP Law in 2006 and adopted the Berne Convention on
copyrights, for example. The result is that today Vietnam has relatively comprehensive set of
laws covering most aspects of IP rights. However, the protection of intellectual property is
still low. For example, somewhere around 90% of all software is still pirated according to the
Business Software Alliance (compared to an average of 55% in the Asia Pacific region). In
addition, Vietnam has the high encouragement of trading partners, encouraging tax
incentives for technical companies; the minimum wage is much lower than the technical
industry standard and Vietnam also gives priorities to international companies in Vietnam.
When choosing Vietnam to set up branches, Canon takes lots of advantages and easily
penetrates Vietnam market
Economic: Vietnam's economic system is gradually out into the global system and gradually
improves because of the commitment of Vietnam to WTO in 2007. Vietnam also has a stable
exchange rate and the facility is gradually developed as well as more advanced. Vietnam has
gained considerable economic development for over the last 20 years. For example, since
1990, Vietnam’s economy has made amazing progress with annual average growth of 7.5
percent. Even when many Southeast Asian countries were damaged by the Asian economic
crisis in 1997-1998, the country’s economy still kept growing. In 1999 its economic growth
rate reached 4.5 percent while other Southeast Asian countries, such as Thailand and
Indonesia fell into crisis. The growth rate can be attributed to the consistent economic policy
of integrating gradually into the global economy in line with the situation in Vietnam. In
addition, Vietnam has maintained its macro-economic policy for 20 years, in which it has
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reduced public debt and the inflation rate, ensuring a balance budget and controlling the
amount of currency in circulation.
Besides, most of Vietnam’s organizations are newly-built; the workforce is young,
enthusiastic, hard-working, creative and skilled. Then more employees are properly being
trained for specific and professional work. It can be proved by the following facts:


Almost two thirds of respondents are from privately owned organizations, and



around half of the organizations have been in operation for more than ten years.
On average around four in ten employees are aged between 16 – 25, meaning that



significant proportion of the Vietnamese workforce can be classified as being
“young”.
Levels of professional and technical training amongst staff tended to be polarized




between low and high with more than half having little or no training and more than
quarter being University graduates.
The average salary of an employee in this survey is 2.4 million dong per month.
Staff numbers and training budgets are both projected to rise in the next three years

However, the workforce management of Vietnam is in relatively low quality because of a
shortage of trainers, the fear of losing staff after training and the lack of government
legislation to help organizations retain staff. Canon can easily apply its management and
controls the operating activities of companies as well as exploit the capabilities of the
workforce in the country. In addition, the labor costs cheaper than other countries. Highspeed economic development for many years also creates favorable conditions for Canon to
introduce its products in the Vietnamese market. It can be said that the Vietnamese a
convenient market so that Canon can back up its position in world market.
Social: young people expect the global economic exchange. The more percentage of people
quickly access to the high quality and advanced technology that Canon brings to Vietnam.
Vietnamese people have high mental development to improve quality of life, higher job
responsibility which is suitable for the working style of Canon.
Technology: Technology of Vietnam is poor, limited and on track to improve and develop.
Although Vietnam has gained some achievements since becoming a member of WTO,
Vietnam still ranks behind many other developing countries in technology field. Looking at
the survey results and the World Economic Forum’s ranking in terms of technology
innovation, there is clearly a large gap in technology between Vietnam, and Thailand and
China.
Vietnam

Thailand

Technology Index

92

43

Technology innovation index

79

37

China
62
70

8


Information and
communication index
Technology transfer index

86

55
66

4

62
37

Among the indices, Thailand is most successful in technology transfer, ranking 43rd while
Vietnam comes 92nd. This requires Vietnam to make further efforts in technology investment
and renewal. Therefore, Vietnamese workers will quickly absorb into Canon’s advanced
technology and promote the advantages of this high technology. In addition, Vietnam has
more and more skilled, creative and enthusiastic engineers who can help to develop new
ideas in order to diversify products, save time and increase the productivity.
b. Industry analysis
It is very important to determine the industry analysis to appreciate the strengths
and weaknesses of Canon Inc. in several external factors. Based on the result of industry
analysis, we will have more understanding about the factors affect to Canon in running
business all over the world and particularly in Vietnam.
An industry analysis consists of three major elements: the underlying forces at work
in the industry; the overall attractiveness of the industry; and the critical factors that
determine a company's success within the industry. In case of Canon Inc., we also focus on
those contents to determine how management team of company could make Canon Inc.
more competitive with the others.


INDUSTRY FORCES

The most important thing that we mention here is the effect of Porter’s five forces
model influence to Canon Inc. widely market including the potential of new competitors to
enter the market, the bargaining power of buyers and suppliers, the availability of substitute
goods, the competitors and the nature of competition.

 New entrants:
The history of camera market shows that the first camera was built in 1685, and then
people knew more about the other brand-Kodak with by film camera version, but there are
more brands were established and ran their business in the market and they also own a lot
of competitive advantages.
As we mentioned above, Canon Inc. introduced their first camera in 1934 and
became one of Japan first-ever camera. However, they are not the first company who
produced lenses for those products instead of Nikon. At previous decades, the camera
market was known as the owner of three big brands including Kodak, Canon, and Nikon.
Nowadays, with the development of market, there are more brands enter the market and
promissory to become threatening competitors of those old brands. However, in fact, we
9


can see that, Canon Inc. until now is still powerful brand with their own competitive
advantages in compare with some others including old brands such as Nikon and Kodak or
new brands such as Samsung, Sony, Rolei, etc.
For those exist competitors as Nikon, Canon Inc. has been faced with many new
innovation and creativities from them. Therefore, they have to improve their product to
create competitive advantage themselves, and then build new product for satisfying the
huge of consumer market.
Camera market is easy enough for some new companies entering to because as we
see that in recent years, there are more and more companies such as Sony or Samsung, they
also participate in this field beside some traditional products. In addition, the barriers of new
entrants are not really high with low capital requirement, low switching cost or widen
distribution channels are the main reason that make the market more complicated with lot
of big brand names move onto producing this product.
 Powerful of suppliers:
Canon Inc. distributes their product in almost electronic market and also their own
store and outlet authorized. However, the concentrated level is not clearly determined by
the distribution channel, for example besides Canon, electronic supermarkets also sell many
other brands so that they can cover all those market products. Therefore, Canon cannot
easily increase the attraction to the customers by focusing on those channels.
 Powerful of buyers:
Canon Inc. is defined as one of famous and attractive camera brands in recent years.
Therefore, the number of potential customers is huge. Besides, the consumer demand is also
high, so the powerful of buyers will become one of the most factors that each company
should focus on to run business effectively. Nowadays, customers have many chooses for
purchasing camera include normal and luxury products because of the changing in quality
and attractive price. The demands of customer will be based on some factors such as the
purpose of using product, the appearance or quality of product. Almost customers use
camera for personal purposes, other for business stuff, so depends on how much money
they are willing to purchase and which kind of camera they need, company can analysis the
demand of customer to build long-term plan for improving their producing.

10


For example:
In Chinese market, the rate of selling digital
camera is increasing year-by-year. For
different brands in sales, Canon ranks the
first place while Sony and Nikon are all
smaller. Canon has the highest market
share with the rate of 27.2%, following by
Sony with 16.8% and Nikon with 15.7%, etc.

According to some research of customer’s interested in camera, there are more than half of
total said that they want to buy Canon more than the other brands. It’s also one of
competitive advantages of Canon when they take full advantage of customer loyalty.
 Substitute products
Going along with the development of technology and creativity, camera can’t avoid
the increasing of new products instead the others elder ones. For example, before the first
appearance of digital camera, film camera is the main product of every brand that they
always innovate their products with higher quality. However, when the first digital camera Sony ProMavica MVC-5000 was shown off in the market in 1989, and then Dycam Model 1
(Logitech FotoMan), camera market step-by-step moved into this market and improve those
products as target market.
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Nowadays, there are many different kinds
of camera are distributed in the market.
This is an example about the interest of
customer in searching for some types such
as Point and shoot, DSLR… As we can see,
DSLR camera and Point and shoot camera
with very large market share.

 Competitors
Camera market is the big market with many opportunities for company to improving
their business. The number of competitors in the market for digital camera is enormous. The
competitive landscape is characterized by various type of rivals. Company has to complete
with large enterprises that offer a widespread portfolio and on the other hand there are
many highly specialized small firms that are trying to gain market shares. The main
competitive elements are technology, quality, reliability, performance, price and customer
service and support.
Example:
According to the survey concerning customer’s interest in some camera brands show
that canon is winning in the camera war, following by Nikon, Sony and some other brand
names.

Along with the technological innovation, Canon Inc. also identifies the market
12


segmentation to get competitive advantages in compare with their competitors including
price wars, advertising campaigns, new products introductions, or expended services. As we
see that, Canon Inc. produces many kinds of product lines from the normal product to luxury
product with the satisfactory price. Even though there are more companies with the higher
competitive price such as Olympus, Panasonic or Samsung, Canon and Nikon are still keeping
their market shares in the high level. Customers are willing to buy the product with high
quality and also high reputation more than the other despite the product is a little bit
expensive. To mention about the advertising campaigns, Canon Inc. based on more the
loyalty of customer and their existed reputation to get customer familiar with their products.
Canon Inc. builds the specific advertising campaign for each product lines that make the
people understand more about them.



INDUSTRY ATTRACTIVENESS AND INDUSTRY SUCCESS FACTORS

“Industry attractiveness is the presence or absence of threats exhibited by each of
the industry forces”, Cook explained. How does Canon Inc. make them more attractive to
become the successful camera company? Nowadays, camera market is an open market and
promise to become the attractiveness because of the rapidly increasing in technology. For
example in Vietnam, we can see that there are more and more people take care of
photograph so on they become the most potential customer that each of camera brand
should focus on. To know more about the way that Canon get the higher attractiveness and
success, we can concentrate on the strategic of them in camera market.


COMPETITIVE ADVANTAGES

To rich the high market share and attract customer, Canon has to get competitive
advantages in compare with the other brands. Based on the UK market perspective, we have
model of competitive advantage as following:

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c. Some highlights of Canon:
Canon has achieved the lowest cost production in the overall digital camera market.


Core competency in tacit and explicit knowledge of optical and imaging technology



learnt over the years, with Canon’s tradition of innovation, ‘anticipating tomorrow’s
need’.
Integrated value chain

Canon has been able to reduce cost in every aspect of the value chain. Full ownership and
control over its value chain and production. JIT (just in time) production which saves lead
tine and production cost (Canon, 2011).


In-house fully automated production system

Its in-house production system has a dual aim of cost-reduction and product innovation


Investment in cost-saving technology Canon adopts computer aided engineering



(CAE) which includes and allows ‘prototype-less technology’
High differentiation:
Distinctive capability - inimitable reputation built over the years

Canon realizes that customers may be not willing to buy the product with some
special features in high price. They always tend to some kind of products with the high
quality and satisfactory price. Therefore, Canon focus more in increasing the quality instead
of creating too much differentiates. Besides, canon is also constantly creating value for
customers such as investment in R&D.


High quality

Canon produces their product in high quality, which is very user friendly. From the
first existence in the camera market, Canon continuously changes not only the appearance
but also the quality of products and image and creativity. There are some Canon camera
which are using by professional photographer such as Canon 60D, Canon 5D Mark II, Canon
7D, etc. with almost appreciate quality and customer’s satisfaction.

2. Analysis of strategies issues of Canon in Vietnam
a. International strategies of Canon in Vietnam
From the established day in 1934, Canon has tried its best to diversify products, for instance,
launching the first indirect X camera in Japan in 1941, inventing the electronic, physical and
medical technology in the late 1960s, especially in 1969 changing its called name “Canon
Camera Co, Inc.” into “Canon Inc.” with purpose of receive challenges to develop Canon
photocopier using the first normal paper in Japan… Canon, until now, has still continued to
diversify and differentiate its products to meet people’s demands, requiring a lot challenges.

14


It is undeniable that Canon is the leading brand all over the world in manufacturing and
providing the imaging products such as printer, camera, and camcorder… Canon expands
always its distribution to almost countries as much as possible. Canon products have been
available in Vietnam since the 1980s through its authorized distributors. In the last eight
years, it established a more significant presence when it set up three production facilities in
Thang Long, Hanoi, Que Vo and Tien Son, Bac Ninh and two representative offices in Ho Chi
Minh City and Hanoi, providing employment for more than 15,000 people in the country.
The two representative offices operate under the guidance and support of Canon Singapore
Pte. Ltd., which is the regional marketing headquarter for Canon's South & Southeast Asia
region. Besides Le Bao Minh distributor, the company has more than 300 authorized service
partners in the country.
In the early 1980s, Canon launched AE-135-millimeter camera with the surpassing
characteristics. This product was so success that experts regarded it as “Chevrolet of
market”. In 1982, Canon continued to introduce the first personal photocopier with function
of self-assembly and component replacement and other various products, which increased 7
times up to USD 3.3 billion in revenue and 20 times up to USD 135 million in profit,
compared with the year 1970s. During a decade 1970-1980, Canon launched continuously
new products and won competitors in all new markets. The evidence is that in 1982, Canon
launched electronic printer and defeated directly IBM. In particular, in 1983, Canon applied
combination between differentiation and cost-leader strategy by laser printer with a onethird price. Indeed, Canon always renews and changes product to adapt new environments,
reaching a peak of success as today.
In Vietnam, citizens have tended to update high technology and the famous brand is often
the first choice. Canon understands and keeps up with the development of society, hence,
introduces ceaselessly new and fashionable products into Vietnam market such as printer,
camera and photocopier…However, due to not having chance to find out almost regions of
Vietnam, Canon just focuses on potential cities where a large number of people have high
demands. With aim of bring customers the advanced products, Canon always hears to adapt
to Vietnamese’s demands by a wide range of new products with Vietnamese interface,
including DSLR EOS 5D Mark III, SELPHY CP 810 camera… In reality, by viewing customers as
god, Canon actually beats a lot of famous brands such as Sony to hold the first rank all over
the world in electronic products.
b. Business strategy of Canon in Vietnam
Canon's strategies have been very effective in balancing growth of market share with
profitability, with the firm controlling a significant share of focused niche markets in the
imaging industry. Cannon's strategic challenges involved identifying the markets in which it
intended to compete and developing competitive advantages to allow the firm to balance
market share and profitability growth within these markets. In the late 1960s, the firm
initially adopted a business-level strategic vision of focusing on the small camera niche that
was underserved by its major competitors using a technology that was totally different than
the existing technologies used by competitors. The strategic vision provided direction for the
15


firm's strategic planning process. At the same time, the corporate planning process was
flexible enough to allow Cannon to recognize and exploit opportunities in related markets
over the long run, with the firm eventually adopting a corporate-level strategy of horizontal
diversification based on the evolution of its core competencies. Over the long run, the
development and application of Cannon's strategy has made the firm a leader in the imaging
industry group.
The generic strategy selected by Canon for its initial penetration of the camera market was
focused differentiation, which required the firm to develop the technical competencies
necessary to create a new type of photocopier technology. The focused differentiation
strategy gradually expanded to be general differentiation strategy in the broader imaging
market. This strategy was suitable for Canon's specific situation by matching the conditions
in the external environment with the resources the firm had available or could acquire in a
reasonable period of time. The strategy may not be suitable for other industries because of
differences in the nature of the industry, the conditions in the external environment, and the
resources available to the firm.
Canon’s strategies in Vietnam and Asia are in common when Canon always renews its
products to meet people’s demand and focuses differentiation to diversify products for each
region. The specified strategies of Canon applied in Vietnam will be detailed as follows:
i. Corporate- level strategy:
o Diversification strategy
Canon always becomes the most popular brand all over the world and hence, the discovery
of new potential regions to bring its products to others is indispensible. Vietnam market is a
desiring land for investors to improve its brands. Therefore, in order to create favorable
conditions for the development of brands, Canon and Le Bao Minh company have
corporated since 2003 to distribute and bring products to customers more flexible by
focusing on the potential products such as camera, photocopier…Le Bao Minh company is
main distributor of Canon in Vietnam and has significant profits as well as valuable rewards
granted by authorities. Besides, It is undeniable that by dint of cooperating with Le Bao Minh
company, Canon has strong position in Vietnam market, for example, cameras occupy 31.2$
of camera market in Vietnam… Both companies also have gained great achievements in the
development of brand, profit and market share…
o Forward vertical integration strategy
The striking milestone is that July 23th, 2012, Canon Asia Marketing Group and Canon
Singapore Pte. Ltd. announced the establishment of Canon Marketing Vietnam Company
Limited (CMV) - a new Canon marketing company in Ho Chi Minh City, Vietnam. This new
company was formed with the purpose of building systems of import, distribution, sales and
service for Canon products in Vietnam.
16


In recent years, Vietnam, after joining the World Trade Organization (WTO) in January 2007,
has made important progress in the transition to the economy market and integration into
the international economy. In particular, through the open policy of economy and
government policies to expand domestic demand, Vietnam has achieved economic growth
of around 6% during the past few years, which has created an urgent need for Canon to set
up a strategic marketing system in this country. In order to meet the market, Canon has
officially established Canon Marketing Company Limited Vietnam in Ho Chi Minh City,
Vietnam.
Canon has established the representative offices in Ho Chi Minh City and Hanoi in 2002 and
2003. In addition, except for the existing products, through Canon Marketing Vietnam
Company Limited Ltd. established, Canon also focus on the expansion of the market in the
field of industrial printing products and camera and specialized camcorder in the field of
cinema.
Canon’s new marketing subsidiary, Canon Marketing Vietnam Company Limited (CMV) with
investment of $3 million from Canon Singapore, planned to start operations in August, 2012
with around 40 employees.
The new company aims to create an import, distribution, sales and services system for
Canon products in Vietnam. It will support Le Bao Minh - Canon’s authorized dealer in
Vietnam, and other dealers in areas of sales, marketing and services. “We regard the Asia
market as most important and Vietnam is definitely one of our most important markets as it
is quickly becoming one of leading economies in the region. This is due to its strong growth,
a young and hardworking workforce and the government’s commitment to develop country
further,” said by Hideki Ozawa, president of Canon Asia Marketing Group.
ii. Business- level strategy
Strategic planning at Canon fundamentally involved identifying areas in the market that are
not well served by existing members of the industry and allocating resources to exploit the
market opportunity. This aspect of the strategy was an attempt to avoid competitive threats
by exploiting opportunities in market niches ignored by competitors. Strategic groups of
firms in an industry constitute a cluster of firms following a similar strategy with the firms in
different clusters not necessarily in direct competition with each other (Henry, 2008). Firms
in the same strategic groups tend to have similar market share and respond similarly to
changes in the external environment, which results in higher competitive rivalry among
members of the same strategic group. Canon's strategic vision involved minimizing
competitive rivalry by positioning the firm in a strategic group that was comparatively small
with no firm dominating the market. As a result, Canon's strategic vision involved indirect
competition with Xerox in the camera market, with Canon pursuing a market niche in which
Xerox chose not to compete. To some degree, this decision provided additional focus for the
medium-range plan by identifying the specific type of research and development the firm
should conduct to occupy the market niche for small camera.
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In Vietnam, the differentiation strategy of Canon is often applied, for example, launching
camera products with high technology that be suitable for Vietnamese’s preference such as
5 DIGIC image processor…"At Canon, we always listen to every thought and consumers’
need to be able to bring the best products that consumers want and welcome. We always
wanted to bring the Vietnamese consumers the most comprehensive imaging solution. The
past years, Canon has been non-stop efforts in research activities and development to bring
our customers products with the most advanced technology. Besides, we also prioritize
application of simple features, and stylish designs when developing new products. And I
hope that Canon's new products will become your companion to help users save the most
precious moments” - Mr. Nomura Shimao, Chief Representative of Canon in Vietnam said.
The following extraordinary products of Canon launched into Vietnam market is one of
clearest evidences in the differentiation strategy of Canon.
Debut Digic 5 and latest features integrated in Canon new cameras
Ho Chi Minh City, 9 November, 2011, Canon, the leader in digital imaging, announced the
launch of its new products in the second half of 2011, consisting of 5 new digital cameras
and 8 Inkjet printers. In order to carter for the growing demand of users for innovative
technology, Canon introduced the DIGIC 5 image processor first time in Vietnam market
while improving other functions of its camera, including HS System, Full HD Video capture,
High speed Burst HQ and Intelligent IS. On this occasion, Canon also highlighted its Inkjet
printer PIXMA E500 – the low cost all in one color printer.

As the year end was around the corner, the shopping spree was reaching its peak. That's why
Canon introduced a series of new technology products which ensure to meet the high
demand of customers for high-end cameras and printers. Newly rolled out cameras include
PowerShot S100, SX40 HS, SX150 IS, IXUS 1100 HS and IXUS 230 HS .
A challenging task for any professional and amateur photographer is working under low-light
conditions. Helping improve the quality of images from these situations is Canon's HS
System, where the camera's image processor and high-sensitivity image sensor work in
tandem to enhance low-light image quality. With the PowerShot S100 and SX40 HS, Canon
has introduced a new DIDIC 5 image processor, maintaining the camera's superb low-light
image quality while improving overall camera operation and color accuracy. The new image
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processor has improved noise reduction and advanced Multi-area White Balance optimizing
color tones of both subject and background under multiple light sources.
An added benefit of the DIGIC 5 image processor is the incorporation of the new High-speed
Burst HQ providing users with the ability to continuously capture a maximum of eight
frames. Besides, Canon has taken the Image Stabilization (IS) technology one step further
with the new Intelligent IS which automatically chooses from six different modes (Normal,
Macro, Panning, Dynamic, Powered, Tripod) to optimize image stabilization and help achieve
crisp, blur-free images for various shooting conditions.
Coming to users in more stylish and colorful bodies, the IXUS 230 HS packs a powerful Canon
lens into a thin metal body with a range of leading features. At the same time, users who are
a fan of HD movie can find themselves in love with Canon PowerShot S100 with Stunning Full
HD (1080p) video captured at 24 frames per second with stereo sound.
"Super Cool" EOS M and 650D Cameras
August 31th 2012, at Vietnam Consumer Digital World Expo 2012, Canon Marketing Vietnam
Company Limited brought an extraordinary experience for its customers through a
comprehensive series of sophisticated products and high-tech solutions, ranging from
compact cameras, professional cameras, lens, and camcorders to mono-functional, multifunctional ink-jet printers, compact photo printers and scanners. The event marks an
important step in fulfilling Canon Marketing Vietnam's goal of expanding the market after its
recent establishment.
By dint of understanding the demands of Vietnamese, especially the young, Canon renews
and enhances ceaselessly its products when researching that almost Vietnamese enjoy the
fashionable and convenient cameras which have famous brand in the globe. Therefore, as a
strategic product in the launch, the first mirror less interchangeable lens camera called EOS
M will make users be surprised. The biggest breakthrough of the EOS M lies in Canon's ability
to integrate an EOS system into a compact body, with full compatibility to more than 60 new
and existing EF and EF-S lenses. Furthermore, to prevent under-exposed shots in poor
lighting conditions, EOS M is equipped with an Auto Lighting Optimizer system and especially
the HDR Backlight Compensation function– taking three images in three different exposure
levels then merging and automatically aligning it within the camera to create perfect images
with all details and highlights optimized.

19


While mobile solutions such as wireless connection or the Vietnamese interface language
are highlighted as remarkable features of compact IXUS camera range to easily share photos
onto social networks, the convenience and flexibility of Canon EOS 650D's LCD lies in multitouch screen, even for first-time users. The most outstanding products are legendary camera
lines such as EOS 1DX and EOS 5D Mark III with cinematic standards, smart and automatic
features and new light-metering sensor technology which help produce sharp and clear
images. Besides, Canon's huge collection of spectacular lenses and accessories is also
presented and displayed at the event.
c. Organizational structure of Canon in Vietnam
Canon Inc. had built a branch in Vietnam since 2001 and started operating in 2002. Firstly,
Canon had 2 operating representative offices: one in Hanoi (started in January 2003) and the
other in Ho Chi Minh City (started in January 2004. In May 2002, Canon established the first
assembly production in Vietnam which is located in Thang Long industrial zone. After 11
years of development, Canon Vietnam now has 3 factories which are Thang Long factory,
Que Vo factory and Tien Son factory. The headquarters is at Thang Long factory. With 3
factories, Canon runs a divisional departmentalization which is illustrated as the following
chart:

Canon
Vietnam

Managing Director

Thang Long
Industial Park

Specialised in Ink
Jet Printers

Que Vo
Industrial Park

Specialised in New
laser printer

Tien Son
Industrial Park

Secialised in large
ink jet printers

Canon Vietnam has a managing board of directors which control the general operating in
Vietnam. These divisional structure groups departments together based on organizational
outputs. Each of factories runs all of its departments: R&D, finance, manufacturing. This
20


kind of organizational structure has many advantages. Firstly, this structure helps each
divisions focus on its assembly production then maximize the productivity. For example, Que
Vo factory was built on the area of 20 ha with the investment capital of US$50 million, with
the maximum capacity of 8 million laser printers per year. Besides, following divisional
departmentalization gives each factory opportunities to practice management skills and
improve human resources more effectively. Especially, each division can emphasis on its
product and goals.

Team building for Vietnam Canon workers on sport day

Training at assembly production for workers
However, departmentalization contains several disadvantages such as duplication of
resources across divisions, poor coordination across divisions. For more details about
organizational structure of Canon Vietnam, there is another perspective we can consider. It
is job-classified structure.
21


Direct with production
Plan section
Project section
Indirect with production
Job-classified structure specifies detailed missions for each section therefore improve the
management of the whole company.
During the time of 2002 and 2011, Canon Vietnam did not have official marketing
department or company and its own distribution channel. The only authorized distributor of
Canon in Vietnam is Le Bao Minh Company which is in charge of distributing Canon products,
warranty support and carrying out marketing strategies.

Until now, Le Bao Minh Canon has 15-year experiences of promoting Canon brand in
Vietnam. However, in August 2012, Canon Asia marketing group and Canon Singapore Ltd.
announced the establishment of Canon Marketing Vietnam Company Limited, a new Canon
22


marketing subsidiary in Ho Chi Minh City, Vietnam. The new company was established with
the aim of creating an import, distribution, sales and service system for Canon products in
Vietnam.
In recent years, Vietnam, which joined the World Trade Organization in January 2007, has
made great strides in transitioning to a market economy and integrating into the
international economic system. In particular, through the government's economic open-door
policy and domestic-demand expansion policies, Vietnam has achieved economic growth
approaching 6% over the past few years with further expansion expected in the future,
which has created a pressing need for Canon to establish a strategic marketing system in the
country.
In response to these circumstances, Canon has newly established Canon Marketing Vietnam
Company Limited in Ho Chi Minh City, Vietnam. Canon Marketing Vietnam Company Limited
will gradually take over the responsibilities currently handled by the existing representative
offices in order to develop Canon's presence and services to customers in Vietnam more
directly and progressively.
In addition to existing business segments, through the new marketing company, Canon also
aims to further expand its market share within industries such as production printing and
motion-picture and broadcasting production. “Establishing our own sales company will allow
us to better serve our customers as we are able to support Le Bao Minh and dealers much
more in the areas of sales, marketing and service,” said Hideki Ozawa, president of Canon
Asia Marketing Group.

d. Modes of market entry


The period of 1980s

Canon products first appeared in Vietnam in 1980s through authorized distribution channels
and individual dealers. At that time, Vietnam economic had just been defined for 5 years
23


after the whole country unification. Economic environment was so poor and
underdeveloped. At that beginning, Canon gained the first-mover advantage in Vietnam
market and built the brand consciousness of Vietnamese consumers. However, all Canon
products were imported to Vietnam. The profit margin was still low and sale volumes were
not large. Even though Canon could avoid the costs of establishing manufacturing
operations, Canon had to stand high transport costs and tariff barriers of Vietnam market.


The period of 2000 – 2011

The establishment of Canon Vietnam Company in 2001 marked a big change of Canon
strategy in Vietnam. The operation of 3 Canon factories implies the pursuit of wholly owned
subsidiaries mode of entry. All 3 Canon factories were built by 100% capital of Canon Global
and Canon Asia. There are 2 main factors that can support Canon on this mode of entry.
Firstly, Canon owns the significant technological know-how in the world and Canon financial
capacity is strong to build and operate its own subsidiaries in the world. Canon Inc. has
invested 300 million USD in Vietnam to build assembly productions with the expectation of 1
billion USD exports.

According to the US Patent and Trademark Office, Canon is the third position of top ten U.S
patent holders by company 2011. It shows the technological strength of Canon Inc.

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