Canon vs. Leica
Canon
Canon was founded in Japan
During the 1980s and 1990s the company continued to innovate, developing high grade computer systems and more sophisticated cameras, copiers and digital imaging systems. Canon's technology is designed to enable companies and individuals to achieve their goals -- an objective which is encapsulated in the company's "You Can" philosophy.
Canon is known today for providing state-of-the-art integrated IT and office solutions, as well as top class photography and imaging systems. In the UK
Companies which set out, through their products and services, to help other companies become and remain efficient operators need to be at the forefront of innovation and good practice themselves. Canon prides itself on the research that it carries out into developing new technologies. It has research centres located in Europe, USA and Japan
Canon is spearheading unprecedented growth in the digital imaging sector with predictions that unit sales of its digital cameras will outstrip that of its analogue cameras as early as 2003. In preparation for this surge in growth, Canon plans to manufacture 4 million digital cameras worldwide this financial year, an increase of 70% on the number produced the previous year. In terms of value Canon currently holds a market-leading 18% of the European high-end digital camera (2 mega pixel and above) market segment (Canon (UK) Ltd., 2003).
However, far from this trend signalling the demise of the film and analogue camera markets, Canon believes the burgeoning digital imaging market will co-exist alongside these traditional markets for several years to come. Canon maintains a strong and profitable position in the analogue camera market with 39% market share in SLR and 14% in the compact markets (Canon (UK) Ltd., 2003).
Canon is one of the few organisations which truly understands the digital process, from capture to print, and probably the only electronics company to own significant technologies across the areas of digital cameras, lenses and photo printing. This is a key strategic advantage for Canon over its competitors and ensures that the company is well positioned to maintain its dominant position in the booming digital imaging market.
Canon has always been a driver and pioneer of new technologies in digital imaging, and we have no intention of slowing our pace in this very important and competitive sector. According to The Times 100 (2003), its commitment to continuing research and development and inspiring creativity in its customers will ensure that their name remains synonymous with quality and excellence in imaging for many years to come. This is reflected in the fact that Canon registers a higher number of patents in Europe , year on year, than any other company (The Times 100, 2003).
Canon's objective is to hold the number one market share worldwide in every consumer product category by 2005. This includes digital camera, Bubble Jet, direct printing, scanner, video, and multifunction devices.
The company operates in a highly competitive environment. It recognises the importance of managing its processes in ways that ensure that its new products come to market quickly, are to the highest technical specifications, and can be competitively priced. Canon has used its technology, understanding and systems integration skills to help improve its own business processes - aiding it to become more efficient, more productive and more profitable.
Because it understands the important contribution of Information and Communications systems to effective working, Canon is well placed to help other organisations improve their own Information Management Systems. With its history of technological innovation in the fields of state-of-the-art integrated IT, office and imaging systems, Canon seeks to continually provide solutions that best meet customer requirements.
For today's digital, networked offices, this means providing a range of Information Technology and Communications solutions built around a core set of digital products. Strategic management involves making long-term plans that are clear and well thought out, rather than simply reacting to problems when they arise. In business, we make a distinction between a reactive organisation and a proactive one. The proactive organisation is the one that plans ahead.
Leica
In 2002, the global sales of film-based analogue cameras fell, down by 4% to approximately 63 million units. Nevertheless, analogue cameras still dominate the market. Characteristics of the market for digital photography are extremely short product life cycles and sharply dropping prices in the various classes of cameras (Annual Report 2002/2003, 2003).
Leica camera group's total sales grew by € 4.3 million to € 144.2 million, corresponding to a 3.1% rise in 2001. A general sales downturn for top-of-the-range analogue SLR systems is being experienced globally. High-quality SLR systems are competing with digital camera. A brake was put into downturn by giving a new boost to sales with the successful launch of Leica R9 and with additional lenses for the Leica R9 System (SLR) (Annual Report 2002/2003, 2003).
Compact camera sales increased by 85.1% to € 23.7 million (Annual Report 2002/2003, 2003). This is primarily due to the Leica Digilux1 digital camera that was recently launched. In the analogue range, the Leica R2 and Leica R3 cameras were introduced on the market.
The Leica Group at a Glance
| | 2002/2003 | 2001/2002 | 2000/2001 |
| | | | |
| Sales € million | 144,153 | 139,823 | 157,783 |
| Operating result | 2,761 | 1,607 | 4,246 |
| Income | 1,235 | 1.305 | 1,201 |
| Net Income | 1,504 | 1,518 | 604 |
| Total Assets | 86,711 | 90,373 | 95,148 |
| Equity Ratio % | 26.46 | 24.35 | 24.66 |
| Capital Expenditure | 9,137 | 5,051 | 4,839 |
| Employees (Number) | 1,400 | 1,399 | 1,456 |
| Personnel Expenditures | 46,981 | 46,372 | 47,139 |
Leica Sales By Product Lines 2002/2003
| | 2002/2003 € million | Change by previous Year |
| | | |
| System Cameras | 61.9 | -4.90% |
| | | |
| Compact Cameras | 23.7 | 85.10% |
| | | |
| Sports Optics | 33.2 | 0.70% |
| | | |
| Spare parts and Technical After-Sales Service | 4.7 | 2.80% |
Leica is continuously offering new technologies for the convenience of its customers. Over the years Leica brought to market a varied and evolving lens selection, and to the Leicaphile, each new lens is keenly and anxiously awaited (Barcellona, 2002). One of its latest and greatest offerings is the 28mm f/2.0 Summicron-M Aspherical, a wide angle lens using a completely new optical formula. Previously, Leica only had the 28mm f/2.8 Elmarit-M as its medium wide- angle lens, and the new faster Summicron lens now offers low light shooters that extra stop of low light capability that has been long sought after.
Leica is the oldest successful line of 35mm cameras ever produced (Barcellona, 2002). After thirteen years of the introduction of the M3 camera, Leica was able to develop a 28mm lens for the M system in 1966. This was the first version of the 28mm Elmarit-M. Three more versions of the Elmarit-M was developed by Leica. The latest version of Elmarit was introduced in 1993, when the optical formula was again redesigned, and performance was dramatically improved. In Leica, the capability to design, and manufacture camera has changed with time. Improved optical glasses, and other modern materials, are also newly available.
Leica, in recent decades, has developed a fine line of high speed lenses, most of them with aspherical elements. Recently, Leica has introduced 28mm f/2.0 Summicron-M Aspherical. According to Leica, the new 28mm f/2.0 Summicron-M Aspherical offers significantly improved performance over the current Elmarit design of the same focal length. Leica's latest 28mm lens surpasses the performance of the Leica Elmarit-M 28mm f/2.8. According Leica, it was possible to create a lens with outstanding performance that is in no way below that of the excellent performance of the (Barcellona, 2002).
Leica makes the best in the world, yet market penetration is minimal. According to rosenfield (2003), Leica is not offering a product to buy for the user. Many think that Leica can not survive because: (1) R 9 has been available for 1 1/2 plus and has minimal market penetration, so Leica is going wait another year with minimal sales. And then try to sell the world on a digital R series; and (2) the film option will have little impact on the sales of R9.
Product Innovation
An important early study of successful industrial innovations was carried out by Myers and Marquis (1969). They studied 560 commercially successful innovations, from over 100 firms in five different industry segments. Product innovations, innovations in the production process, and innovations in product components were investigated. Data such as costs, changes in the production process, and source of basic information used were obtained for each innovation.
Utterback (1975) re-examined the same data with more powerful statistical techniques. Earlier, Utterback (1974) had examined factors that limit and determine a firm's effectiveness in the innovative process. As a result of in-depth analysis of several industries, Utterback (1974) determined that strategies for growth and competition in an industry differ across industries. The implication to management is that, in a cost-minimizing situation, production is likely to be the main source of uncertainty, while product technology would be more uncertain in a performance-maximizing industry.
Based on ideas presented in the Myers and Marquis (1969) and Utterback (1974) studies, Utterback and Abernathy (1975) presented a dynamic model of product and process innovation. In this important model, product innovations were shown to predominate at early stages in the innovation process, when production processes were flexible and the firm seeks to gain a competitive advantage via emphasis on product performance maximization. As time passes, the competitive emphasis shifts to product variation and the production process becomes more rigid, with the formation of "islands of automation." Process innovations, required by rising volume, predominate. In the third stage, incremental innovations in both product and process predominate as competitive focus is placed on cost minimization. Production processes become rigid, efficient, and capital-intensive.
Some support for the hypotheses of the model was obtained by re-examination of the Myers and Marquis (1969) data. Meloche (1988) found that technically autonomous firms are most successful with process innovations that allow them to achieve cost savings and scale economies, and that successful internally-developed innovations developed by technically autonomous firms tended to be introduced early in the production process. Moore and Tushman (1982) linked the Utterback-Abernathy model to the product life cycle and discussed the implications for competitive advantage. They concluded that, because changes in types of innovation lead to changes in competitive emphasis, the firm must recognize that strategies, processes, and organizational structures must evolve over time as well, and must therefore be explicitly managed.
An important extension to the basic model was made by Utterback (1982), who distinguished between evolutionary and revolutionary product and process innovation. Using the automotive, transistor, and typewriter industries as examples, Utterback (1982) showed that an industry with relatively stable market shares and little real product innovation is "ripe" for attack by an invading firm that is new to the industry, and which has a radical product. Such a discontinuous change in the industry pattern forces the incumbent firms either to make hurried improvements to the old technology, or somehow to gain access to the new technology, perhaps through acquisition (Cooper and Schendel 1976).
Calantone, di Benedetto, and Meloche (1988) found that successful product innovations frequently were "revolutionary" ones originating outside the industry. That is, if a market that is receptive to a new technology can be identified, then the invading firm stands a reasonable chance of success. This is consistent with Utterback (1982). Ettlie and Rubenstein (1987) also investigated the issue of radical versus incremental innovations and found that, up to a point, larger firms with greater resources were more likely to be successful in revolutionary product innovation, but very large firms (over 45,000 employees) would not necessarily be so inclined.
A large volume of the literature on product innovation is concerned with the individual stages in the new product development process: what each stage involves, how it can be carried out more effectively, and what implications there are for management (di Benedetto & calantone, 1990).
Most articles on product development focus on one of the specific stages listed above. However, a few take a broader perspective. These fall into one of two categories: those which present an overview of the stages in the product development process, and those which evaluate the practice of new-product development in industry. Such articles are generally non technical and are written for the practicing product manager. Often these topics appear in managerially oriented publications such as the Journal of Product Innovation Management and Industrial Marketing Management.
The most commonly cited overview article is that of Booz, Allen and Hamilton (1968) which, although quite dated, is a good place to start. It describes the stages in the product development process: idea generation, screening, business analysis, development, testing, and launch. At the time of this study, Booz, Allen and Hamilton found that 58 new-product ideas were required for each product successfully brought to market. Clearly, risks are high, especially at early stages of development.
As a project passes careful evaluation at the end of each stage, risk of commercial failure is reduced and a greater financial commitment can be made. Booz, Allen and Hamilton (1968) pointed that many of the problems faced in new-product development could be traced to organizational factors. A later study (Booz, Allen and Hamilton, 1981) showed that the number of new-product ideas needed for a successful launch had been reduced to seven, indicating perhaps that some improvements had occurred in the efficiency of the product development process. Clearer specification of the steps in the process may also have explained some of the improvement.
The later study acknowledged that the process could be consumer driven, competition driven or technology driven, and it outlined a sequence of stages for each of these situations. More recently, Crawford (1986) provided an expanded overview of the process, from preconceptualization to rollout, together with a discussion of ideas and decision models relevant to each stage.
A related literature compares normative principles of newproduct development with managerial practice. In some cases the studies reveal that great discrepancies exist: product strategies are frequently not clearly spelled out, and available marketing research techniques are often not employed (Feldman and Page, 1984). On the other hand, many stages in the process are carried out quite completely. Moore
The forecasting of potential outcomes, whether sales, profit, or market share, occurs at every stage of the new product development process. At each stage, the firm must decide whether to continue or abandon development. Forecasts of future sales form the basis for much of this analysis. The forecast of adoption rates for a new product is undoubtedly a critical component of many new-product development decisions, yet it is of ten poorly done. Berenson and Schnaars (1986) presented several examples of wildly optimistic forecasts of market growth (as well as some accurate ones) and noted some of the reasons for mistaken forecasts. These included: relying on poor assumptions, failing to stress fundamentals (such as who the real customer for the new product would be), and being dazzled by new technology or the latest fad. Clearly, sales forecasting is not only a critical input to the new-product development process; it is also a difficult task.
Product Life Cycle
According to Product Life Cycle (PLC) theory, some products assume a life form and progress through the stages of birth (introduction), growth, shake out, maturity, and eventual death. Application of the product life-cycle concept allows marketing managers to select appropriate strategies based upon the relative position of the product within its life cycle (Kotler, 1994). Dean (1961) states that price rations and allocates inputs and outputs to their highest economic use in producing and/or distributing goods and services wanted in a free, competitive economy. The role of price in the economic system is to adapt business system to a change in what society wants (Greene, Sechrest & Walls, 1996).
A rising price indicates an increase in the relative scarcity of a good, either demand has increased or supply has decreased or both; a faring price reflects a decrease in relative scarcity, either demand has declined or supply has increased or both (Greene, Sechrest & Walls, 1996). In other words, price reflects a product's strengths and weaknesses, i.e., its value, competitive positioning, and distribution power (Simon, 1992). Thus, price is the marketing mix variable that can be adjusted to maximize the products position at any given point in the life cycle. In turn, these strategic marketing adjustments influence the life-cycle stages themselves (Onkvisit & Shaw, 1983).
The product life cycle theory (PLC) of trade and investment explains the trade and investment patterns of technology-intensive products like Canon and Leica cameras. In a country like the UK
Empirical studies have isolated variations from the common five-stage life-cycle model: introduction, growth, shake-out, maturity, decline (Rink & Swan, 1982; Simon, 1992). However, one feature common to all PLC models is that, at some point in time, the product reaches a maturity stage. Simon defines the maturity stage as occurring when price becomes the main variable of competition, thus increasing its importance primarily because of market saturation, over capacities, and quality standardization (Simon, 1992). It is this maturity stage that offers the marketer the greatest opportunity to shape the duration of the product's life cycle (Bowers, 1989). The purpose of this article is to examine the decision to delegate pricing authority to sales personnel during the maturity stage of the product life cycle.
Design for Manufacture
In business, the marketplace is the battlefield. People often speak of marketing battles and price wars. Businesses capture market share instead of territory. Advertisements and articles talk about wars between products. Anything worth having requires effort. To capture or hold market share, it is very important to get new products to the marketplace before competitors do and to seize market segments and niches that competitors have overlooked. Moreover, it is also important not to attack established products and services. This is like attacking an opponent who holds a fortified position. These positions should be bypassed unless you have a special, overwhelming advantage. Further, avoid price wars.
The first market entrant gains a competitive advantage. Design For Manufacture (DFM) is a useful tools for rapid product introduction and for getting products to the marketplace quickly. Product quality begins in the design phase.
The Design for Manufacture (DFM) is a tool for reaching this goal. Under the traditional system, Research gets an idea from Marketing. They do the basic research and hand it over to Development. The product idea goes through process development and product design. The designers then hand it over to Manufacturing. The problem with this approach is that it is sequential. It does not promote rapid product development and introduction. Sometimes there are other problems. Manufacturing may get a new product and find that the existing tooling can't make it. DFM relies on cross-functional teams for success. This requires a porous organization.
DFM uses cross-functional teams to make sure the product is manufacturable. It adopts a parallel approach. The teams include representatives from R&D, Design, Manufacturing, Field Service, and Marketing. The use of multi-function teams for all new-product/service development activities can greatly cut the product or service development cycle time.
ISO 14000
The demands of a growing population and an expanding global economy place increasing stresses on natural systems (Hormozi, 1997). The effects are visible on our natural systems from year to year. As global pollution increases, both human health and the environment are adversely affected. Environmental concerns are, therefore, becoming of paramount importance to consumers, producers, governments, and other interested parties worldwide. These groups, individually and collectively, are pressuring companies to demonstrate better environmental stewardship and accountability (Hormozi, 1997). Accordingly, organizations are continuously assessing their environmental performance. These assessments do not, however, assure that the organization's performance will meet its policy requirements. Only a structured management system can accurately assess performance.
The ISO 14000 standards describe the basic elements of an effective environmental management system (EMS ). An EMS is a system by which managers identify and address environmental problems. An EMS includes several steps: assessing problems, establishing goals, measuring progress, training workers, auditing performance, rewarding or penalizing behavior, and verifying through third party review (Nash & Ehrenfeld, 1996). An effective EMS can help a company manage, measure, and improve the environmental aspects of its operations by efficiently complying with mandatory and voluntary environmental requirements.
In 2003, the Sale of Goods Act 1979 is enhanced by implementing the Sale
For up to six years after purchase consumers can demand damages, which a court would equate to the cost of a repair or replacement. At present, the onus is on consumers to prove the good did not conform to contract and should have reasonably lasted until this point in time. Moreover, if the consumer chooses to request a repair or replacement, then for the first six months after purchase it will be for the retailer to prove the goods did conform to contract. After six months and until the end of the six years, it is for the consumer to prove the lack of conformity. If repair and replacement are not possible or too costly, then the consumer can seek a partial refund, if they have had some benefit from the good, or a full refund if the fault/s have meant they have enjoyed no benefit.
References
Annual Report 2002/2003 (2003) Leica. Available at [www.leica-camera.com]. Accessed [19/11/03].
Barcellona, C. (2002) Leica 28mm f/2 Summicron-M Lens. Available at [www.phot.net]. Accessed [19/11/03].
Bowers, M. R. (1989) Developing new services: Improving the process makes It better. The Journal of Services Marketing, Vol. 3, No. 1, Winter, pp. 15-20.
Canon (UK
Cox Jr., W. (1967) Product life cycles as marketing models." Journal of Business, Vol. 40, October, pp. 375-384.
Dean, J. (1961) The role of price in the American business system. AMA Management Report, No. 88, pp. 1-7.
Di Benedetto, A. and Calantone, R. J. (1990) Successful industrial product innovation: An integrative literature review. New York : Greenwood
Greene, W. E., Sechrest, L. and Walls, G. D. (1996) Delegating pricing authority in mature industries. Review of Business, Vol. 18.
Hormozi, A. M. (1997) ISO 14000: the next focus in standardization
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Kotler, P. (1994) Marketing management: Analysis, planning, and control, Seventh Edition. Englewood Cliffs, New Jersey
Nash, J. and Ehrenfeld, J. (1996) Code Green. Environment, 38(1), January/February, 16-20, 36-45.
Onkvisit, S. and Shaw, J. J. (1983) An examination of the international product life cycle and its application within marketing. Columbia
Rink, D. R. and Swan, J. E. (1982) Fitting market strategy to varying product growth theory. Business Horizons, January/February Vol. 25, pp. 72-76.
Rosenfield, J. A. (2003) Is Leica still in business? Available at [www.photo.net]. Accessed [19/11/03].
Simon, H. (1992) Pricing opportunities -- And how to exploit them. Sloan Management Review, Winter, pp. 55-65.
The Times 100 (2003) Integrated information systems: seeing the whole picture. Available at [www.thetimes100.co.uk]. Accessed [18/11/03].
Tsuruni, H & Tsurumi, Y (1999). Fujifilm-Kodak Duopolistic Competition in Japan and the United States
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