Core Competence Strategy
Case Aims: To illustrate how exploitation of competences can support the delivery of the same entrepreneurial marketing strategy over many years An organisation which continues to exploit internal competences to its future advantage is the Japanese corporation Canon, created 60 years ago (Desmond 1998). The firm's first core competence was in the area of optics and for its first 30 years it produced cameras. In 1962 the decision was made to enter the office equipment market. As Xerox Corporation held patents on photocopying technology and would not grant licences, Canon drew upon both existing and newly acquired competences to develop new photocopying technology which did not infringe the Xerox patents. Launched in 1970,
(continued) their first product, the NP-1100, had a number of original features, including the first ever toner cartridge which obviated the need for service calls.
Having become the world leader in photocopying machines, the firm then applied existing and newly acquired competences to the desktop printer market. Their rationale was based on a simple but highly relevant understanding of future markets: photocopiers would eventually become obsolete because as computer costs declined, increasingly people would send information via e-mail which would be downloaded to an adjacent printer. Although Hewlett-Packard beat Canon to launch the first low-cost ink-jet printer, Canon have maintained their vision concerning opportunities in electronic printing, and they are the market leaders in the supply of massive printing machines to the clothing and textile industry for printing directly onto fabric using ink-jet technology.
The second, and potentially even larger opportunity, was the creation of a digital camera which can be linked to a printer without the need for a computer. Consumers can now produce their own photographs without having to own a computer or buy film for their camera. This latest vision clearly linked together Canon's competences across the areas of optics, cameras, digital data transmission, print reproduction and specialist inks, permitting the organisation to sustain its strategy of acting entrepreneurially to develop and expand its extensive line of innovative products.
Watanabe and Ane (2003) concluded that Canon's continuing success can be attributed to the ongoing utilisation of a business strategy based upon combining existing and new knowledge to support entrepreneurial diversification. New functionality has been developed by focusing upon wide- ranging inter-technology spill-overs from indigenous core fundamental technologies and manufacturing processes that have supported broader involvement in existing and new markets. As new functions for internal technologies are identified, they are carefully assessed to determine what new market opportunities might exist. Enhancing the functionalities of existing indigenous technologies usually permits a dramatic decrease in the prices of innovative goods early in the product life cycle, ensuring the company remains ahead of the competition in rapidly changing, highly volatile, high-tech markets.