3. Company Overview….
1879: George Eastman invented the dry-plate process
and filed patent for a machine that coated dry
photographic plates
1880: George Eastman established the Eastman Dry
Plate Company, at Rochester N.Y.
1884: Introduced paper roll film
1889: Invented perforated celluloid film
1900: The Brownie box camera went on the market
with a price of $1
1935: Introduced color film
1960: Brought the Instamatic camera to the market
1970: Major sales growth for Kodak. Concentrates on
film and basic cameras
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4. Company Overview….
Cont…
1980: Fuji emerges as a serious competitor
1994: Kodak abandoned its non-imaging health-related
businesses began to invest in digital imaging
products for medical practice
1997: Kodak was a high-cost manufacturer with a
growing portfolio of digital products which was
losing hundreds of millions of dollars annually
1997: Restructuring that eliminated 19,000 jobs and cut
more than $1 billion from annual costs
1999: Kodak entered the digital radiography market
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5. 5
Kodak Product
• Four distinct sub-product
– Digital cameras
– Home printing
– Online services
– Retail kiosks and mini-labs
7. • Huge capital & specialized
• Not relay on any company
Low switching cost
Low price of substitutes
High bargaining power
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8. • Rapid decline in demand for traditional
photography equipment in developed
economies
• Rapid growth in demand for digital cameras
in developed economies
• Steady decline in demand for film and photo
processing
• Development of new imaging technology
such as photo-enabled wireless telephones
and high-megapixel digital cameras
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9. Key Success Factors
• Technological capabilities
• Rapid design-to-market cycle times
• Reputation for producing high-quality consumer
electronics
• Reputation for producing high-quality optical
devices (cameras, binoculars, microscopes, medical
equipment)
• Distribution network that includes large electronics
chains and local camera retailers
• Involvement in multiple segments of the industry
value chain—camera production and sales, printing
supplies, professional photo processing
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11. Value chain pre digital age
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Image Capture Processing
Projection
Printing
Storage
- Film Camera
- Video Camera
- Retailer
Processing
- All Retail Stores
- Reprints
12. 1. Managing the traditional film business
2. Leading in distributed output
3. Growing the digital capture business;
and
4. Expanding digital imaging services
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13. Reason For Failure
1.Core competency became core
rigidities
2.Lack of market research
3.Late mover of digital photography
4. Innovation and transformation Failure
5.Unwillingness to change
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14. 14
Kodak FUJI
Market leader initially Gained considerable market share in
US by aggressive marketing
Higher prices Slashed prices to compete
Defensive strategy Offensive strategy
Compatible only with Kodak
products
Compatible with Kodak Cameras &
Films
Strong distribution network Distribution network is good for
Digital Industry
Failed in Japan, lower market share
in Japan
Higher market share of FUJI in US in
comparison
Stronger Brand value Brand not as strong as Kodak
Better Technology Technology not as good as Kodak
15. Q.1 How has the environment affected
Kodak ?
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16. 16
-Kodak delayed in realizing that Digital
business is the way to go in the future.
-Kodak’s vision of digital photography is not
ready since the company is not yet prepared.
-Hence, they should start this on small scale,
& thus, not sell Kodak health and home
product division for paying debts.
18. • Discontinue unprofitable products.
• Change middle to high-level management
• Launch new and innovative product
• Move to another business segment such as
movie and entertainment
• Focus on high potential products
– Kiosks and mini-lab
– Online services such as photo printing and sharing
• Emphasize on niche market i.e. medical market
and professional
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19. Q.3 If you were hired as a consultant by
Kodak’s board,
what recommendation would you make to
improve the company effectiveness ?
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20. 20
Recommendation:
1) Plan to establish new Plant in developing countries.
2) Develop core competency in
existing products & markets.
3) Outsource Digital Business &
maintain existing Easy Share System
4) Focus traditional photography & films in current &
emerging markets & reap the maximum cash.
21. Conclusion
• Great example of strategic failure.
• Different models and theoretical concepts were
applied to identify key factors that have led the
company from where it was to where it stands
today.
• Lessons we can learn:
• External environment can be deceiving
• Change happens
• Greatest strength can be weakness
• Innovation is not the perfect solution
• Its not all over till its over
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