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10/4/2013

Canon Inc. Survival Strategy through Corporate Restructuring

Domenico Gouveia ROLL NO. 9034

PROJECT REPORT ON Canon Inc. Survival Strategy through Corporate Restructuring

SUBMITTED BY Domenico Gouveia

M.Com Part I 2013-14

PROJECT GUIDE Dr. Swati Chaplot

SUBMITTED TO UNIVERSITY OF MUMBAI

St.Andrews College Of Arts , Science and Commerce St. Dominic Road, Bandra (West), Mumbai 400 050.

CERTIFICATE It is certified that this project Canon Inc. Survival Strategy through Corporate Restructuring has been prepared and submitted by DOMENICO GOUVEIA , Roll no 9034 under my guidance during the academic year 20132014.

Date:

Signature (Dr. ________________

Place:
Signature of the Internal Examiner Signature of the External Examiner

(AssociateProfessor)
Signature of the Principal

DECLARATION St.Andrews College Of Arts , Science and Commerce St. Dominic Road, Bandra (West), Mumbai 400 050.

I ,Domenico Gouveia of St.Andrews College , M.Com Part I hereby declare that I have completed the project on Canon Inc. Survival Strategy through

Corporate Restructuring in the academic year 2013-14.The information


submitted is true and original to the best of my knowledge.

Signature of the Student, Domenico Gouveia

ACKNOWLEDGMENT
I hereby acknowledge all those who directly or indirectly helped me to draft the project report. It would not have been possible for me to complete the task without their help and guidance. First of all I would like to thank the principal Dr. Marie Fernandes and the coordinator Prof. Kevin Miranda who gave me the opportunity to do this project work. They also conveyed the important instructions from the university from time to time. Secondly, I am very much obliged of Dr..Swati Chaplot for giving guidance for completing the project. Then I must mention the person who co-operated with me, Mr. Alok from Canon India. He not only rendered time out of their busy scheduled but also answered my queries without hesitation. He gave me information on their system of working in their organisation and told me how survival strategies are conducted within their organisation. Last but not the least, I am thankful to the University of Mumbai for offering the project in the syllabus. I must mention my hearty gratitude towards my family, other faculties and friends who supported me to go ahead with the project.

EXECUTIVE SUMMARY
Today, in every organisation Corporate Restructuring as an activity is necessary - to expand the business or operations of the company, to carry on the business of the company more economically or more efficiently, cost Reduction by deriving the benefits of economies of scale, obtaining tax advantage by merging a loss making company with a profit making company, to have access to better technology, to have better market share, to overcome significant problems in a company. It helps to become Globally Competitive and to eliminate competition between the companies. Corporate Restructuring is only possible with the help of the following tools and strategies Amalgamation Merger Demerger Reverse Merger Joint Venture Takeover/Acquisition The case study examines the emergence of Canon India, a part of the Japanese imaging major Canon Inc., as a leading digital imaging company in India. It begins with a discussion on the reasons for Canon India's lackluster performance after its inception in 1997. The case then examines the rationale for the company's decision to restructure its operations in 2001. It discusses in detail the company's restructuring initiatives that involved an overhaul of its product, brand-positioning, advertising, promotion, and sales and distribution strategies. The case lists the benefits reaped by Canon India from the restructuring exercise and examines its future prospects in light of the changing dynamics of the Indian IT Peripherals and digital imaging markets. However, there is a great deal of controversy and the issue is The nature of the Indian IT Peripherals and imaging market in the early 21st century, the product/service offerings involved and the prevailing competitive situation Appreciate why it is imperative for companies to revamp their strategies in accordance with changing market trends So , through my project I will try to decipher why Canon Inc. tried to reconstruct in order to survive in the digital market from competitors like Nikon , XEROX etc. and what strategies were adopted by them to get back on track after the 1997 crisis.

Index Sr.No.
Chapter I 1.1 1.2 1.3 Chapter II 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 Chapter III Chapter IV Chapter V Chapter VI Chapter VII

Topic
Introduction to the Study Aim of the Study Objectives of Study Importance of the Study Corporate Restructuring About Corporate Restructuring Objectives of Restructuring Need and Purpose of Restructuring Strategies for Restructuring Reasons for Restructuring Symptoms for Restructuring Factors for Successful Restructuring Process Measuring Results Methods Tools for Reconstructuring Research Methodology Case Study Limitations Conclusion Bibliography

Chapter I Introduction to the Study

1.1 Aim of doing the project:


To implement the learning of Corporate Restructuring in Strategic which is a part of our syllabus, and to be able to understand the topic better through my presentation on the topic through a case study Canon Inc.s Survival Strategy through Corporate Restructuring

1.2 Objective of doing the project


To implement our learnings of the presentation in my study. To be upgraded with the particle business life and the aspect of the needs of corporate restructuring in a company. To study the Restructuring strategies adopted by Canon Inc. to survive in the digital market after the 1997 crisis and evaluate its benefits in context of the cut-throat competition it faces with heavyweight competitors like Xerox and Nikon To study the effectiveness of the Corporate Restructuring System adopted by companies, Canon Inc. in general.

1.3 Importance of the study


The present study is expected to identify the strategies and key factors required for surviving in the market due to cut-throat competition. This study will also enable us to understand the problems faced by Canon Inc. due to competition in the digital market from heavyweights like Xerox and Nikon and how they overcame these problems through recon structuring.

Chapter II Corporate Restructuring

2.1

About Corporate Restructuring


Restructuring is the corporate management term for the act of reorganizing the legal, ownership, operational, or other structures of a company for the purpose of making it more profitable, or better organized for its present needs. Other reasons for restructuring include a change of ownership or ownership structure, demerger, or a response to a crisis or major change in the business such as bankruptcy, repositioning, or buyout. Restructuring may also be described as corporate restructuring, debt restructuring and financial restructuring.

Executives involved in restructuring often hire financial and legal advisors to assist in the transaction details and negotiation. It may also be done by a new CEO hired specifically to make the difficult and controversial decisions required to save or reposition the company. It generally involves financing debt, selling portions of the company to investors, and reorganizing or reducing operations.

Corporate debt restructuring is the reorganization of companies outstanding liabilities. It is generally a mechanism used by companies which are facing difficulties in repaying their debts. In the process of restructuring, the credit obligations are spread out over longer duration with smaller payments. This allows companys ability to meet debt obligations. Also, as part of process, some creditors may agree to exchange debt for some portion of equity. It is based on the principle that restructuring facilities available to companies in a timely and transparent matter goes a long way in ensuring their viability which is sometimes threatened by internal and external factors.

Steps:

ensure the company has enough liquidity to operate during implementation of a complete restructuring

produce accurate working capital forecasts provide open and clear lines of communication with creditors who mostly control the company's ability to raise financing

Characteristics

Cash management and cash generation during crisis Impaired Loan Advisory Services (ILAS) Retention of corporate management sometimes "stay bonus" payments or equity grants

Sale of underutilized assets, such as patents or brands Outsourcing of operations such as payroll and technical support to a more efficient third party

Moving of operations such as manufacturing to lower-cost locations Reorganization of functions such as sales, marketing, and distribution Renegotiation of labor contracts to reduce overhead Refinancing of corporate debt to reduce interest payments A major public relations campaign to reposition the company with consumers Forfeiture of all or part of the ownership share by pre restructuring stock holders (if the remainder represents only a fraction of the original firm, it is termed a stub).

Improving the efficiency and productivity through new investments, R&D and business engineering.

2.2 Objectives of Corporate Restructuring.


1.Positioning the business to be more competitive By achieving Economies of Scale. By acquiring focus. By acquiring competition. By increasing efficiency By reducing expenses By acquiring larger market share or capacities 2.Surviving in an adverse economic climate. 3.Taking the business in an entirely new direction.

4.Restructuring of Debt 5.Rehabilitation of Business 6.Inviting new partners or Private Equity.

7.Settling Family Disputes or Family Arrangements Reliance Group 8. Succession planning. 8.Division of Assets among Promoters-Asian Hotels Limited-Trifurcation.

2.3 Need and Purpose To expand the business or operations of the company. To carry on the business of the company more economically or more efficiently To focus on core strength Cost Reduction by deriving the benefits of economies of scale. Obtaining tax advantage by merging a loss making company with a profit making company. To have access to better technology. To have better market share. To overcome significant problems in a company. To become Globally Competitive. To eliminate competition between the companies. To reduce the cost of operations for the company. To make company more competitive as compared to other peers in industry. To reduce the interest burden for the company.

2.4 Restructuring strategies


Organizational Restructuring Strategy In this strategy the terms downsizing, redesign and layoffs are often used. Organizational restructuring will normally change the levels of management in the company, effect the span of control or shift product boundaries. There is also a change in production procedures and compensation associated with this strategy. Reduction in the work force is the main by-product that accompanies organizational restructuring and is the reason for the least positive impact on organizational performance.

Financial Restructuring Strategy This type of restructuring is identified by changes are in the firm's capital structure. Changes can include debt for equity swaps, leverage buyouts (LBOs), or some form of recapitalization. In a financial restructuring that is in the form of a LBO, there is an immediate influx of free cash flows, organizational efficiency is enhanced and the company refocuses on the core business. Additionally, long-term performance of the organization is significantly improved after the LBO. Note that LBOs of divisions have greater improvement in efficiency than when the entire company is acquired

Portfolio Restructuring Strategy Companies involved in acquisitions, divestitures, or spin-offs are mainly using a portfolio restructuring strategy. This type of strategy includes selling off those business units that are drawing down operations or spinning off business units to raise more capital. The organization's objective is to regain its perspective on the core business. Portfolio restructuring has the best results when the firm uses the spin-off strategy and count on subsequent mergers rather than sell-offs

2.5 Reasons for Restructuring The three primary reasons for restructuring: 1. To address poor financial performance. Declining or stagnating sales, accounting losses, or a falling stock price are usually the warnings. In extreme cases such poor performance may cause the company to default on its debt, resulting in bankruptcy. 2. To support a new corporate strategy, or to take advantage of a business opportunity. In an equity spin-off, for example, a diversified firm's businesses are split apart into independent entities, each with its own common stock. Spin-offs can make sense when a high-growth business is being held back by a bureaucratic corporate parent, or when it no longer makes sense for a company to be vertically integrated. In this case, a sign that restructuring may be necessary when the stock market is valuing the entire company for less than what its separate businesses would be valued for if they were separate, independentlytraded companies. Restructuring is required to correct a large error in how the company is valued in the capital market. 3. To correct a large error in how the company is valued in the capital market. In large diversified companies that operate in many different businesses even if the businesses may be well-run, investors may place too low a value on the overall portfolio. Restructuring tools like tracking stock, stock buybacks, or leverage buyouts, can be used to reduce this kind of value gap.

2.6 Symptoms for Restructuring Symptoms indicating the need for corporate restructuring include: The market(s) perception about the organization is deteriorating. The company has difficulties in paying or is unable to pay off its debts. Sales are declining. Stock price is falling. New skills and capabilities are required to meet operational requirements. Accountability for results are not clearly communicated and measurable resulting in subjective and biased performance appraisals. Parts of the organization are significantly over or under staffed. Organizational communications are inconsistent, fragmented, and inefficient. Technology and innovation are creating changes in workflow and production processes. Significant staffing increases or decreases are contemplated. Personnel retention and turnover is a significant problem. Workforce productivity is stagnant or deteriorating. Morale is deteriorating.

2.7 Factors for Successful Restructuring Key factors for successful restructuring include: Setting specific short- and long-term objectives to be achieved through restructuring; Planning growth scenarios after restructuring in advance; Defining core businesses and focusing on them; Developing a restructuring plan toward superior shareholder value; Demonstrating leaders' commitments to restructuring; Sharing a restructuring plan across the group organizations; Setting objective criteria to identify candidates for restructuring; Assessing restructuring alternatives and selecting the best option; Finding the right partners to complete the transactions; Executing restructuring in a swift and intensive manner; Monitoring the progress of a restructuring plan on a regular basis; Involving external advisors in the restructuring process. Preemptive Restructuring Organizations could benefit by restructuring before they are hit with a crisis; a preemptive restructuring may often be appropriate. If an organization waits too long to address problems with its business, the resulting restructuring may be very painful as the options remaining will definitely be fewer. A preemptive restructuring may deter executives from taking the full measures that are necessary to return the business to a sound footing whereas a resulting restructuring may severely disrupt the business. If, for example, it is necessary to layoff 20% of your workforce

to achieve the same cost efficiency as your competitors, better to do this over several years than all at once. The key is to recognize the problem as early as possible. Organizations must perform a "restructuring audit" on their businesses periodically, looking for opportunities to create value by voluntarily restructuring, before circumstances leave them with no choice.

Prior to Restructuring Make sure that that the organizations owners, leadership team and directors are personally protected. When the organization is in trouble or under restructuring, it is vulnerable to lawsuits from creditors and others wanting to cash in on its distress. The organization should make sure that its top leaders are protected by a Directors and Officers policy. Real estate planning should be encouraged to help protect personal assets against personal lawsuits. By knowing that everyone is safe, the organization can focus and devot e all efforts against restructuring. Oversee all cash collections and payments. The CEO must take complete control of cash (how, depends on the size and existing structure of the organization). If cash is controlled it cannot be overspent.

2.8 Process- The Restructuring Process


As companies are coming under more pressure to create shareholder value they will become engaged in divestitures of underperforming business units or subsidiaries. The pattern of a typical corporate restructuring process calls for an organization to stabilize its financial situation, return to profit and then focus on growth. If companies incur excessive debts and suffer from deteriorating cash flows, short-term measures will need to be taken immediately to generate cash for debt payments and stabilize the financial situation. To release cash (and thus reduce debts), organizations can sell off fixed assets or underperforming businesses and rationalize working capital, e.g., accelerate debtor collections, extend creditor payments or reduce inventories. The priority in this phase (financial restructuring), is to stabilize financial situations. In parallel, companies will need to strengthen their core businesses so that they can generate enough cash to finance subsequent growth initiatives; no growth initiatives can commence without having strong core businesses. To improve profitability in core business, companies must redesign and streamline business processes. Such efforts can be extended to the entire supply chain; business rebuilding. This involves the whole range of the organizations business activities, including strategies and individual business processes (financial and operational restructuring). When organizations have improved the efficiency of their core businesses sufficiently, they are poised to shift emphasis from short-term profitability to longterm profitable growth. To sustain growth, companies need to launch new products and develop new markets; value-building growth. Growth initiatives usually take several years to yield results. Consequently, companies will need to consider frontloading of growth initiatives. In many cases, business rebuilding and value-building growth take place simultaneously rather than one after the other.

However, unless the company undergoes organizational restructuring it is more than likely that the inefficiencies that forced the company to undergo financial restructuring in the first place will surface again. Alternative Divestiture Structures There are three basic ways to divest a subsidiary: sell-off, equity carve-out and spin-off. Other methods of divesting a subsidiary include corporate splits and tracking stocks. Corporate splits are commonly used to effect intra-group corporate restructurings and to prepare a business for divestiture. A tracking stock is a specialized option for a parent company to realize hidden value in a business unit or subsidiary while retaining control of the unit or subsidiary concerned. Moreover, a spin-in is the acquisition of minority shares in majority-owned subsidiaries. Consequently, majority-owned subsidiaries become wholly-owned subsidiaries. In many cases spin-ins are executed with the aim of implementing group-wide restructuring and are followed by further divestitures. Last but not least, a joint venture can be used as a means of acquiring or exiting a business in two stages. In the first stage, a parent company and its partner company create a joint venture company. In the second stage, the parent company sells its remaining shares of the joint venture to the partner after a certain period of time. To achieve value-building growth, companies must develop and maintain balanced business portfolios. No growth can be achieved without having strong core businesses; cash flows generated by core businesses are essential to fund for growth initiatives. Yet strong core businesses alone do not guarantee value-building growth. To develop and maintain balanced portfolios, the challenge is to nurture promising options while reviewing frequently the growth potential of each business and divesting quickly underperforming businesses with diminishing potential or distracting noncore businesses. Growth initiatives call for funds, management time and other resources. Divestitures of underperforming or non-core businesses can often release tied-up resources and thus can create capacity for growth. The two cornerstones of successful divestitures are: Deliberate use of interim solutions to an eventual exit; and Laying the groundwork for creating a stand-alone entity. The methodology of restructuring is basically based on a strategic planning process. This consists of three phases: The Diagnostic Phase. Diagnosis of the company through Strategic Appraisal and Due Diligence (Financial, Operational, Macro-Environment, Legal). The Planning Phase. Preparation of the Strategic Improvement Plan. Define corporate objectives and strategies. The Implementation Phase. Restructuring, including monitoring of progress and revisions of the previous phases.

2.9 Measuring Results


Results of restructuring strategies can be measured by one of two performance standards, i.e. market performance or accounting performance. Market performance The market performance standard addresses the stock price of the organization following a restructuring. The changes can be directly attributed to restructuring action are short term indicators of how the restructuring has effected the organizations performance. Accounting Performance To determine long term performance of an organization accounting standards (financial ratios) are used to calculate restructuring performance. A comparison is made on financial ratios ROI (Return of Investment) and ROE (Return on Equity) of pre-restructuring and post-restructuring data over several periods and years. The results using this method take longer to obtain but can give a clearer picture to whether the restructuring objectives have been met.

2.10 Methods
1.Sell-offs A sell-off is the sale of a business or subsidiary of the parent company to another firm outside the group, generally resulting in a payment of cash to the parent. In theory, sell-offs are the least complex of restructuring structures. Acquirers can usually be divided into two groups: strategic buyers and financial buyers. Strategic buyers are those who are interested in acquiring a business for strategic purposes, e.g., increasing market share, creating economies of scale or exploiting synergies; they are typically companies engaged in the same business as, and therefore competing with, the business or company under consideration. In contrast, financial buyers are those who are interested in acquiring a business to secure a financial return in the short- to medium-term before selling the business or otherwise exiting the investment. Financial buyers are likely to be buyout firms. Buyout firms raise funds in order to be able to take equity stakes in companies though funding and assisting with management buyouts (MBOs) and leveraged buyouts (LBOs). Buyout firms generally focus on established companies with potential to grow after transformation. Non-core divisions and subsidiaries of large public companies are their typical targets. 2.Equity Carve-outs An equity carve-out is the sale of an equity interest in a subsidiary to public investors in an IPO or to professional investors in a private placement. Equity carve-outs come in two forms: minority carve-outs and majority carve-outs. A minority carve-out occurs when a parent company sells a minority interest in a wholly-owned or majority-owned subsidiary to investors while retaining the majority interest. A majority carve-out involves the sale of a majority interest in a wholly-owned or majority-owned subsidiary to investors. It should be noted that the preparation for either an IPO or a private placement to professional investors takes longer than that for a sell-off. In addition, a parent company will have to ensure that a carved-out subsidiary should be a viable independent company. This is often the most difficult part of the preparation for an equity carve-out. Main benefits of a minority carve-out: After a minority carve-out, the parent company continues to remain in control of the subsidiary; It allows the parent company to take advantage of a high valuation of part of its operations and provides opportunities to raise capital on advantageous terms;[ If the minority carve-out unlocks value and a higher-rated or higher value stock is created (in aggregate), the stock of the parent company (or subsidiary) has more value as an acquisition currency; It gives the subsidiary time to become a stronger company before a sale or majority or full carve-out; It may create business opportunities for the subsidiary by demonstrating that the subsidiary will be an independent business; and A minority carve-out IPO allows the subsidiary to offer market-linked or other equity incentives to management. Disadvantages of the minority carve-outs include: The parent company maintains control of the subsidiary, which may cause a potential conflict of interests with the minority shareholders of the subsidiary; If the initial public float is too small, it may fail to attract institutional investors; Small public floats may increase the volatility of the stock;

In difficult markets, a minority carve-out may impede a selling strategy by setting a price for the shares of the subsidiary which is below their "real" value; and A minority carve-out may reduce the flexibility with which the parent and subsidiary can cooperate to capture synergies. The parent should anticipate that a minority carve-out is often an interim solution. In most cases, a minority carve-out is later followed by another transaction, such as a sell-off, followon public offering or spin-off. In practice, a minority carve-out is likely to lead to complete separation over time because the carved-out subsidiary tends to drift away from and interact less with the parent due to its independence. In addition, the carved-out subsidiary, if it becomes a publicly listed company, will issue its own financial statements and establish a public market value, resulting in the increased possibility of a merger (or takeover) offer. A minority carve-out IPO may be combined with a later spin-off. If unsuccessful, the minority carve-out may be followed by a spin-in, i.e., the parent company acquires the shares held by minority shareholders and turns the majorityowned subsidiary into a wholly-owned subsidiary. When a substantial or complete separation is desired, a majority carve-out may be implemented (again usually by way of an IPO or private placement). A majority carve-out is beneficial in the following ways: A majority carve-out may generate substantial cash for the parent and/or the subsidiary; A majority carve-out may allow the parent to terminate its responsibility toward the subsidiary; A majority carve-out means that there will be fewer potential conflicts of interests between the parent and the subsidiary after the carve-out than is the case with a minority carve-out; Notwithstanding that it will only be a minority shareholder, the parent may maintain a significant influence on the subsidiary after the carve-out; and A majority carve-out allows continued financial participation by the parent. Disadvantages of a majority carve-out include: Neither the parent nor its shareholders will participate fully in the upside of the subsidiary; and The parent will lose control over the subsidiary after the carve-out.

3.Spin-offs A spin-off (or demerger) often consists of the distribution of a subsidiary's stock to the parent company's existing shareholders by way of a dividend. A spin-off is a popular way of undertaking corporate restructuring in the U.S. and Europe. The main reason for the popularity of spin-offs is that the distribution can often be made tax free for both the parent corporation and the receiving shareholder. This can represent significant savings to the parent company. Spin-offs are a means to unlock the value of a subsidiary and transfer that value directly to the parent company's shareholders. It is especially useful for a subsidiary that does not completely fit with the parent company's core activities or would otherwise benefit from being a stand-alone public company. Spin-offs are also a means to obtain full value for the parent company's shareholders when a spun-off subsidiary is viable but will not command a reasonable price in a cash divestiture because of market conditions. Where the shares of the parent company are publicly listed, in order to ensure that the parent company's shareholders can realize the value of the distribution, the shares of the subsidiary generally need to be (or become) publicly listed to

give the shareholders the same liquidity in the shares in the subsidiary as they have in the shares of the parent, i.e., the parent will need to seek a public listing for the new shares. As is the case with equity carve-outs, the spun-off subsidiary must be a viable stand-alone entity to create shareholder value. This means that it must have a strong capital structure and a viable business model. This poses a major challenge for all spin-offs. In addition, spin-offs have disadvantages, including the following: Unlike an equity carve-out or a sale for cash, neither the parent company nor the subsidiary receives any cash in the transaction itself; The parent company loses the income and cash flow of the subsidiary without receiving any cash in return; Unlike a carve-out IPO, the shares are distributed to the parent's shareholders as a dividend and therefore the parent company may not work hard to create investor interest in the stock as much as in a carve-out IPO; and If the spun-off subsidiary fails to meet their investment criteria (e.g., minimum size of market capitalization or portfolio holdings), institutional investors of the parent company may sell the shares distributed to them in the spin-off.

4. Spin-ins Increasingly, companies are making majority-owned subsidiaries into wholly-owned subsidiaries. Such transactions are referred to as spin-ins. Often spin-ins are implemented through the share exchange procedure. Spin-ins allow a parent company to implement groupwide restructuring by streamlining overlapping businesses and redeploying assets and capabilities within the group. Consequently, spin-ins will often lead to divestitures.

5. Corporate Splits The corporate split procedure makes it easier for companies to split business units into new companies (or existing companies). Prior to the introduction of the corporate split procedure, it was possible for a company to split a business unit into a new subsidiary through either an investment-in-kind or a post-establishment transfer of business. However, the traditional methods to complete such transactions were expensive and time consuming procedures. For example, an asset valuation by a court appointed inspector was required. A corporate split which does not involve the distribution of shares directly to the shareholders of a transferor company) enables a parent company to: Focus on core businesses; Improve the control span of the parents management team by reducing parental involvement; and Accommodate differing personnel and compensation systems. At the same time, such splits enable a parent company to unlock the value of a business unit by: Clarifying the business units responsibility and authority; Providing a certain degree of autonomy to foster an independent culture; Expediting the business units decision-making to improve business performance; and Enhancing visibility for customers, suppliers and potential alliance partners or buyers.

More significantly, corporate splits facilitate the participation of strategic partners who can provide necessary capabilities.

6. Tracking Stocks Tracking stock is a class of parent company common stock that provides a return to investors linked to the performance of a particular business unit within the parent company. In theory, tracking stock can create many benefits for both the parent company and the subsidiary. A tracking stock does not require the parent company to make the tax, legal, governance and organizational changes required for an equity carve-out or spin-off, e.g., no separate board of directors is required. This provides the main appeal to the parent company over other alternatives. The advantages to using tracking stocks include: The parent company continues to control the business unit and maintain ownership of its assets; A tracking stock can raise capital on attractive terms; A publicly listed tracking stock establishes a market value for the business to which management compensation programs can be tied; A tracking stock preserves the operating benefits of a single, integrated corporation; and The parent company may use the tracking stock as acquisition currency. The disadvantages of a tracking stock include the following: The parent company issuing a tracking stock must create financial "firewalls" between the business and the rest of its operations; The parent company will shoulder the administrative burden in connection with a tracking stock; A company that issues a tracking stock creates the potential for a conflict at the board level between the interests of the two sets of shareholders; and Investors may not give as much value to the tracking stock as if shares represented a direct ownership interest in the assets of the tracked business. Tracking stocks are often terminated when the circumstances and objectives of the business and/or parent company change and consequently the parent company decides to sell, spin off or spin in the tracked business.

2.11 TOOLS OR STRATEGIES OF CORPORATE Amalgamation Merger Demerger Joint Venture Takeover/Acquisition 1. Amalgamation .Amalgamation is defined as a simple arrangement or reconstruction of business. It is a process that involves combining of two or more companies as either absorption or as blend. Two or more companies can either be absorbed by an entirely new firm or a subsidiary powered by one of the basic firm. In such cases all the shareholders of the absorbed company automatically become the shareholders of the ruling company as the amalgamating company loses its existence. All the assets and liabilities are also transferred to the new entity.

Amalgamation has given different forms to different actions in due course of the merger taking place. It can either be classified in the nature of merger or in the nature of purchase. If the process takes place in the nature of merger then the all assets, liabilities, and shareholders holding not less than 90% of equity shares are automatically transferred to the new company or the holding company by virtue of the amalgamation. When amalgamation takes place in nature of purchase then the assets and liabilities of the company are taken over by the ruling company. All the properties and characteristics of amalgamating company should vest with the other company. Even the shareholders holding shares not less than 75% should transfer their shares to the transferee company. In such a case any company does not purchase the business resulting in a takeover, the transferor company does not completely lose its existence.

2.Merger Business deals are often referred to as mergers when they are really acquisitions. This is mainly done as a public relations ploy to soften any hard feelings among the company being acquired and its key customers. A true merger occurs when two or more companies of roughly equal size come together to form a new entity. In this scenario, money need not change hands from one company to another. In an acquisition, a company is paying cash or stock for an ownership stake in another company. The acquired company then becomes part of the parent organization. Although the word "merger" is used often, most deals that join separate companies are technically acquisitions.

Horizontal Mergers Horizontal mergers occur when two companies sell similar products to the same markets. A merger between Coca-Cola and the Pepsi beverage division, for example, would be horizontal in nature. The goal of a horizontal merger is to create a new, larger organization with more market share. Because the merging companies' business operations may be very similar, there may be opportunities to join certain operations, such as manufacturing, and reduce costs. Vertical Mergers A vertical merger joins two companies that may not compete with each other, but exist in the same supply chain. An automobile company joining with a parts supplier would be an example of a vertical merger. Such a deal would allow the automobile division to obtain better pricing on parts and have better control over the manufacturing process. The parts division, in turn, would be guaranteed a steady stream of business. Market Extension Mergers The main benefit of a market extension merger is to help two organizations that may provide similar products and services grow into markets where they are currently weak. Rather than try to establish a retail presence in Europe, Wal-Mart could merge with a European retailer that is already successful and has good brand recognition. Even though the two organizations are both big-box retailers selling similar products, they have found success in different parts of the world. As a single organization, they have a diverse, global presence.

Product Extension Mergers Two companies may merge when they sell products into different niches of the same markets. A manufacturer of high-end stoves may merge with a company that makes budgetconscious models. The combined organization now has a complete product line that spans various price points. Conglomerate Mergers Conglomerate mergers occur when two organizations sell products in completely different markets. There may be little or no synergy between their product lines or areas of business. The benefit of a conglomerate merger is that the new, parent organization gains diversity in its business portfolio. A shoe company may join with a water filter manufacturer in accordance with a theory that business would rarely be down in both markets at the same time. Many holding companies are built upon this theory.

3. Acquisition An acquisition or takeover is the purchase of one business or company by another company or other business entity. Such purchase may be of 100%, or nearly 100%, of the assets or ownership equity of the acquired entity. Consolidation occurs when two companies combine together to form a new enterprise altogether, and neither of the previous companies remains independently. Acquisitions are divided into "private" and "public" acquisitions, depending on whether the acquiree or merging company (also termed a target) is or is not listed on a public stock market. An additional dimension or categorization consists of whether an acquisition is friendly or hostile. "Acquisition" usually refers to a purchase of a smaller firm by a larger one. Sometimes, however, a smaller firm will acquire management control of a larger and/or longerestablished company and retain the name of the latter for the post-acquisition combined entity. This is known as a reverse takeover. Another type of acquisition is the reverse merger, a form of transaction that enables a private company to be publicly listed in a relatively short time frame. A reverse merger occurs when a privately held company (often one that has strong prospects and is eager to raise financing) buys a publicly listed shell company, usually one with no business and limited assets. 4.Demerger Demerger is a form of corporate restructuring in which the entity's business operations are segregated into one or more components It is the converse of a merger or acquisition. A demerger can take place through a spin-off by distributed or transferring the shares in a subsidiary holding the business to company shareholders carrying out the demerger. The demerger can also occur by transferring the relevant business to a new company or business to which then that company's shareholders are issued shares of. Demergers can be undertaken for various business and non-business reasons, such as government intervention, by way of anti-trust law, or through decartelization

5.Joint Ventures

When well crafted, joint ventures (JVs) can achieve many of the same objectives for the parent company as an acquisition of the other company, including access to the resources and capabilities of the joint venture partner, but at a lower cost and without many of the risks associated with an acquisition. Consequently, the parent can increase the value of a subsidiary by way of a JV. Successful JVs are often followed by IPOs. Joint ventures may be also used as a means of divesting a business. The first step is the creation of a JV with a strategic partner. Often the strategic partner controls a major stake (i.e., over 50%) in the JV company. The second step is the acquisition of the minority shares of the JV company by the strategic partner. Such two-stage transactions provide the acquiring partner with benefits, including the following: A means to encourage the partner to assist in building the business; A means to get to know the business before a subsequent acquisition; and A means to lay the groundwork for smooth integration after a later acquisition. Buy-out firms are active buyers of non-core subsidiaries of large public companies. Although JVs are not their traditional business model, buyout firms may be interested in forming JVs. Such buyout partnerships can be used as a means of divesting non-core businesses when a cash sale is unavailable or undesired. The advantages of a buyout partnership for the parent company and the subsidiary include: A means to encourage the partner to assist in building the business; Experienced buyout firms can greatly assist in building the subsidiary, recruiting a management team, forming relationships with customers and setting business strategy; Buyout firms invest cash into the subsidiary and assist in funding key business initiatives; The involvement of experienced and respected buyout firms may be a significant asset to the subsidiary in a later IPO. The challenges of a buyout partnership for the parent company and the subsidiary include: A buyout firm may not invest in an entity when the parent company is in control;; and Buyout firms are usually interested in executing an exit strategy within a reasonable time frame.

Chapter 3 Research Methodology


Research is simply a systematic and refined technique of thinking, employing specialized tools, instruments, and procedures in order to obtain a more adequate solution of a problem than would be possible under ordinary means. It starts with a problem, collects data or facts, analysis these critically and reaches decisions based on the actual evidence. It evolves original work instead of mere exercise of personal. It evolves from a genuine desire to know rather than a desire to prove something. It is quantitative, seeking to know not only what but how much, and measurement is therefore, a central feature of it. OBJECTIVES: To implement our learnings of the presentation in my study. To be upgraded with the particle business life and the aspect of the needs of corporate restructuring in a company. To study the Restructuring strategies adopted by Canon Inc. to survive in the digital market after the 1997 crisis and evaluate its benefits in context of the cut-throat competition it faces with heavyweight competitors like Xerox and Nikon To study the effectiveness of the Corporate Restructuring System adopted by companies, Canon Inc. in general.

HYPOTHESIS: STUDY AREA AND PROBLEM DEFINITION:

1. The nature of the Indian IT Peripherals and imaging market in the early 21st century, the product/service offerings involved and the prevailing competitive situation 2. Appreciate why it is imperative for companies to revamp their strategies in accordance with changing market trends

Chapter IV Case Study

Canon Inc.
Canon's history dates back to 1933, when Goro Yohsida (Yoshida) and his brother-inlaw Saburo Uchida (Uchida), laid the foundation for the company by establishing the Precision Optical Instrument Laboratory in Japan. The founders aimed at developing high grade cameras that could compete with the German models, which were considered as the most advanced in those times. To reach this goal, they undertook an extensive research of camera models available and then came up with their own design. The research was funded by Takeshi Mitarai (Mitarai), a friend of Uchida. In 1934, Precision Optical Instrument Laboratory was registered as Precision Optical Industry Co. Ltd. In the same year, the company developed the first prototype, which was named 'Kwanon.'

However, as 'Kwanon' was an old-fashioned name, the founders felt it would be better if they gave the brand a new name before launching it in the market. They wanted a more modern- sounding name that reflected the image of a premium class camera. Yoshida and Uchida finally chose 'Canon' as the brand name. Canon cameras, launched in the 1930s were a huge success and had a major impact on the camera industry in Japan. Fueled by this success, the company grew rapidly through the mid-1930s.

In 1942, Mitarai became the company's President and laid the groundwork for Canon's evolution into a global company. In 1947, the company's name was changed from Precision Optical Industry Co. Ltd. to Canon Camera Co. Inc. During his 32year tenure (1942-1974), Mitarai formulated many management policies and techniques on which the modern Canon is founded. He also set the company on the diversification path by venturing into manufacturing and marketing other imaging products such as printers, photocopiers (copiers) and digital devices serving the home, office and industrial markets worldwide.

History
1937 to 1970
The origins of Canon date back to the founding of Precision Optical Instruments Laboratory in Tokyo in 1937 by Takeshi Mitarai, Goro Yoshida,Saburo Uchida and Takeo Maeda. During its early years the company did not have any facilities to produce its own optical glass, and its first cameras incorporated Nikkor lenses from Nippon Kogaku K.K. (the later Nikon Corporation).[5] Between 1933 and 1936 The Kwanon, a copy of the Leica design, Japans first 35 mm focal plane-shutter camera, was developed in prototype form.[6] In 1940 Canon developed Japan's first indirect X-ray camera. Canon introduced a field zoom lens for television broadcasting in 1958 and in 1959 introduced the Reflex Zoom 8, the worlds first movie camera with a zoom lens, and theCanonflex. In 1961 Canon introduced the Rangefinder camera, Canon 7, and 50mm 1:0.95 lens in a special bayonet mount. In 1964 Canon introduced the 'Canola 130', the first Japanese made 10-keycalculator, a substantial improvement on the design of the British Bell Punch company, which introduced the first fully electronic calculator two years earlier with the Sumlock Anita Mark 8 unit. In 1965 Canon introduced the Canon Pellix, a single lens reflex (SLR) camera with a semi-transparent stationary mirror which enabled the taking of pictures through the mirror.

A logo from 1934 depictingBodhisattva Kwan'on

An early Seiki Kogaku Hansa-Canon with 3.5/50mm Nikkor lens

A Canon 7

A Canon Pellix

1970 to 2010

A Canon F1

A Canon AE-1

A Canon EOS 650

About Canon India


Incorporated in 1997, Canon India Pvt. Ltd. is a 100% subsidiary of Canon Singapore Pte.Ltd; a world leader in imaging technologies. Canon today has offices spread across 10 cities in India with an employee strength of over 1100 people and markets 140 comprehensive range of sophisticated and contemporary digital imaging products in the country. These include digital copiers, multi-functional peripherals, faxmachines, inkjet and laser printers, scanners, All-in-ones, digital cameras, digital camcorders , dye sub photo printers and semiconductors, card printers & cable ID printers. Canon has pioneered five technology 'imaging' engines viz: Optical Engine, Electrophotography, Bubble Jet, Semiconductors and Display which drives Canon's cutting-edge technology products. With over 1100 registered patented technologies in Digital Cameras, 2300 in inkjet printers, 5600 in multifunctional printers and more than 200 in scanners, Canon has emerged as one of the leading technology innovators in the digital imaging space worldwide. Canon India forayed into retail space with the launch of its exclusive brand retail store called "Canon Image Square." Canon has inaugurated 50 stores in 2011, added 43

stores in 2012, and targets to take the count to 300 stores by end of 2014. Canon's unique initiative to tap B, C and D-class cities of the country, Canon Image Express, reached 38 cities in Tier II and Tier III towns. With the acquisition of Oc Canon was positioned as the undisputed leader in professional and display graphics printing domain in 2010. Canon India closed the year 2012 with revenues of Rs.1850crore, 21% growth over 2011. In 2011, Canon India was ranked as one of the top 25 Best Employers in India by Aon Hewitt. The extensive study was conducted across 6 months and 200 companies with a stringent methodology to arrive at the rankings. Metrics covering information on business performance, organization structure, and HR strategy, policies and metrics, employee survey of random population, CEO interviews and on site audit to validate accuracy of information provided and included interaction with HR teams, group discussions with employees and managers, discussion with the CEO, and facility tour of the organization. Canon takes pride in not only bringing quality products to the market; but also contributes to minimizing environmental burden through effective application of environmental technologies. Canon focuses on the development of resource conserving products that are smaller, lighter and easy to recycle. In India, Canon takes responsibility to dispose off end of life Canon products and other e-waste by sending such waste to government approved recycling agency. Today, Canon India is certified for ISO 9001, ISO 14001 and OHSAS 18001. In 2006 and 2010, the company was certified for its "Strong commitment to excel" at the CIIEXIM Business Excellence Award. Over the last 14 years of its India growth story, Canon's comprehensive range of the latest digital imaging products supported by a trained sales force across the country has emerged as its key differentiator. Canon has around 100 primary channel partners 14 National Retail Chain partners. Canon's service reach extends to over 2700 towns with over 200 service Engineers, 7 Canon owned service centers and 37 Canon Care Centers. Over 6000 secondary retail points including 400 National Retail Chain store partners. Canon products are available in over 400 towns in India. As part of the company's promise to enhance digital experience for consumers,Canon Image Lounge was launched in 2008 in Gurgaon, Mumbai and Bangalore for customers to get a touch and feel of Canon products. The lounges provided a comprehensive display of Canon's vast range of offerings and display over 101 consumer imaging products for consumers to simply look, feel and experience without the compulsion on buying. Special photography workshops and other customer engagement programmes were conducted in these lounges.

Key Highlights 2011-12 Canon has recently roped in Bollywood Actress Anuskha Sharma, a youth icon, as the brand endorser for its ICP Division and for a new Campaign for PIXMA Printers

In 2011, Canon India was ranked as one of the top 25 best Employers in India by Aon Hewitt. The extensive study was conducted across 6 months and 200 companies with a stringent methodology to arrive at the rankings. Canon's Original Ink Centres touched 1536 outlets across 176 cities in India Pioneer of 100% cash back offer on laser printers under CLAP, Canon Loyalty Achievement Program Canon India's presence in the retail space for its exclusive brand retail store called "Canon Image Square" and has inaugurated 65 stores. 5% revenue comes from retail division for Canon India In order to reach out to digital photography enthusiast, Canon organized over 40 photography workshops across India in 2011 Canon launched a variety of technologies for digital cameras, camcorders, lenses, printers and MFDs in 2011 Canon is featured in VentureOutsource.com's list of top 100 people influencing global electronics manufacturing services (EMS) for the year 2012 As a part of Corporate Social Responsibility, Canon had launched the Green Cycle Program in 2010 for Printer and Cartridge E-Waste management. Canon has tied up with authorized EWaste recycler TIC Group India Pvt Ltd who would be collecting and disposing the e-waste from the 45 OIC's.

As a part of the company's Corporate Social Responsibility, Canon initiated the 1 Month eye screening camp i-Care in 2011, and also undertook the initiative of making Gurgaon green by planting more and more trees in Gurgaon. The company is expected to invest over 35 lacs towards CSR activities this year.

Recent Accolades: "Best Imaging Device of the year", at NDTV Gadget Guru Awards 2012, for Canon PSA 100 Digital Camera "Best SLR Camera", awarded by Better Photogrpahy to EOS 1100D "Best Professional DSLR of the year" awarded by Smart Photography magazine for EOS 5D Mark II "Best mid priced DSLR of the year" by Smart Photography magazine for EOS 600D Asian Photography's "Digital SLR camera of the year, professional" for EOS 5D Mark II Smart Photography magzine's "Reader's Choice award" for camera of the year under the Best Compact Digital Camera and Best Bridge camera of the year category for SX40HS "Best Rated Professional DSLR", for the Canon EOS 5D II by Maxim magazine "Best Camera in the Point & Shoot Category" at TechLife Awards 2012 for Canon PowerShot S95

Awards and Recognitions in 2011 In 2011, Canon India was ranked as one of the Top 25 Best Employers in India by Aon Hewitt Dr. Alok Bharadwaj, Executive Vice President, Canon India, was appointed as the President of MAIT; and Chairman of CII Office Automation & Imaging division in 2011 Canon imaging products received multiple awards across various categories in 2011 such as Digital Camera (25), Digital SLR Camera (15), Camera Lenses (2)

Mr. Kensaku Konishi, former President and CEO, Canon India, was felicitated with the "2011 IMM Award for Excellence as Top CEO" award by Institute of Management and Marketing Dr. Alok Bharadwaj is amongst the "Global Top 100 People" Influencing Electronics Manufacturing Services (EMS). He has received the "Pride of the Industry" Award and also the prestigious "Best CMO" Award by the CMO council Canon India got certified as ISO 9001, ISO 14001, CMM Level 3 and OHSAS 18001 for Quality Control

Awards and Recognitions in 2010 The list of product awards received in 2010 is as follows: Manufacturer of the Year- Smart Photography Best Camera Company of the Year-Smart Photography Best Printer Company of the Year: Inkjet- Smart Photography Best Professional Printer of the Year-Asian Photography Digital Camera 11 Digital SLR 9 Canon Lenses 3 Best Buy by Digit-iP 3680

Awards and Recognitions in 2009 The list of product awards received in 2009 are as follows: Digital Camera 21 Digital SLR 9 Canon Lenses 5 Living Digital recommended- Lide 100 Best Buy Digit- PIXMA iP 1980 Kazutada Kobayashi is the President and CEO of Canon India. Under Kobayashi's leadership, Canon will further its focus on continued growth by bringing innovative products and solutions to the Indian market. Dr. Alok Bharadwaj, Executive Vice President was awarded the most influential person in photography this year. He has also received the 'Pride of the Industry' award. Dr. Alok is also the receiver of the prestigious award of the Best CMO by the CMO council. He is also amongst the "Global Top 100 people influencing electronics manufacturing services (EMS)". Canon was also featured in the Digit- Icons of Trust survey wherein, Canon ranked No 1 in Digital Cameras and No 2 in Printers in 2009. 4Ps survey also positioned Canon as one amongst the 100 Most Valuable Brands with a rank of 87 in 2009. Apart from this, Canon stood at 87th rank in the Powerbrands survey of top 100 brands in India in 2009.

Products Of Canon
1. 8 mm and Super 8 mm film Projectors 1.1 Regular 8 mm projectors 1.2 Dual 8 mm (Super 8 mm and Regular 8 mm) projectors 1.3 Super 8 mm projectors 2 Cameras 2.1 SLR cameras 2.1.1 FL-mount SLR 2.1.2 FD-mount SLR 2.1.2.1 F series 2.1.2.2 A series 2.1.2.3 T series 2.1.3 EOS 2.2 Digital SLR cameras 2.3 35 mm compact cameras 2.4 35 mm compact half-format cameras 2.5 35 mm rangefinder cameras 2.5.1 Regular 8 mm cameras 2.5.2 Single 8 mm cameras 2.5.3 Super 8 mm cameras 2.5.4 16mm cameras 2.6 Digital compact cameras 2.6.1 IXUS/IXY/PowerShot ELPH series 2.6.2 Canon PowerShot digital cameras 2.6.2.1 PowerShot A series 2.6.2.2 PowerShot D series 2.6.2.3 PowerShot E series 2.6.2.4 PowerShot G series 2.6.2.5 PowerShot Pro series 2.6.2.6 PowerShot S series 2.6.2.7 PowerShot T series 2.7 Camcorders 3 Electronic dictionaries (only sold in Japan) 3.1 Canon Wordtank 4 Portable flash 4.1 E line 4.2 EG line 4.3 EX line 4.4 EZ line 4.5 T line 4.6 Macro flashguns 4.7 Remote flash trigger 5 Multifunction peripheral/digital copiers 5.1 imageRUNNER series 5.2 Canon Laser series 5.3 CanoScan 6 Printers 6.1 BJ series 6.2 BJC series

6.3 i series 6.4 SmartBase series 6.5 MultiPASS Series 6.6 PIXMA series 6.7 SELPHY series 6.8 S series 7 Lenses 7.1 EF and EF-S line 7.2 FD line 7.3 FL line 7.4 Rangefinder line 7.5 TV line / C mount 7.6 Tilt-shift 7.7 Dedicated macro 8 Steppers for IC and LCD fabrication 9 Calculators 10 Software 11 Accessories

4.5 Canon India Marching Ahead


In April 2003, Canon India, a wholly-owned subsidiary of Canon Singapore (regional headquarters of Japan's global imaging major, Canon Inc.), won the prestigious 'Challenger 2003' award. The award was given by Skoch Consulting Services (Skoch), a leading strategy and marketing consultancy for the information technology (IT) industry in India. Canon India won this award for excellent performance in its inkjet printer2 business. Commenting on Canon's selection for the award, Sameer Kochhar, CEO, Skoch, said, "Canon sold 15% inkjet printers in a market size of 580,963 units. Additionally, Canon's performance in India has been commendable, considering that nearly 70% of its sales took place in non-metro areas, where the action is shifting."3Research conducted by Skoch revealed that Canon India was well poised for leveraging the growth in the inkjet printer market in the early 21st century. Skoch also stated that the company had the potential to double its marketshare by 2005. While receiving the 'Challenger 2003' award, Alan Grant, Managing Director, Canon India, said, "Canon is extremely pleased to receive the Challenger 2003 award. The award is a reinforcementof Canon's performance in the inkjet printer market and strengthens its positioning as the only complete digital imaging company in India."4 This award was one of the many positive developments in the company after June 2001, when Canon India set about to position itself as a complete digital imaging company, increase its marketshare and consolidate its presence in the Indian IT Peripherals market. As part of the restructuring exercise, it completely overhauled its product, marketing and, sales and distribution strategies. Analysts attributed the significant increase in Canon India's inkjet printer marketshare, from 3% in 2001 to 15% in early 2003, largely to this revamp. The company was now the second leading player in India's inkjet, scanner and multifunctional devices (MFD) market.

The Print Crisis Print industry crisis

Is the printer as a device going to be made dispensable? This is a justified question which however cannot be fully answered for the next couple of years. People still need printers. However, the number of alternatives has increased over the years. Conventional devices have a hard time keeping up with sales figures of recent years and decades while facing the success of tablets and smartphones, the best example being printers. The German print industry had to incur extreme losses in the last few years. Part of it can be blamed on the euro crisis in connection with the bad economic situation in Europa. However, the truth is that this development is continuing in stable years as well. During the first and second quarter of 2011, the German sales figures for printer and scanners have decreased compared to recent years. The sales of printers amounted to 370 000 items, flat base multi-function units to 1 532 000 items and scanners to 126 000 items. The crisis of 2011 has been overcome in most industries. However, the multi-function units seem to be the only items to succeed in leading the print industry out of its personal crisis. Most multi-function units do not only print, they can also send a fax, photocopy and scan. A couple of years ago, they were only used in companies. This has changed and now that these devices are more often used in private households as well the sales have been increased extremely. However this has led to decreasing figures for normal printers. The demand for multi-function units is the only thing which can ensure some kind of growth in the future. Additionally, companies try to increase sales and turnover by using consequential costs and selling more ink cartridges. The customers are dependent on buying the corresponding cartridges if they want their printer to continue working. It remains doubtful if this strategy will be able to save the whole industry. In the third quarter of 2012, Brothers's global market share in the sale of printers, coperts and multifunction devices amounted to 7.0 percent. HP: 37.30 percent Canon: 20.90 percent Epson: 15.20 percent Samsung: 5.0 percent

Example Canon Indias Merger with Mindtree


Customer Name MindTree Ltd. The Challenge Lack of document security and accountability Rising printing costs Paper and ink wastage Reduce environmental footprints The Solution uniFLOW imageRUNNERs eCOPY The Results Flexible printing with ease Maximum document security Increased document accountability Reduced wastage and printing costs Increased customer confidentiality

'Our success is built on a level of trust and confidence that our clients have with us. We wanted to look for a solution that could ensure this promise.' Mr. Sudhir Reddy, Chief Information Officer of MindTree

Business Overview Ranked 45th among the leaders in The 2009 Global Outsourcing 100 by the International Association of Outsourcing Professionals. Ranked no 1 among the Most Admired Knowledge Enterprise (MAKE) India Award winners for the third consecutive year in 2009. Winner of the National Award for Excellence in Corporate Governance in India in 2007-2008. MindTree's focus on innovation has ensured that they are constantly raising the bar for themselves and for the industry as a whole. And it was a bar that they intend to continue setting with Canon solutions in place. MindTree Ltd. is a global IT Solutions Company specializing in IT Services, Independent Testing, Infrastructure Management and Technical Support (IMTS), Knowledge Services and Product Engineering, which comprises of R&D Services, Software Product Engineering and Next in Mobility (N!Mo). MindTree partners with its clients to create a transparent, value-based relationship. Their people build innovative solutions on a wide range of technology platforms, helping their customers succeed in business.

The Challenge Canon India worked together with MindTree to create an optimal solution that meets their needs. "Just like MindTree, we believe that it is important to create a transparent, value-based relationship with our customers. We delve deep into the customer's environment, unified as a team, to understand their work processes and concerns in order to tailor a Canon solution that would be a right fit." said Mr K Bhaskhar, Director of the Enterprise Solutions Division in Canon India. Before Merger : Lack of security and accountability Confidentiality has always been the hallmark of MindTree success. Working with many global customers, it is imperative for the company to uphold a high level of trust and accountability. To MindTree, this is a cornerstone in building and growing long term relationships with customers. Commonly, MindTree has to sign Non-disclosure Agreements with their customers, as a declaration that all confidential information is kept secured within the compounds of their business dealings. Since MindTree was using network printers, there was a potential risk of printouts left uncollected at these devices. This created a risk of information leakage. In addition, with their current set of printers and scanners, they were unable to produce an audit trail or track print, scan and copy activities. Mr. Sudhir Reddy, Chief Information Officer of MindTree emphasized, "Ensuring security of our client's information is very important to us. Our success is built on a level of trust and confidence that our clients have with us. We wanted to look for a solution that could ensure this promise." Then: Increasing running costs and environmental concerns In Canon's study to evaluate the current workplace situation at MindTree, they noticed that the company had 60 network printers located across different offices. Due to the absence of a systematic way to track usage in the company, it became extremely difficult to impose meaningful controls over their large employee base. Apart from unnecessary printouts and single-sided printing, uncollected printouts or faxes were also common at the machines and that was a significant contributor to the increase in printing costs. In addition, all these problems were also hindering continuous efforts of MindTree to go green and conserve resources.

After Merger - The Solution Today: Secured print with ease, reduced cost and a bid for the environment Canon analyzed these concerns and other challenges related to flexibility, control and growth. The following 3 simple solutions were proposed to meet all their needs. imageRUNNERs. uniFLOW. eCOPY

uniFLOW enables users to print and collect documents from any Canon multifunction printer (imageRUNNERs). This helps staff to be more flexible in their printing as well as provide additional document security by ensuring that only the authorised user can activate and collect the documents at the device. User authentication is achieved by enabling SSO access to the device. Users will be able to pick up their documents at any machine throughout the office, instead of the previous need to pick them up at their selected printers, thus providing added convenience and improvement in productivity. By letting users authenticate and retrieve jobs at Canon machines, MindTree also reduced the number of printouts left in the tray, forgotten documents and even accidental multiple printouts which are often thrown away. Reports are also generated by the company, with details on who prints what, how it is printed (ie duplex, single sided), with which devices and how much it costs the company. With such reports, it is now possible to analyze the data and show users how much has been printed in each department. Security is also enhanced with eCOPY Sharescan Essentials. This provides the necessary audit trails to ensure that there is accountability on the scanning paths of all confidential documents in the office. Embedded within the imageRUNNER, it makes secure document imaging available to all their staff and with ease. Staff can now authenticate themselves with a single sign-on and be able to distribute documents directly to their network file folders and their Document Management System. With that, the company will be able to account for every single document each staff has scanned or distributed, to whom it has been sent to, when and how it was delivered. These 3 solutions allow MindTree to conserve, cut printing cost and most importantly, ensure that their promise of confidentiality is maintained. A success story! To ensure MindTree of the benefits of the proposed solutions, the Canon Team diligently worked with their IT team to study their infrastructure and conducted a Proof of Concept (POC) at their office premises. And, MindTree was convinced. Mr Ronnie, Senior IT Manager of MindTree commented, "I was impressed with the analysis that Canon has done to ensure a smooth transition. They worked as a team, with us, to ensure the solutions would perform seamlessly in our company, customizing it to work within our premise. We knew we could rely on Canon, not only for their innovative technology but for their services." With uniFLOW and eCOPY solutions implemented in August 2009, there was an overall reduction of 50% in paper consumption, 25% reduction in printing cost and a savings of USD$62,000 per year in MindTree.

Conclusion The Results Flexible printing with ease Maximum document security Increased document accountability Reduced wastage and printing costs Increased customer confidentiality

Other strategies adopted by Canon Inc to survive in the market


revamping the company's product, brand-building, promotion, sales and distribution, and customer service strategies. created ten core managerial positions. Five of these were designated as business development managers, for the regions of Chennai, Delhi, Kolkota, Mumbai and Pune. The other five were designated as managers in charge of product management, marketing programs, sales and marketing, support and coordination and consumer grievances. Apart from this, the company integrated the sales, marketing and support processes, which were previously operating as independent divisions. To ensure wider reach of its products, the company made each senior manager responsible for his offerings. The company then proceeded to revamp its sales and distribution operations. aggressive advertising and distribution strategies

Conclusion After using survival strategies through reconstruction of business By early-2003, as a result of the restructuring initiatives, Canon India had become a leading player in nearly all segments of the digital imaging market in India. Its position was especially strong in the printers, scanners, cameras, copiers and multimedia devices segments. Reportedly, the strategy of launching a range of new products every quarter, and its aggressive advertising and distribution strategies, had helped it establish itself as a company offering sophisticated, superior quality products. Canon India registered an impressive growth of 33% in 2002, with its revenues amounting to Rs 2.02 billion, as compared to Rs 1.51 billion in 2001. Reportedly, the company witnessed growth across all its business segments. In 2002, the inkjet printer business and scanner business registered growth of 313% and 656% respectively, while the fax business and digital copiers business grew by 180% and 242% respectively. Canon India's MFD segment registered a growth rate of 251% in the same year...

Chapter 5 Limitations
Obstacles to Restructuring Common obstacles to restructuring include: Denial of acknowledging problems: Organizations have tended to restructure only reactively in response to pressure and when action has become unavoidable. Saving jobs: Observed mostly in governmental organizations characterized by lifetime employment and seniority-based promotion employment security, saving jobs even at the expense of shareholder interests continues to sway executive decisionmaking. Internal politics and long-held tradition: Restructuring efforts can fail because the initiatives are not followed group-wide and are changed shortly after announcement, when politics and tradition stand in the way. Executives' disregard for shareholder value: Organizations divest their businesses, those businesses are often incurring heavy losses as a result of several years of poor performance; executives can be reluctant to divest underperforming businesses, even when they know that the divestiture will maximize the value for shareholders. Arrogance: Executive management believes that it knows how to solve the problems without outside help often ignoring changing market dynamics.

Chapter 6 Conclusion
Although restructuring is a valued tool for an organization to use in an attempt to maintain its goals and objectives many companies recognize the need to restructure too late, when fewer options remain and saving the organization may be more difficult. Canon India must stabilize its financial situation, return to profit and then focus on growth. In parallel, it must strengthen its core businesses so that it can generate enough cash to finance subsequent growth initiatives. Although focusing on core business alone is not enough! Canon India in order to achieve value-building growth, it must develop and maintain balanced business portfolios. The key challenge is to nurture growth options while divesting underperforming or non-core businesses proactively Restructuring is an on-going process and understanding the relationship between Canon India and its employees is the key not only to improving its ability to move through change effectively but to guarantee everlasting competitiveness with Xerox or Nikon As discussed in this project Canon should have done preemptively restructure. The more extensive the restructuring, the greater the growth prospects; the stronger the growth, the greater the need for restructuring.

Bibliography

Corporate Restructuring IIPM Journal Indore

http://www.varindia.com/April2007ChannelBuzz1.html http://articles.economictimes.indiatimes.com/keyword/canon/featured/5

Canon to restructure stepper division- Livemint Journal Canon%20to%20restructure%20stepper%20division%20-%20Livemint.htm Secrets Behind the Growth & popularity of Canon and Nikon (Infographic http://www.digitalpicturezone.com/featured/secrets-behind-the-growth-and-popularityof-canon-and-nikon/