Strategic Management

Case Analysis on

Omron Sensing Society

Submitted to:
Prof. Ray Titus
Submitted by:
Group 11 MBA Finance A
Adithya B A
Aayush Kumar
Priyanka Basera
Swathi Rao
Zishan Ali
The structure adopted for the case analysis is as follows:

Growth and
Development
SWOT
ANAL
YSIS
CORPORATE
LEVEL
STRATEGY
BUSINESS
LEVEL
STRATEGY
Recommenda
tions

Growth
In late 1930 Kazuma Tateisi rented a factory to produce his invention and in
1933 founded the Tateisi Electric Manufacturing Company which was began to
produce X-ray timer. When World war second destroyed Kazuma-sans Tokyo
office and main Oska factory, then he built a new factory in the Omuro district
of Kyoto. He took the name of town as the brand name for his product starting
in 1948 and then in late 1959 Omlon became Omron. This is how Kazuma
Tateisi found Omron. Omron was known for multiple engineering.

Development
In the 1950s I developed a solid state proximity switch called as dream
switch. In the 1960s built an R&D laboratory at 4 times its capital. Omron was
the western Japan competitor to eastern Japans Sony and was listed on the
Kyoto and Osaka stock exchange. Omron introduced Worlds first ATM
machine which was capable of dispending several different item and accepting a
variety of currency.

Omron introduced 1st health device in 1962 and then in 1964 introduced
automated traffic signal and in late 1967 came out with automated train station.
Omron opened 1st R&D center in Mountain view, California and then in
Singapore in 1972 and after that launched the smallest calculator which was
Calculet-1200. Omron showed its product in 12 Japanese ports to 123400
visitors. Between 2002 and 2007 profitability grew and Omron earn profit of
$6.3 billion.
As Omron grew through acquisition and the only company in one of Omrons
social area were considered and Omron reputation as a preferred acquirer was
partially based upon excellent integration of acquired companies.
In 1971 Dr. Yutaka Nakamura a medical doctor approached Kazuma with a
proposal which states that Omron to consider building a factory staffed which
will run by physically challenged people. And then in late 1972 a joint venture
was introduced under slogan Not charity, but a chance. The collaboration
between academics and Omron has been key for the development for several
technologies which includes the Advance Optical Inspection technology
Wal-Mart manager visited Omrons manufacturing plant in China and expressed
interest in a blood pressure monitor design for women because women are the
most common buyer of blood pressure monitor for their family this interest held
Omron half the global market share in blood pressure monitor until 2008.
In mid-2000 Electronic Component Business moved to china that was Omrons
first vertically integrated. Omron was a top brand in Shanghai with over 70% of
people living in Shanghai according to a survey done in China. Omron was the
first Japanese company in China that the government permitted to have a
holding company in China.
Omron was the world leader in the field of automation. Automation business
also had a growth in each area like quality improvement, work safety etc.
Electronic component business was the second largest relay manufacturer and
largest mobile backlight maker in the world. Social system business its a
domestic business was preferred to Japans automated railway, roadway and
security control system. In Healthcare business Omron had smallest business in
term of sales but healthcare was the Omron brand was best known for.

SWOT ANALYSIS

STRENGTHS:
1. Huge employee base:
Omron had an employee base of around 36,000 employees
2. Focused more on R&D:
With an investment of 8% of their revenue, Omron was taking up innovation
3. The various products available:
They had a portfolio of products available that were innovative, for e.g. hand
gesture recognition technology.
4. Huge market share:
The company had huge and robust market share.
5. Many firsts
Omron was the first company to come up with few medical equipment, ATM
machines, oilfield and marine equipment etc.
WEAKNESSES:
1. Decreasing financial position and decrease in the margins
The company was producing many products which was sold with very low
margins so as retain their market.
2. Dependence on Japan and Asia for production
As a result of this weakness, Omron would have to incur high cost of
distribution.
3. Depending on the Asian markets for revenue.
Any economic downturn in the Asian countries would affect Omron in a
negative way.

OPPORTUNITIES:
1. Potential for strong global expansion
Omron wanted to go Global and tap into the markets it had not focused on
and make use of the potential opportunities thus it came up with Small but
Global concept.
2. Growth in the electronics components market

With consumer electronics and other electronic items taking pace and
importance, this was huge opportunity that Omron had
3. Acquisitions of Smaller enterprises
Omron effectively managed collaborations with all its stakeholders, one
among them are its acquisition targets. This will help Omron to boost its
operations and achieve its financial position without losing it further.

THREATS:
1. The company faced severe competition in pricing the products
Because of its distribution costs, the products of Omron had high costs
compared to its competition.
2. Compliance of various environmental laws and regulations
As the company was aiming for Global expansion, it had to properly follow
the rules and regulations set forth in those countries.
Analysis
Omron had very low barriers to imitation with its service based business,
however it had to face huge competition in its resource based business i.e.
their products.
Speaking about the capability of competition, it had to move away from low
strategic commitments to absorptive capacity as it aimed for Global
expansion.
It had to keep a look at the industry dynamism and change, otherwise it
would affect its competitiveness in the market.

CORPORATE LEVEL STRATEGY:

As Omron was known for multiple Engineering firsts and listed on the Kyoto
and Osaka Stock Exchanges .Though it introduced first vending machine and
ATM machines too.
The company had 5 business lines, containing 85 business domains and their
revenues ranging nearly from $50M.
Different strategy's undertaken are:

 ''Small but global'': The company wanted to be small in that the business
domain is not particularly large ,but at the the same time ''Global'' in that
they aim for global position.
Due to the change in the organizational model and domestic mindset ,the
company strengthened itself in the area of strategic business restructuring
and this way Omron's way of governance has also changed.
Calculation of overall enterprise value by comparing the ''Brand value''
and ''market value'' to focus on corporate principles.
The identification and resolution of social needs as Omron's core
competency.
Their motto is ''at work for a better life ,a better world for all''

BUSINESS LEVEL STRATEGY:

Omron always try to compete with their last performance as they want to give
their best and compete, they challenge themselves to perform better than last
they performed. They invent the products according to the social needs, they
identify the needs and then innovate. The strategies they take at business level
are:
Industrial Automation Business (IAB)- IAB produced factory automation
equipment sensors- sensors, safety components, controllers, relays,
switches and other control equipment- to help to improve factory floor
productivity in a wide variety of industries.
Electronic Components Business (ECB)- Omrons focus on sensing and
control, ECB produced and sold electronic components for use in
household appliances and mobile electronic devices.
Automotive electronic Components Business (AEC)- AEC was spun out
of ECB in 2003, it as leveraged the technology of the now separate ECB
to manufacture and sell ECB devices adapted for use in automobiles. In
2007, AEC was making significant investment in the development of next
generation safety products such as laser radars and other image sensing
technologies, for use in emerging automated breaking systems.
Social Systems Business (SSB)- Almost exclusively a domestic business,
SSB was a preferred provider of Japans automated railway, roadway and
security control system.
Healthcare Business (HCB)- Omrons smallest business in terms of sales,
as its only B2C business. HCB had expanded into their Healthcare At
Home electronic devices, including weight/body fat monitors, digital
thermometers etc.

 Business Development and Other- The remainder of Omrons business

operations were separated into a sixth grouping. This group of business
included their entertainment business, personal computer peripherals and
simple anti-theft devices for automobiles.
Competitors for OMRON
1.
2.
3.
4.
5.

Rockwell Automation
Emerson Electric Co.
Mitsubishi Corporation
Schneider Electric SA
Siemens Aktiengesellschaft

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