Reengineering & Restructuring at Canon

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...

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...