Consultancy Report on Reconstruction of Olympus Ltd

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Olympus Product is an electronics company established in the year 1919 with a sole objective of manufacture and sales of electronics and related product. The major items of trade the company engages in are electronic equipment like cameras, tape recorders, optical pins among many others. The company is well organized and managed. Its good organization and effective management start right from how the company itself is structured; the company is divided into six divisions with a headquarter to which each division is answerable. All the foreign subsidiaries of the company’s operations are centrally managed. The other divisions perform other functions, such as the production of the products, packaging including even creative works of design and innovation.

Competition and competitive analysis

The competitive situation of Olympus is so stiff that without better and well-laid strategies the company may not survive strong tides of competition. This stiffness in competition is large because of the existence of several similar players in the same market who deal with the same products. Some players provide the products so cheaply due to their production at extremely lower costs, others provide designs that have been developed recently from current innovations and determination of customer preferences as a result of research and development conducted by their respective R & D departments.

To curb the challenges above, Olympus Ltd had to devise long-term strategies as opposed to the short terms that were used previously and that have been flip-flops; many loopholes have, as a result, given competitors room to seize Olympus Ltd. The plan involves steps where the firm firstly collects relevant data about competitors and new developments in the field of competition as well as data as pertains to future product plans, the second step is the product planning section manager to integrate all the sources into a product plan. The product plan developed by Olympus is unique and different from any other firm which is a competitor in the same industry. It is different in that this department of product planning, instead of being part of Research and Development, belongs to that of sales and marketing. This means that apart from having developed unique and quality products, the firm is also able to find its products developed a ready market hence no delay in sales, which reduces the lead-time required.

The third step in the competitive strategy is the extensive review of the product plan that is developed. Its strengths and weaknesses are identified and the firm strengthens them more as it tries to minimize the weaknesses to achieve a competitive advantage. A review of this case would also cover the degree of sale of the camera products to help in the maximization of profits. The product plan reviewed is then subjected to adoption through acceptance as part of the organization’s operational tool. The ultimate end of the competitive strategy is the involvement of the production personnel to aid in the implementation of the policy formulated so that the benefits could be realized.

Crisis involvement

Despite employing all the above strategies, Olympus still found itself in crisis in the 1980s, where its product sales vastly rolled down. This was partly due to its rigidity to change and reluctance in the adoption of the new technology. This implied its peers in the market could at any given time be ahead of Olympus in the market. The company’s board after realizing that the firm was not being a going concern any time in the future held crisis meetings where a reconstruction agreement was made.

The agreement entailed a three-step strategy, which involved strategies to increase the market share of Olympus from a low of 10% lower than even of that of its subsidiaries operating abroad. Secondly, a suggestion was put forward to improve the quality of products it was engaged in. This was done through the introduction of new products, as well as improvement in the production processes so that quality and efficiency could also be improved. Reduction of the production cost as a strategy became into place. This was planned to be achieved by engaging in low-cost production through low production cost measures, the production cost can also be reduced when expenditure is reduced by avoiding unnecessary expenses, improvement in the production engineering is also away.

Recapture of Market share through corporate planning, differentiation of products in the market, as well as various production bore many fruits because it was at the time when sales increased drastically from 40% to around 70%. Improvement of quality was also a part of the system that gained much. Though Olympus products had a record high in the industry, the company management still stressed the fact of being the best of the best and this became the basis of this strategy. Reduction of production cost for the first time busted the margin by around 20% mark up. Designs of high-quality low-cost products resulted in a bust to the production system. Target cost as a measure made it possible that prices could be set at projections through comparisons of current versus future prices.

Price points

Price points as prices, which were fixed for newly developed products, proved very useful. This is because they are used for the determination of future higher or lower prices. Point prices as compared to current prices are valueless in case of inflation. They appreciate if stability measures are used. Price points and its commodity pricing techniques even support the firm in expanding a wider market even beyond its borders hence improvement in its cash inflows. Price points with well-developed technological advances could be lowered even further.

Olympus shifted its production to countries like Japan and China. As a result, a cost saving of about 15% became of value. These shifts are conducted in consideration of the principle of comparative advantage where low-cost zones are identified and then production firms established where such costs are identified to be low and the ability to transport also exists.


The strategies adopted for reconstruction above were highly beneficial for the firm because they made the firm record tremendous growth. As a consultant, I would have advised aggressiveness in the facilitation of capital growth through intensive local and foreign borrowing. This expansionary act to the firm would only ensure further expansion even to greener lands as greenfield projects.

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