Note: Sample below may appear distorted but all corresponding word document files contain proper formattingExcerpt from Essay:
Growing Market Share at Olympus
When you can buy a Barbie doll that doubles as a video camera, I think that it's official that anything can be a camera. -- Jason Griffey, 2012
The heyday of amateur single lens reflex cameras and developable film has passed, replaced by increasingly sophisticated cameras in all types of handheld wireless devices, especially smartphones. Some camera manufacturers have responded to these trends in different ways, with some changing to digitally-based technologies for their cameras while others have simply gone out of business. Major manufacturers such as Olympus have a number of business lines besides amateur photography, but even these firms are struggling to stay afloat on a digital sea of photographic technology. To determine what these companies should do in the face of these trends, this paper provides a review of the relevant literature concerning the kind of markets in which Olympus sells cameras and a characterization of the competitive environment of each. A discussion concerning what perspective this provides on Olympus's decision to drop manufacture of its sub-$200 dollar cameras is followed by a comparison of Olympus with its competitors to determine what, if any, competitive advantages Olympus has and whether these can be considered sustainable competitive advantages. Finally, recommendations are provided for the CEO of Olympus concerning an optimal future competitive strategy. A summary of the research and important findings concerning these issues are presented in the conclusion.
Review and Analysis
What kind of market(s) are cameras sold in and how would you characterise the competitive environment in each market.
Today, Olympus Corporation (hereinafter alternatively "the company" or "Olympus") is a global manufacturer and marketer of a wide range of precision machineries and instruments (Company profile 2013). The company is divided into five basic business segments as follows:
1. Medical. This segment provides endoscopic video imaging, medical information, fiberscope, broncho endoscope, and endoscopic ultrasound systems; ultrasound fiberscopes, probes, and centers; ultrasound-guided needle puncture systems; cleaning, disinfecting, and sterilization systems; medical treatment peripherals; and ancillary products. This segment also offers endoscopy products for gastroenterological surgery, thoracic surgery, urology, gynecology, orthopedic surgery, neurosurgery, cardiovascular surgery, anesthesiology, and otolaryngology; treatment and surgical equipment; and peripherals, as well as endotherapy products (Company profile 2013). This business unit competes directly with Precision Optics Corporation, Inc. And Vision-Sciences, Inc.
2. Life Science and Industrial. This segment provides bioscience products, such as system and inverted biological microscopes, stereo and confocal laser scanning microscopes, single-molecule fluorescence detection systems, microscope system equipment, and peripherals; industrial microscope systems, including metallurgical and semiconductor inspection microscopes, flat-panel display inspection systems, laser microscopes, measuring microscopes, microscopic 3-D measurement systems, and peripherals; printers; and remote visual inspection products and non-destructive testing products (Company profile 2013). This business unit competes with Sony, Precision Optics Corporation, Inc. And Vision-Sciences, Inc.
3. Imaging. This segment offers digital cameras, lens barrels for digital cameras, optical materials, IC recorders, and binoculars (Company profile 2013). This business unit competes with Sony.
4. Information and Communication. This segment sells mobile terminals, including mobile handsets (Company profile 2013). This business unit competes with Sony.
5. Others. This segment manufactures and sells biomedical materials, as well as conducts system development and other business services (Company profile 2013). This business unit competes with Precision Optics Corporation, Inc.,
What perspective does this provide on Olympus's decision to drop manufacture of its sub $200 dollar cameras?
The only thing wrong with the decision by Olympus to drop manufacture of its sub-$200 cameras was that it took so long to make. After all, the handwriting has been on the wall for all to see for the past decade or more, and companies that continued to manufacture mechanical cameras as the onslaught of digital technology swept the industry found themselves without customers. It has gotten to the point today where digital cameras are being placed in everything that can hold one because of the economics that are involved. For instance, according to Griffey (2012, p. 26), "There is an effect in consumer electronics where, as Moore's Law drives the costs of individual components steadily downward, the cost per unit for said component is suddenly so cheap that device manufacturers can just put them in everything."
It has become increasingly commonplace to see phone users taking pictures with their phones and sharing them with others through social media networks, and it is reasonable to suggest that Olympus executives saw these trends for themselves as well. Indeed, Griffey (2012, p. 26) argues that, "I believe we've hit that point with camera sensors. When you can buy a Barbie doll that doubles as a video camera, I think that it's official that anything can be a camera." In fact, digital camera technology has evolved to the point where increasingly sophisticated and powerful digital cameras are available at a fraction of what one of Olympus's models cost, and these cameras are usually included as part of a larger hand-held device package (Oppenheim 2012). In other cases, though, specialized cameras are being marketed that can do everything mechanical cameras were capable of and far, far more. In this regard, Griffey (2012, p. 27), reports that, "There are cameras that are designed to be worn during extreme sports (the GoPro) and my personal favorite, the Looxcie, which is effectively a Bluetooth headset, but complete with an HD video camera that can capture everything you do, all the time."
More importantly, the quality of the newly released digital camera technology is superior to the sub-$200 model marketed by Olympus, sealing the door on its obsolescence. As Griffey (2012, p. 27) points out, "The cameras in most smartphones are better than the dedicated point-and-shoot cameras that you could buy just a few years ago, and they have the advantage of being connected to a computer with network access, which means that not only can you upload pictures to the Internet, but in many cases you can also live stream video."
Furthermore, entrepreneurs and amateur inventors are using these digital camera technologies in innovate ways that their manufacturers likely could not foresee. For example, Microsoft's Kinect digital camera that was specifically designed for the Xbox 360 was released in November 2010 but has since been modified to provide a wide range of new applications from three-dimensional scanners, new tools for surgery and even advanced robotics at a fraction of the cost of previous applications (Gobble 2013).
Compared with its competitors, what, if any, are the competitive advantages that Olympus has and can you characterise any as sustainable competitive advantages.
The company's main competitors are Precision Optics Corporation, Inc. (POCI), Sony Corporation (SNE) and Vision-Sciences, Inc. (VSCI). As noted above, Olympus currently directly competes with each of these firms in its various business segments, most especially Sony Corporation. Olympus does enjoy a sustainable competitive advantage with respect to brand recognition compared to Precision Optics Corporation and Vision-Sciences, Inc., but not Sony Corporation.
You have been appointed as a consultant to advise the CEO on options for future competitive strategy. What would be your recommendations?
The company most recently posted of a half-yearly profit of more than $100 million for the period ending in September 2012 following a 2-year gap that included the sales of assets and profits from its specialized medical equipment unit (Pham 2012). Despite these trends, unless Olympus changes its business model soon, it may be a very long time before the company realizes any further economic gains in the future. In this regard, Pham (2012, p. 2) emphasizes that, "Its annual forecast has also been raised, which caused its shares to increase by more than 5% in response to the news. High quality camera-equipped smartphones and a strong yen are the main reasons behind Olympus's losses."
It is reasonable to suggest that the quality of cameras featured in future smartphones will be even better than the high-quality versions installed today, and the market for the company's mechanical cameras for other than specialized applications may be disappearing before the company can take its picture. Indeed, Pham (2012, p. 3) argues that:
The average person simply does not need a camera more powerful than the one in their smartphone for most picture taking. And with camera technology in phones becoming more of a focus for manufacturers and a differentiator with buyers, traditional Digital Single Lens Reflex (DSLR) producers are going to find their wares a harder sell. Just ask what is left of Eastman Kodak.
One indication of what can be expected in the near-term was the technological capabilities of the camera used by Nokia in its recently released smartphone, the Lumia 920. According to Pham (2012, p. 3), "The Lumia 920 is capable of very impressive optical performance due to hardware optical stabilization normally reserved for a single-purpose camera and was designed to challenge stand-alone DSLRs as a person's carry camera."
Certainly, miniaturization has been applied to both smartphone and camera technologies, but a logical limit must be reached where there is a balance between ease of use and smaller size. By combining high-tech camera technologies…[continue]
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