INTRODUCTION

Strategic Management is all about identification and description of the strategies that managers

can carry so as to achieve better performance and a competitive advantage for their organization.

An organization is said to have competitive advantage if its profitability is higher than the

average profitability for all companies in its industry.

Strategic management can also be defined as a bundle of decisions and acts which a manager

undertakes and which decides the result of the firm’s performance. The manager must have a

thorough knowledge and analysis of the general and competitive organizational environment so

as to take right decisions. They should conduct a SWOT Analysis (Strengths, Weaknesses,

Opportunities, and Threats), i.e., they should make best possible utilization of strengths,

minimize the organizational weaknesses, make use of arising opportunities from the business

environment and shouldn’t ignore the threats. Strategic management is nothing but planning for

both predictable as well as unfeasible

contingencies. It is applicable to both small as well as large organizations as even the smallest

organization face competition and, by formulating and implementing appropriate strategies, they

can attain sustainable competitive advantage.

Strategic Management is a way in which strategists set the objectives and proceed about attaining

them. It deals with making and implementing decisions about future direction of an organization.

It helps us to identify the direction in which an organization is moving.

Strategic management is a continuous process that evaluates and controls the business and the

industries in which an organization is involved; evaluates its competitors and sets goals and

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strategies to meet all existing and potential competitors; and then reevaluates strategies on a

regular basis to determine how it has been implemented and whether it was successful or does it

needs replacement.

Strategic Management gives a broader perspective to the employees of an organization and they

can better understand how their job fits into the entire organizational plan and how it is co-

related to other organizational members. It is nothing but the art of managing employees in a

manner which maximizes the ability of achieving business objectives. The employees become

more trustworthy, more committed and more satisfied as they can co-relate themselves very well

with each organizational task. They can understand the reaction of environmental changes on the

organization and the probable response of the organization with the help of strategic

management. Thus the employees can judge the impact of such changes on their own job and can

effectively face the changes. The managers and employees must do appropriate things in

appropriate manner. They need to be both effective as well as efficient.

One of the major role of strategic management is to incorporate various functional areas of the

organization completely, as well as, to ensure these functional areas harmonize and get together

well. Another role of strategic management is to keep a continuous eye on the goals and

objectives of the organization.

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STRATEGY - DEFINITION AND FEATURES

The word “strategy” is derived from the Greek word “stratçgos”; stratus (meaning army) and

“ago” (meaning leading/moving).

Strategy is an action that managers take to attain one or more of the organization’s goals.

Strategy can also be defined as “A general direction set for the company and its various

components to achieve a desired state in the future. Strategy results from the detailed strategic

planning process”.

A strategy is all about integrating organizational activities and utilizing and allocating the scarce

resources within the organizational environment so as to meet the present objectives. While

planning a strategy it is essential to consider that decisions are not taken in a vacuum and that

any act taken by a firm is likely to be met by a reaction from those affected, competitors,

customers, employees or suppliers.

Strategy can also be defined as knowledge of the goals, the uncertainty of events

and the need to take into consideration the likely or actual behavior of others. Strategy is the

blueprint of decisions in an organization that shows its objectives and goals, reduces the key

policies, and plans for achieving these goals, and defines the business the company is to carry on,

the type of economic and human organization it wants to be, and the contribution it plans to make

to its shareholders, customers and society at large.

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FEATURES OF STRATEGY

1. Strategy is Significant because it is not possible to foresee the future. Without a perfect

foresight, the firms must be ready to deal with the uncertain events which constitute the

business environment.

2. Strategy deals with long term developments rather than routine operations, i.e. it deals

with probability of innovations or new products, new methods of productions, or new

markets to be developed in future.

3. Strategy is created to take into account the probable behavior of customers and

competitors. Strategies dealing with employees will predict the employee behavior.

Strategy is a well defined roadmap of an organization. It defines the overall mission, vision

and direction of an organization. The objective of a strategy is to maximize an organization’s

strengths and to minimize the strengths of the competitors.

Strategy, in short, bridges the gap between “where we are” and “where we want to be”.

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COMPONENTS OF A STRATEGY STATEMENT

The strategy statement of a firm sets the firm’s long-term strategic direction and broad policy

directions. It gives the firm a clear sense of direction and a blueprint for the firm’s activities for

the upcoming years. The main constituents of a strategic statement are as follows:

1. Strategic Intent

An organization’s strategic intent is the purpose that it exists and why it will continue to

exist, providing it maintains a competitive advantage. Strategic intent gives a picture

about what an organization must get into immediately in order to achieve the company’s

vision. It motivates the people. It clarifies the vision of the vision of the company.

Strategic intent helps management to emphasize and concentrate on the priorities.

Strategic intent is, nothing but, the influencing of an organization’s resource potential

and core competencies to achieve what at first may seem to be unachievable goals in the

competitive environment. A well expressed strategic intent should guide/steer the

development of strategic intent or the setting of goals and objectives that require that all

of organization’s competencies be controlled to maximum value.

Strategic intent includes directing organization’s attention on the need of winning;

inspiring people by telling them that the targets are valuable; encouraging individual and

team participation as well as contribution; and utilizing intent to direct allocation of

resources. Strategic intent differs from strategic fit in a way that while strategic fit deals

with harmonizing available resources and potentials to the external environment, strategic

intent emphasizes on building new resources and potentials so as to create and exploit

future opportunities.

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2. Mission Statement

Mission statement is the statement of the role by which an organization intends to serve

it’s stakeholders. It describes why an organization is operating and thus provides a

framework within which strategies are formulated. It describes what the organization

does (i.e., present capabilities), who all it serves (i.e., stakeholders) and what makes an

organization unique (i.e., reason for existence). A mission statement differentiates an

organization from others by explaining its broad scope of activities, its products, and

technologies it uses to achieve its goals and objectives. It talks about an organization’s

present (i.e., “about where we are”). For instance, Microsoft’s mission is to help people

and businesses throughout the world to realize their full potential. Wal-Mart’s mission is

“To give ordinary folk the chance to buy the same thing as rich people.” Mission

statements always exist at top level of an organization, but may also be made for various

organizational levels. Chief executive plays a significant role in formulation of mission

statement. Once the mission statement is formulated, it serves the organization in long

run, but it may become ambiguous with organizational growth and innovations. In

today’s dynamic and competitive environment, mission may need to be redefined.

However, care must be taken that the redefined mission statement should have original

fundamentals/components. Mission statement has three main components-a statement of

mission or vision of the company, a statement of the core values that shape the acts and

behaviour of the employees, and a statement of the goals and objectives.

2.Features of a Mission

a. Mission must be feasible and attainable. It should be possible to achieve it.

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b. Mission should be clear enough so that any action can be taken.

c. It should be inspiring for the management, staff and society at large.

d. It should be precise enough, i.e., it should be neither too broad nor too narrow.

e. It should be unique and distinctive to leave an impact in everyone’s mind.

f. It should be analytical,i.e., it should analyze the key components of the strategy.

g. It should be credible, i.e., all stakeholders should be able to believe it.

3. Vision

A vision statement identifies where the organization wants or intends to be in future or

where it should be to best meet the needs of the stakeholders. It describes dreams and

aspirations for future. For instance, Microsoft’s vision is “to empower people through

great software, any time, any place, or any device.” Wal-Mart’s vision is to become

worldwide leader in retailing. A vision is the potential to view things ahead of

themselves. It answers the question “where we want to be”. It gives us a reminder about

what we attempt to develop. A vision statement is for the organization and it’s members,

unlike the mission statement which is for the customers/clients. It contributes in effective

decision making as well as effective business planning. It incorporates a shared

understanding about the nature and aim of the organization and utilizes this

understanding to direct and guide the organization towards a better purpose. It describes

that on achieving the mission, how the organizational future would appear to be.

An effective vision statement must have following features-

a. It must be unambiguous.

b. It must be clear.

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c. It must harmonize with organization’s culture and values.

d. The dreams and aspirations must be rational/realistic.

e. Vision statements should be shorter so that they are easier to memorize.

In order to realize the vision, it must be deeply instilled in the organization, being owned

and shared by everyone involved in the organization.

4. Goals and objectives

A goal is a desired future state or objective that an organization tries to achieve. Goals

specify in particular what must be done if an organization is to attain mission or vision.

Goals make mission more prominent and concrete. They co-ordinate and integrate

various functional and departmental areas in an organization. Well made goals have

following features-

a. These are precise and measurable.

b. These look after critical and significant issues.

c. These are realistic and challenging.

d. These must be achieved within a specific time frame.

e. These include both financial as well as non-financial components.

Objectives are defined as goals that organization wants to achieve over a period of time.

These are the foundation of planning. Policies are developed in an organization so as to

achieve these objectives. Formulation of objectives is the task of top level management.

Effective objectives have following features-

f. These are not single for an organization, but multiple.

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g. Objectives should be both short-term as well as long-term.

h. Objectives must respond and react to changes in environment, i.e., they must be

flexible.

i. These must be feasible, realistic and operational.

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STRATEGIC MANAGEMENT PROCESS

The strategic management process means defining the organization’s strategy. It is also defined

as the process by which managers make a choice of a set of strategies for the organization that

will enable it to achieve better performance. Strategic management is a continuous process that

appraises the business and industries in which the organization is involved; appraises it’s

competitors; and fixes goals to meet all the present and future competitor’s and then reassesses

each strategy.

Strategic management process has following four steps:

1. Environmental Scanning- Environmental scanning refers to a process of collecting,

scrutinizing and providing information for strategic purposes. It helps in analyzing the

internal and external factors influencing an organization. After executing the

environmental analysis process, management should evaluate it on a continuous basis

and strive to improve it.

2. Strategy formulation :Strategy formulation is the process of deciding best course of

action for accomplishing organizational objectives and hence achieving

organizational purpose. After conducting environment scanning, managers formulate

corporate, business and functional strategies.

3. Strategy implementation :Strategy implementation implies making the strategy

work as intended or putting the organization’s chosen strategy into action. Strategy

implementation includes designing the organization’s structure, distributing

resources, developing decision making process, and managing human resources.

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4. Strategy evaluation :Strategy evaluation is the final step of strategy management

process. The key strategy evaluation activities are: appraising internal and external

factors that are the root of present strategies, measuring performance, and taking

remedial / corrective actions. Evaluation makes sure that the organizational strategy

as well as it’s implementation meets the organizational objectives.

These components are steps that are carried, in chronological order, when creating a new

strategic management plan. Present businesses that have already created a strategic management

plan will revert to these steps as per the situation’s requirement, so as to make essential changes.

Components of Strategic Management Process

Strategic management is an ongoing process. Therefore, it must be realized that each component

interacts with the other components and that this interaction often happens in chorus.

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BCG Matrix

Boston Consulting Group (BCG) Matrix is a four celled matrix (a 2 * 2 matrix) developed by

BCG, USA. It is the most renowned corporate portfolio analysis tool. It provides a graphic

representation for an organization to examine different businesses in it’s portfolio on the basis of

their related market share and industry growth rates. It is a two dimensional analysis on

management of SBU’s (Strategic Business Units). In other words, it is a comparative analysis of

business potential and the evaluation of environment.

According to this matrix, business could be classified as high or low according to their industry

growth rate and relative market share.

Relative Market Share = SBU Sales this year leading competitors sales this year.

Market Growth Rate = Industry sales this year - Industry Sales last year.

The analysis requires that both measures be calculated for each SBU. The dimension of business

strength, relative market share, will measure comparative advantage indicated by market

dominance. The key theory underlying this is existence of an experience curve and that market

share is achieved due to overall cost leadership.

BCG matrix has four cells, with the horizontal axis representing relative market share and the

vertical axis denoting market growth rate. The mid-point of relative market share is set at 1.0. if

all the SBU’s are in same industry, the average growth rate of the industry is used. While, if all

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the SBU’s are located in different industries, then the mid-point is set at the growth rate for the

economy.

Resources are allocated to the business units according to their situation on the grid. The four

cells of this matrix have been called as stars, cash cows, question marks and dogs. Each of these

cells represents a particular type of business.

                10 x                                  1 x                                  0.1 x

Figure: BCG Matrix

1. Stars- Stars represent business units having large market share in a fast growing industry.

They may generate cash but because of fast growing market, stars require huge

investments to maintain their lead. Net cash flow is usually modest. SBU’s located in this

cell are attractive as they are located in a robust industry and these business units are

highly competitive in the industry. If successful, a star will become a cash cow when the

industry matures.

2. Cash Cows- Cash Cows represents business units having a large market share in a

mature, slow growing industry. Cash cows require little investment and generate cash that

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can be utilized for investment in other business units. These SBU’s are the corporation’s

key source of cash, and are specifically the core business. They are the base of an

organization. These businesses usually follow stability strategies. When cash cows loose

their appeal and move towards deterioration, then a retrenchment policy may be pursued.

3. Question Marks- Question marks represent business units having low relative market

share and located in a high growth industry. They require huge amount of cash to

maintain or gain market share. They require attention to determine if the venture can be

viable. Question marks are generally new goods and services which have a good

commercial prospective. There is no specific strategy which can be adopted. If the firm

thinks it has dominant market share, then it can adopt expansion strategy, else

retrenchment strategy can be adopted. Most businesses start as question marks as the

company tries to enter a high growth market in which there is already a market-share. If

ignored, then question marks may become dogs, while if huge investment is made, then

they have potential of becoming stars.

4. Dogs- Dogs represent businesses having weak market shares in low-growth markets.

They neither generate cash nor require huge amount of cash. Due to low market share,

these business units face cost disadvantages. Generally retrenchment strategies are

adopted because these firms can gain market share only at the expense of

competitor’s/rival firms. These business firms have weak market share because of high

costs, poor quality, ineffective marketing, etc. Unless a dog has some other strategic aim,

it should be liquidated if there is fewer prospects for it to gain market share. Number of

dogs should be avoided and minimized in an organization.

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Limitations of BCG Matrix

The BCG Matrix produces a framework for allocating resources among different business units

and makes it possible to compare many business units at a glance. But BCG Matrix is not free

from limitations, such as-

1. BCG matrix classifies businesses as low and high, but generally businesses can be

medium also. Thus, the true nature of business may not be reflected.

2. Market is not clearly defined in this model.

3. High market share does not always leads to high profits. There are high costs also

involved with high market share.

4. Growth rate and relative market share are not the only indicators of profitability. This

model ignores and overlooks other indicators of profitability.

5. At times, dogs may help other businesses in gaining competitive advantage. They can

earn even more than cash cows sometimes.

6. This four-celled approach is considered as to be too simplistic.

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SWOT ANALYSIS

SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. By definition,

Strengths (S) and Weaknesses (W) are considered to be internal factors over which you have

some measure of control. Also, by definition, Opportunities (O) and Threats (T) are considered to

be external factors over which you have essentially no control.

SWOT Analysis is the most renowned tool for audit and analysis of the overall strategic position

of the business and its environment. Its key purpose is to identify the strategies that will create a

firm specific business model that will best align an organization’s resources and capabilities to

the requirements of the environment in which the firm operates. In other words, it is the

foundation for evaluating the internal potential and limitations and the probable/likely

opportunities and threats from the external environment. It views all positive and negative factors

inside and outside the firm that affect the success. A consistent study of the environment in which

the firm operates helps in forecasting/predicting the changing trends and also helps in including

them in the decision-making process of the organization.

An overview of the four factors (Strengths, Weaknesses, Opportunities and Threats) is given

below-

1. Strengths - Strengths are the qualities that enable us to accomplish the organization’s

mission. These are the basis on which continued success can be made and

continued/sustained. Strengths can be either tangible or intangible. These are what you

are well-versed in or what you have expertise in, the traits and qualities your employees

possess (individually and as a team) and the distinct features that give your organization

its consistency. Strengths are the beneficial aspects of the organization or the capabilities

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of an organization, which includes human competencies, process capabilities, financial

resources, products and services, customer goodwill and brand loyalty. Examples of

organizational strengths are huge financial resources, broad product line, no debt,

committed employees, etc.

2. Weaknesses - Weaknesses are the qualities that prevent us from accomplishing our

mission and achieving our full potential. These weaknesses deteriorate influences on the

organizational success and growth. Weaknesses are the factors which do not meet the

standards we feel they should meet. Weaknesses in an organization may be depreciating

machinery, insufficient research and development facilities, narrow product range, poor

decision-making, etc. Weaknesses are controllable. They must be minimized and

eliminated. For instance - to overcome obsolete machinery, new machinery can be

purchased. Other examples of organizational weaknesses are huge debts, high employee

turnover, complex decision making process, narrow product range, large wastage of raw

materials, etc.

3. Opportunities - Opportunities are presented by the environment within which our

organization operates. These arise when an organization can take benefit of conditions in

its environment to plan and execute strategies that enable it to become more profitable.

Organizations can gain competitive advantage by making use of opportunities.

Organization should be careful and recognize the opportunities and grasp them whenever

they arise. Selecting the targets that will best serve the clients while getting desired

results is a difficult task. Opportunities may arise from market, competition,

industry/government and technology. Increasing demand for telecommunications

accompanied by deregulation is a great opportunity for new firms to enter telecom sector

and compete with existing firms for revenue.

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4. Threats - Threats arise when conditions in external environment jeopardize the reliability

and profitability of the organization’s business. They compound the vulnerability when

they relate to the weaknesses. Threats are uncontrollable. When a threat comes, the

stability and survival can be at stake. Examples of threats are - unrest among employees;

ever changing technology; increasing competition leading to excess capacity, price wars

and reducing industry profits; etc.

Advantages of SWOT Analysis

SWOT Analysis is instrumental in strategy formulation and selection. It is a strong tool, but it

involves a great subjective element. It is best when used as a guide, and not as a prescription.

Successful businesses build on their strengths, correct their weakness and protect against internal

weaknesses and external threats. They also keep a watch on their overall business environment

and recognize and exploit new opportunities faster than its competitors.

SWOT Analysis helps in strategic planning in following manner-

a. It is a source of information for strategic planning.

b. Builds organization’s strengths.

c. Reverse its weaknesses.

d. Maximize its response to opportunities.

e. Overcome organization’s threats.

f. It helps in identifying core competencies of the firm.

g. It helps in setting of objectives for strategic planning.

h. It helps in knowing past, present and future so that by using past and current data, future

plans can be chalked out.

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SWOT Analysis provide information that helps in synchronizing the firm’s resources and

capabilities with the competitive environment in which the firm operates.

SWOT ANALYSIS FRAMEWORK

Limitations of SWOT Analysis

SWOT Analysis is not free from its limitations. It may cause organizations to view

circumstances as very simple because of which the organizations might overlook certain key

strategic contact which may occur. Moreover, categorizing aspects as strengths, weaknesses,

opportunities and threats might be very subjective as there is great degree of uncertainty in

market. SWOT Analysis does stress upon the significance of these four aspects, but it does not

tell how an organization can identify these aspects for itself.

There are certain limitations of SWOT Analysis which are not in control of management. These

include-

a. Price increase;

b. Inputs/raw materials;

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c. Government legislation;

d. Economic environment;

e. Searching a new market for the product which is not having overseas market due to

import restrictions; etc.

Internal limitations may include-

a. Insufficient research and development facilities;

b. Faulty products due to poor quality control;

c. Poor industrial relations;

d. Lack of skilled and efficient labour; etc

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PORTER’S FIVE FORCES MODEL OF COMPETITION

Michael Porter (Harvard Business School Management Researcher) designed various vital

frameworks for developing an organization’s strategy. One of the most renowned among

managers making strategic decisions is the five competitive forces model that determines industry

structure. According to Porter, the nature of competition in any industry is personified in the

following five forces:

i. Threat of new potential entrants

ii. Threat of substitute product/services

iii. Bargaining power of suppliers

iv. Bargaining power of buyers

v. Rivalry among current competitors

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FIGURE: Porter’s Five Forces model

The five forces mentioned above are very significant from point of view of strategy formulation.

The potential of these forces differs from industry to industry. These forces jointly determine the

profitability of industry because they shape the prices which can be charged, the costs which can

be borne, and the investment required to compete in the industry. Before making strategic

decisions, the managers should use the five forces framework to determine the competitive

structure of industry.

Let’s discuss the five factors of Porter’s model in detail:

1. Risk of entry by potential competitors: Potential competitors refer to the firms which

are not currently competing in the industry but have the potential to do so if given a

choice. Entry of new players increases the industry capacity, begins a competition for

market share and lowers the current costs. The threat of entry by potential competitors is

partially a function of extent of barriers to entry. The various barriers to entry are-

Economies of scale

Brand loyalty

Government Regulation

Customer Switching Costs

Absolute Cost Advantage

Ease in distribution

Strong Capital base

2. Rivalry among current competitors: Rivalry refers to the competitive struggle for

market share between firms in an industry. Extreme rivalry among established firms

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poses a strong threat to profitability. The strength of rivalry among established firms

within an industry is a function of following factors:

Extent of exit barriers

Amount of fixed cost

Competitive structure of industry

Presence of global customers

Absence of switching costs

Growth Rate of industry

Demand conditions

3. Bargaining Power of Buyers: Buyers refer to the customers who finally consume the

product or the firms who distribute the industry’s product to the final consumers.

Bargaining power of buyers refer to the potential of buyers to bargain down the prices

charged by the firms in the industry or to increase the firms cost in the industry by

demanding better quality and service of product. Strong buyers can extract profits out of

an industry by lowering the prices and increasing the costs. They purchase in large

quantities. They have full information about the product and the market. They emphasize

upon quality products. They pose credible threat of backward integration. In this way,

they are regarded as a threat.

4. Bargaining Power of Suppliers: Suppliers refer to the firms that provide inputs to the

industry. Bargaining power of the suppliers refer to the potential of the suppliers to

increase the prices of inputs( labour, raw materials, services, etc) or the costs of industry

in other ways. Strong suppliers can extract profits out of an industry by increasing costs

of firms in the industry. Suppliers products have a few substitutes. Strong suppliers’

products are unique. They have high switching cost. Their product is an important input

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to buyer’s product. They pose credible threat of forward integration. Buyers are not

significant to strong suppliers. In this way, they are regarded as a threat.

5. Threat of Substitute products: Substitute products refer to the products having ability

of satisfying customers needs effectively. Substitutes pose a ceiling (upper limit) on the

potential returns of an industry by putting a setting a limit on the price that firms can

charge for their product in an industry. Lesser the number of close substitutes a product

has, greater is the opportunity for the firms in industry to raise their product prices and

earn greater profits (other things being equal).

The power of Porter’s five forces varies from industry to industry. Whatever be the industry,

these five forces influence the profitability as they affect the prices, the costs, and the capital

investment essential for survival and competition in industry. This five forces model also help in

making strategic decisions as it is used by the managers to determine industry’s competitive

structure.

Porter ignored, however, a sixth significant factor- complementaries. This term refers to the

reliance that develops between the companies whose products work is in combination with each

other. Strong complementors might have a strong positive effect on the industry. Also, the five

forces model overlooks the role of innovation as well as the significance of individual firm

differences. It presents a stagnant view of competition.

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NIKON

Nikon technologies contribute to people’s lives and future dreams.

Nikon is contributing to technology in numerous fields, from manufacturing ICs With

nanometer-rule circuit patterns and advancing bioscience, to furthering the Possibilities of

imaging and capturing views of stars that are billions of light years Away. What makes this

possible? Our opto-electronics and precision technologies that we have nurtured throughout our

history and used to create an extensive range of products, services and even more new

technologies. Nikon will continue to enrich lives around the world, support cutting-edge

industries that are shaping the future, and confront the challenges facing societies around the

world.

Precision Equipment Business

Modern society reaps great benefits from the electronics fabricated in industrial sectors,

including areas such as home appliances, personal computers and automobiles. Nikon is

continuously advancing the production of steppers and scanners that are used to manufacture ICs

— the very core of electronics — as well as liquid crystal panels and organic

electroluminescence panels that are indispensable to LCD TVs, computers, and smartphones. In

these and many other ways, Nikon is fostering and innovating our electronics-based society.\

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HISTORY

1917

●Three of Japan’s leading optical manufacturers merge to form a comprehensive, fully

integrated optical company known as Nippon Kogaku K.K.

1918

●Ohi Dai-ichi Plant (now Ohi Plant) is Completed.

1925

●JOICO microscope is marketed.

1932

●NIKKOR is adopted as the brand name for camera lenses.

1946

●Pointal ophthalmic lens is marketed.

●Nikon brand name is adopted for small-sized cameras.

1952

●nikkor club is established to promote photography culture.

1959

●Nikon F, Nikon’s first SLR camera, is Marketed.

1967

●Ohi Plant’s Ofuna site (now Yokohama Plant) is built.

1968

●Photo gallery Ginza Nikon Salon is opened.

●Nikon Europe N.V. (now Nikon Europe B.V.) is established in the Netherlands.

.

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1985

●Total Station DTM-1 surveying instrument is marketed.

1992

●Nikon Instech Co., Ltd. is established.

1999

●D1 digital SLR camera is marketed.

●In-house company system is Inaugurated.

2000

●Nikon-Essilor Co., Ltd., joint venture with Essilor International of France, is established.

2003

●Nikon-Trimble Co., Ltd., a joint venture with Trimble Navigation Ltd. of the U.S., is

established.

2004

●Yokohama Plant’s Yokosuka Branch (now Yokosuka Plant) is built.

●Nikon F6 SLR camera is marketed.

2009

●FX-101S LCD scanner is marketed.

●Metris NV became Nikon Metrology NV, a wholly owned subsidiary of Nikon Corporation.

2010

●Nikon Head Office is relocated to Shin-Yurakucho Bldg.

●D3S and D3X digital SLR cameras, and NIKKOR lenses are used in the International Space

Station (ISS).

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2011

●Nikon 1 J1 and V1 advanced cameras with interchangeable lenses are marketed.

2012

●NSR-S621D ArF immersion scanner is marketed.

●Nikon Plaza Sendai is opened.

●D4 digital SLR camera is marketed.

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NIKON’S PHILOSOPHY

Nikon has maintained an unwavering commitment to the study of light with the corporate

philosophy, “Trustworthiness and Creativity”. But today, as we become ever more global, what

is the true value that we have to offer? To answer this all-important question, in 2007, we

enacted “Our Aspirations — Meeting needs. Exceeding expectations.” as the new vision to

create a new Nikon.

Our Philosophy

Trustworthiness and Creativity

Our corporate philosophy of “Trustworthiness & Creativity” — simple words that are not easily

put into practice. These important words represent unchanging principles to which we will

always be dedicated.

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Our Aspiration

Meeting needs. Exceeding expectations

“Our Aspirations” mean not only to meet the needs of customers but also to provide customers

with new value that exceeds their expectations.

“Meeting needs. Exceeding expectations.” is our vision for the future.

Providing customers with new value that exceeds their expectations.

Sustaining growth through a break with the past and a passionate commitment by one and

all.

Maximizing our understanding of light to lead the way towards transformation and a new

future.

Maintaining integrity in order to contribute to social prosperity.

Our Commitments

We are therefore implementing a policy for realizing our aspirations that consists of making four

key commitments.

Be broad-minded and well-informed in order to act quickly and resolutely.

Pioneer new potential through self-study and insatiable curiosity.

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Harmonize diverse skills by thinking out of the box and communicating effectively with others.

Work with diligence and sincerity as a responsible individual.

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PESTLE ANALYSIS

Referring to CIPD (2010), PESTLE analysis is an assessment of the company’s environmental

forces that will guide it to be placed strategically above its competitors. These external forces

are:

Political forces

In terms of government policies and legislation, a new geographical market in digital camera will

be beneficial as it will attract new investors in these locations. Regions where political stability is

not appropriate, there will be greater risks to enter new market places. On the other hand, well-

established political legislation enhances the standard of living in these countries. According to

Datamonitor (2010), social responsibility in these countries is developing very fast, enhancing

the education of the population. Hence, new digital camera can be considered as a commodity.

Therefore, Nikon should consider countries with good government policies, prior entering into

these geographic regions. Actually, Nikon is present in Europe, America and Japan. This is

because of the political stability of these countries.

Economical forces

During the past years, the world incurred an economic slowdown due to the U.S financial crisis.

However, it has been reported that many countries has recovered from this crisis. To counteract

this crisis, Nikon had to redo a branding to re-boost the sales. Furthermore, markets for low

income consumers were looked into such that these consumers could afford a trustworthy

camera.

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Social/Cultural forces

The social needs for a camera are becoming more and more important. However, Nikon has the

disadvantage of producing professional cameras with high prices. In order to integrate the

social/cultural external forces, Nikon has started manufacturing cameras which are more

affordable to the mass population. Additionally, in terms of social awareness, Nikon is already

working on CSR to promote its brand.

Technological forces

With rapidly changing technology, Nikon has to keep pace with new technology in order to be

competitive in the market. This has been witnessed by the elimination of traditional film camera

to the latest SLDR camera. Furthermore, Nikon has invested massively in research and

development in order to have a competitive advantage in the imaging industry.

Legal forces

There is no legal requirement regarding purchase of a digital camera on the worldwide market.

This relieved the customers of any special permits that they might need for buying a camera.

However, photography is banned in certain regions for security and cultural purposes. For Nikon,

this does not constitute a problem as most of its users are professional photographers.

Environmental forces

With alarming concern of climate change, Nikon is working on using recyclable materials to

reduce the effect of carbon dioxide emissions. As one of their strategy, Nikon is aiming at green

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marketing which is considered as one of the developing trends in modern business. (Kassaye,

2001). Hence in the manufacture of its products, health and safety procedures are adhered to.

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CORE COMPETENCIES OF NIKON

The core competencies usually relate to the capabilities of the firm, enhancing its

competitiveness in the market it serves.

According to Johnson and Scholes (2002), the core competences ‘create and sustain the ability to

meet the critical success factors of particular customer groups better than the providers in ways

that are difficult to imitate’.

Hence the strategic marketing of Nikon is based on core competences of the company. This

highlights the company’s distinctive capability. Nikon, being leader in manufacturing of lenses,

has four product segments:

i. Imaging products

ii. Precision equipment

iii. Instruments

iv. Others

The figure below shows the missions of Nikon:

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The marketing strategy is in line with the corporate strategy of the company as it is currently

making its brand image identified with ‘high quality’, ‘reliability’, and ‘integrity’. Since it is

aiming to be the market leaders in all its business areas, they have included ‘fun’ and spirit of

innovation as part of their image. Nikon’s vision has been changed recently to become “Meeting

needs. Exceeding expectations.” Furthermore, Nikon is improving on processes that will keep

their survival in a constantly changing market. MEtA and CSR are also two options that have

been considered by Nikon to strengthen this relationship of trust with all their stakeholders.

From the above, Nikon’s core competencies drives it towards a more efficient company and

offers advantages to the market places it occupies.

According to Drucker (1973), the corporate objectives of an organisation should include the

following eight items:

i. Market Standing

ii. Innovation

iii. Productivity

iv. Resources

v. Profitability

vi. Management performance

vii. Employee performance and development

viii. Public responsibility

Regarding Nikon, the corporate objectives are in line to that specified by Drucker (1973) as it

covers all the eight items. However, using the core competencies approach, it can be deduced

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that Nikon has organisational capability for developing lenses use for cameras and other

precision equipment. Their employees have the required core skills and each department has the

competencies. The company also invests a lot in research and development to remain in the

constantly changing market needs.

Wherever, the skills needed do not form part of their competencies, Nikon make acquisitions and

merges with other leading companies as well as leveraging of synergy is used to strengthen its

core competencies and organisational capabilities.

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COMPETITIVE ANALYSIS

Direct competitors for Nikon in the imaging products are Sony, Canon, Panasonic, Samsung,

Olympus and Kodak.

The table below shows the strengths, weaknesses,

Sony

Strength

Strong brand awareness and image

Good after sales service

Variety of products

Economy of sales in terms of promotional campaigns

Canon

Know how in lens

High brand awareness in camera industry

Good image

Good quality products at affordable prices

Indirect competitors are:

Film cameras

Cell phones with high resolution cameras

Video cameras

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SWOT ANALYSIS

For Nikon, the SWOT analysis is tabulated below:

SWOT Analysis

Strength Opportunities

High market occupancy

Major advancement in R&D and new

technology

Healthy monetary situation

High brand name

Increasing market trend in LCD and

DSLR cameras

Healthcare products are becoming more

demanding

Weaknesses Threats

High stock levels of products

Lack of scale

Usually high price of cameras

Increasing cameraphones on the market

Reducing semiconductor capital market

spending

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STRENGTHS

High market occupancy

Considering the asian market, Nikon is the leader in most of the markets it operates. In the

digital camera market, it accounted for 40% of unit batched for digital single-lens reflex (DSLR)

cameras. According to Datamonitor (2008), the company also accounted for 25% of the

instrument products sales and 27% in the precision equipment sector. The company’s high

market occupancy is therefore a competitive advantage, allowing it to capture more market

grounds.

Major advancement in R&D and new technology

Nikon has invested massively in R&D activities. It has also made collaboration with HP for the

development of new technological digital imaging system since 2005. In 2008, it entered a cross

licensing agreement with Microsoft for the development of its products. With these

collaborations between different companies, Nikon is working on deriving synergies between

different businesses. Non-core activities are thus being divested as they do not provide any

competitive advantage to Nikon. Nikon’s percentage of expenditure in R&D rose from 5.1% to

6.1% in 2008. Therefore it can be deduced that the company’s major advancement in R&D has

allowed it to enter strategic relationship with other leading companies.

Healthy monetary situation

Nikon has shown strong monetary performances during the previous years. Data from their

annual report indicates increasing cash and declining debt. This means that the company is in a

strong liquidity status, allowing financial growth plans like market expansion to occur. This

good financial position also creates confidence in its potential investors.

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WEAKNESSES

High level of stock of products

With comparison to its competitors, Nikon had high level of inventory. These were in the

turnover ration of 3%, 3.4% and 3.7% in the years 2006, 2007 and 2008 respectively.

Accordingly, having hign inventories in a market where the trend of price is declining will affect

Nikon’s operating performance.

Lack of Scale

As reported by Datamonitor (2008), Nikon has reported revenues of JPY 955,792 millions in

2008, compared to its competitors Canon and Fujifilm where revenues of JPY 4,481,346 million

and JPY 2,846,828 millions were reported during the same period. This is because of the lack of

scale.

OPPORTUNITIES

Long term growth prospects for LCD displays and SDLR cameras

The demand for LCD screens is expected to grow in the long term. As a developer of LCD

steppers and scanners, the company will be in a situation where manufacturing of multi-lens

projection optical system, requiring an adaptor for larger glass plates, will not be a problem.

In the camera market, the quality of Nikon lenses helped the company to stand good among its

competitors. The digital SLR camera was initiated by Nikon in 1999. Today, the company offers

a range of DSLR cameras. According to GfK (2010), market for DSLR cameras recorded steady

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growth of 22% in the first six months of 2010. This opportunity shall be important for Nikon to

remain as market leader in this product segment.

Healthcare products are becoming in demand

With a global healthcare market growth of 4.5% during 2007, the market is expected to reach a

value of $ 170.5 billion by the end of 2012. Asian, European and American countries are the

customers for these product. In this application, Nikon manufactures microscopes and other

products for use in the biomedical field.

THREATS

Reducing semi-conductor market capital spending

The market capital for semi conductors is expected to decrease by 22%. Nikon being a dependent

on semi-conductor market, can be affected by this reduced capital spending of semi conductor

market.

Increase camera phones on the market

According to ABL Research (2007), nearly 70% of all handset globally are expected to be

equipped with cameras with high resolutions. Therefore this could create a threat to Nikon,

reducing the growth of its share in camera market.

SEGMENTATION OF MARKET

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People who who pay for professional photo portraits are generally status-conscious professionals

who have children, and so we've segmented the Eugene-Springfield metropolitan area according

to the social status of families. We've used education as a measure of social status.

Families of College Graduates

Professionals are, almost by definition, college graduates. They are the ones most likely to have a

need for professional photo portraits for career purposes. They are also most likely to have the

means and taste to want professional photos for their families, as well.

Families of High School Graduates

People who have not completed college are assumed to be more likely to be employees or be in a

trade. While many of them may have the means for professional photos, relatively few will use

them. They are more likely to use home-made photographs, except for rare occasions, such as a

high school photo or wedding.

Families of Non-High-School Graduates

These are families who are generally without the means to hire professional photographers on a

regular basis.

Demographics

The Eugene-Springfield metropolitan area has a total population of 330,527. There are 74,836

families.

Some 25.5 percent of the adult population in the metropolitan area is composed of college

graduates, which we will here define as professionals. Some 62 percent of the population is

made up of high-school graduates.

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The Eugene-Springfield metropolitan area closely conforms to the boundaries of Lane County,

Oregon. The office will be located in Eugene, but clients are accessible throughout Lane County

through physicians’ offices. Most Lane County residents are accustomed to doing occasional

business in Eugene.

The following table and graph give the breakdown in demographic terms.

Year 1 Year 2 Year 3 Year 4 Year 5

Potential Customers Growth CAGR

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Families of College

Graduates1% 19,083 19,350 19,621 19,896 20,175 1.40%

Families of High

School Graduates1% 46,398 47,048 47,707 48,375 49,052 1.40%

Families of Non-High-

School Graduates1% 9,355 9,486 9,619 9,754 9,891 1.40%

Total 1.40% 74,836 75,884 76,947 78,025 79,118 1.40%

Target Market Segment Strategy

Our target market is families of college-educated people who are most likely to be professionals. 

This is the population most likely to order professional photos on a regular basis, having both the

means and the desire for professional quality photographs.

Since women make most of the purchasing decisions in families, our specific target market is

middle-aged professional women in the Eugene-Springfield metropolitan area, roughly 19,554

people.

Market Trends

Photography has gone digital. Digital cameras are replacing conventional cameras faster than

DVDs are replacing VHS in video stores. Even cell phones have digital cameras on them. The

uses of photography have expanded as well because of Web pages on the Internet

and email. Digital images are needed for printing uses as well, for such uses as brochures and

business cards.

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Photo studios have mostly switched to digital format because it also allows for easy processing

and manipulation.  They have been less amenable to making digital files affordably available to

clients, and this is a trend on which we intend to capitalize.

Market Growth

The growth rate used in the table is based on the 1.4 percent growth rate experienced by the

Eugene-Springfield area over the past year. This growth is reflected in the accompanying chart

and graph.

Market Needs

Families have photos taken to preserve memories. Most photos are taken by consumers with

their own cameras, which are increasingly digital and are even part of their cell phones. Most of

these photos are low quality but no one cares because only the family views them.

Consumers generally engage professional portrait photographers when the photos will be viewed

outside the family and when quality matters. Professionals, such as those in our target

market, often have business needs for quality photos and have acquired a taste for them. These

professionals have families, too. They have the budget and the need to use them for their families

because they often entertain at home and their family photos will be on display. Just as they

appoint their homes with fine furniture and decorations, the photos on their walls need to exhibit

quality.

Specifically, some of their needs include:

baby pictures

portraits for home or office

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senior pictures for the high school yearbook

family pictures to send to family members

family newsletters

family, individual or business websites

portraits for business cards, such as for real estate agents

portraits for brochures and annual reports

The world has become increasingly digital, but many professional photo studios have made it

difficult for people to enter the digital age. The traditional practice of retaining negatives to

require clients to return for prints has been carried over to charging high fees for releasing digital

files of their portraits.

The need to capture memories lasts for people's entire lives, and business portraits require a

regular update. But people generally don’t look forward to seeing a photographer. In fact, they

find it a burdensome expense, have not established a relationship with a photographer and don't

think often about going to one. As a result, a lot of memories are lost and ancient portraits of

professionals continue to be hung on walls and portrayed in publications. This makes them

appear to be trying to preserve their youth instead of embracing their maturity and experience,

and doesn't show them in the best light.

Industry Analysis

The competition is divided between luxury magazine-quality photographers, moderate

professional photographers who mostly pose their subjects, and same-day photo studios. 

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Phoebe's Photo Studio is not a luxury, magazine-quality studio, but our service and photo quality

is high compared to other moderate professional photographers. Our rates are comparable to

theirs, but we add value through personal contact and easy dissemination of digital images.

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GLOBAL INTERNATIONAL MARKETING AND E-BUSINESS STRATEGIES

With the evolution of IT and rapidly changing technologies, Nikon has implemented e-business

strategies via the setting up of websites based in USA, Europe and Japan. This will definitely

enhance the marketing strategies that Nikon has adopted for the international market. The

website provides a platform for users 7 days a week 24 hours a day. Furthermore, Nikon

publishes a range of information regarding its products on its website. These include company

profiles, company history, company philosophies, corporate and strategies statements and other

financial data.

Using the marketing mix in the global market with e-business, the 4Ps wwill now become E-

Product, E-Pricing, E-Place and E-Promotion.

E-Product

The consumers will get information and specification about the new camera instantly online but

unlike in a shop where they will not be able to see and touch it physically. For Nikon, products

shall be categorized to suit each target markets. In the case of Nikon XD on the international

market, it may be wise to investigate the geographical segments requiring this camera prior to

launching it in a specific region.

E-Price

E-Price will normally bring the price of the new camera more competitive as Nikon will no

longer incur costs for stores and staff.

E-Place

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Using this strategy, the method of purchasing will be via the internet. Nikon will have to ensure

that the product is delivered on time to the right customer. In the global context, Nikon actually

possesses 3 main websites. However, as more geographic market segments are being targeted

for consumers with different cultures, Nikon will have to expand its servers and security for

higher volumes of consumers. For Nikon XD, the effect of E-Place will not be critical since it

targets high-end consumers in countries where internet accessibility is available. Moreover

Nikon being already in alliance with UPS Supply Chain will continue to focus on global logistics

for competitive advantage.

E-Promotion

E-Promotion strategy will have to include banner promotions, web public relations and E-

leaflets. All these are already being provided by Nikon on their websites.

To conclude, it is vital to consider that e-marketing mix should be dependent on each other for an

online marketing strategy. In the case of Nikon, embracing in e-business strategy has already

started but still the resistance to change needs to be addressed. In this manner, the different risks

shall be considered prior to implementing the changes drastically.

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CSR Policy

Beginning with its corporate philosophy of "Trustworthiness and Creativity," the Nikon Group

has structured policies to fulfill this philosophy, shares them with all employees, and works to

put them into practice.

The Nikon Group's Approach to CSR

For the Nikon Group, fulfilling CSR means embodying its corporate philosophy:

"Trustworthiness and Creativity." We are aiming to contribute to sustainable development by

living up to the trust we are given by society, and also by creating more value than expected.

As a common plan of action for the entire Group we have adopted "Our Aspirations," which

were formulated through a project discussion in which both top management and employees

participated, and "Our Commitments," which are made to realize those aspirations. We are also

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working to increase CSR awareness among each and every employee through the Nikon CSR

Charter, which is Nikon Group's basic policy on social responsibility, and the Nikon Code of

Conduct, which is our code for daily business activities. Furthermore, we participate in the UN

Global Compact, and support its Ten Principles regarding Human rights, Labour, Environment,

and Anti-corruption.

Nikon Corporate Social Responsibility (CSR) Charter

1. Sound corporate activities

The Nikon Group endeavors to comply with international regulations, related laws, and

internal rules, exercise sound and fair corporate practices, earn the trust of stakeholders

such as customers, shareholders, employees, business partners, and society. The Group

will maintain constructive relationships with administrative bodies, remaining politically

neutral and complying with laws, and will not engage in relationships with individuals or

groups that threaten social order or safety.

2. Provision of valuable goods and services for society

The Nikon Group will provide valuable products and services with superior quality and

safety to society, endeavoring to increase the satisfaction and trust of our customers and

contributing to the healthy development of society.

3. Respect for human beings

The Nikon Group will respect diversity and individual human rights and provide a

healthy and safe working environment in which all persons receive fair treatment without

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discrimination. It will also oppose enforced labor and child labor and respect fundamental

human rights as well as workers' rights.

4. Protection of the natural environment

The Nikon Group will proactively engage in environmental efforts and work to protect

the natural environment, as these are common issues for all of mankind.

5. Responsibility to society as a corporate citizen

The Nikon Group will carry out corporate activities that take into account the cultures

and practices of each country and region and proactively engage in activities that

contribute to society as a good corporate citizen.

6. Socially responsible behavior within supply chain

The Nikon Group will encourage socially responsible behavior within its supply chain.

7. Transparent operating activities

The Nikon Group will communicate extensively with customers, shareholders,

employees, business partners, and society and disclose business information in a timely

and fair manner. It will also conduct reliable financial reporting through accurate

accounting processes.

8. Responsibility of top management

Top management and employees in managerial positions within each department must

understand that they play an essential role in fulfilling the spirit of this Charter and thus,

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in addition to leading by example, they must ensure that this information is disseminated

to everyone in the Group and all related parties. Management must always strive to

understand the opinions of those both inside and outside of Nikon to develop a sound

internal framework that ensures that the spirit of this Charter is upheld. If any incident

occurs that violates this Charter, top management will demonstrate, internally and

externally, their determination to solve the problem and strive to identify the cause and

prevent its recurrence. Furthermore, they will uphold information disclosure and

accountability obligations. They will clarify the authority and responsibility of each

manager and employee and deal rigorously and objectively with all people involved in

the matter, including top management.

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Conclusion

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