KODAK BUSINESS CASE STUDY Essay Example

  • Category:
    Business
  • Document type:
    Case Study
  • Level:
    Masters
  • Page:
    3
  • Words:
    1769

Executive Summary

Kodak is a technology company based in America and focuses on imaging services and solutions. Even though Kodak dominated the industry over several years, it has been experiences a number of challenges. Kodak has also experienced a stiff competition from rival companies such as Sony, HP, and Canon. Its strategy to transform the industry has not worked on its favour thus making the company struggle. The main problem of Kodak was the transformation from conventional imaging to digital. To regain its command on the industry, the company, therefore, need to eliminate the Consumer Digital Imaging Group since it is costly but without significant return on investments. It also needs to develop an optics division to ensure that they regain their command of the market.

1.0 Introduction

The company analyzed for the study is Kodak. The issued discussed include Kodak as a company, and analysis of its background. It also entailed the detailed description of why Kodak decided to change its business strategy which will be based on the Porter’s Five Forces Analysis of the Company. In addition, it captures the consequences that are linked to Kodak’s strategic change in the photographic film to which it operates. Furthermore, the report captures a set of recommendations that will boost the growth of Kodak Company and enhance positive outcomes. Lastly, the report concludes with the key points that are presented.

2.0 Analysis

Kodak is a technology company based in America and focuses on imaging services and solutions. It is also known as Eastman Kodak Company named after the founder George Eastman (Mendes 3). It provides its service directly and indirectly through its partners and other innovative firms. Kodak’s products include software, hardware, consumables and customers services in commercial print, graphic arts, electronic displays, packaging, publishing, commercial and entertainment films, and markets for consumer products. The company has a world-class research and development capabilities, a brand that is highly trusted and a portfolio with innovative solutions. It helps its customers to grow their businesses sustainably and empower themselves.

Initially, photography was an activity based on studio and professionals were the common users. However, the founder of Kodak, George Eastman, changed it to hobby that anyone could consume. The company was started in Rochester, New York in which it introduced the first portable camera and a roll film. It offered a range of services and products and quickly became a leading company in portable photography with processing, production and distribution facilities all over the world and one of the most famous brand names. After the Second World War, the company began to expand through engaging into healthcare and chemicals since it was aware of the changing technologies. In 1980, the research and development department of Kodak launched initiatives that resulted in products of high electronic technologies (Mendes 3). Since then, the company has been trying to transform the film industry and be a leader through digital imaging. Today, Kodak is a digital imaging business that focuses on commercial imaging such as commercial films, 3D printing, and motion pictures despite entering a bankruptcy plan in January 2012.

3.0 Detailed Description of Business Issues

There has been a great transformation in the photographic film industry. Even though Kodak dominated the industry over several years, it has been experienced a number of challenges. The company’s attempts to intensify its impact in the industry have been nose-divided with the decline in sales in the United States. Kodak has also experienced a stiff competition from rival companies such as Sony, HP, and Canon (Mendes 4). Currently, most of the company’s products include professional photographic film services, paper processing chemical, retail kiosk, software, sensors, inkjet printers, and digital cameras. The merger companies such as Sanofi, Cinelabs Limited, and AOL online have seen Kodak still enjoy the lion market share. The Porter’s Five Forces have seen a great impact on Kodak making it develop better ways to compete with its industrial rivals. The forces include;

3.1 Threat of New Entry

The impact of new entry into the market in the case of Kodak is moderate. This is because entering into the photographic film industry needs a huge sum of capital (Shamiyeh 84). Furthermore, most of the new companies in the market have not been able to effectively compete with Kodak due to inadequate knowledge and experience in the core areas of digital photography and imaging.

3.2 Power of Consumers

The demand for electronic services and products is high. Companies such as Kodak and Sony, HP, and Canon among others provide the clients with wide range of products to choose from (Shamiyeh 107). Consequently, the consumers are always positive of the industry. The buyers have high bargaining powers with the demand being extremely volatile.

3.3 Power of Suppliers

The suppliers’ power in the photographic film industry is low since they are located in most of the places in the world. Most of the suppliers of film services and products usually experience unfriendly local and international environment. The supplier contract of Kodak run for 1 to 3 years and the company is cautious when dealing with third party suppliers since they reduce the profitability o the industry (Shamiyeh 104). Most o the finished and raw materials needed for the industrial products are easily available.

3.4 Threat of Substitute Products and Services

Substitute services and products offer a high threat in the film industry. Companies in the photographic film industry work hard to match its characteristics such as pricing and specifications. The substitutes have less switching costs since the consumers can change to products based on photographic film as per their preferences (Shamiyeh 89). Substitutes also offer extreme threats as mobile phone technologies develop faster. In explanation, the cameras in social media sites and mobile phones threat to eliminate the need of portable cameras and use of image sharing platforms like Kodak’s Easyshare.

3.5 Competitive Rivalry

Kodak faces huge competition from other companies such as Fuji Photo, HP, Nikon, Canon, and Sony. Increase in the prices o related services and products and competitive pricing has greatly impacted the operations of Kodak in the industry (Shamiyeh 89). The competition is high in the media sharing industry too with the presence of social media sights such as Instagram and other media sights such as Sears.com, Yahoo Photos, Fujifilmnet.com, Walmart Photo Centre, Snapfish, Shutterfly, and Kodak’s Easyshare. The consumables also have several strong players such as Oji, 3M, Xerox, and Hewlett-Packard.

The current strategy of Kodak Company is, therefore, to transform Kodak from the conventional photographic business into a leader in the digital imaging emerging market. The strategy has four themes: development of an incremental process that will ensure transmission to the digital imaging; harvesting the conventional photography business; outsourcing of knowledge through emphasizing on the printed images, acquisitions, alliances, and hiring; and developing diverse strategies for the commercial, professional, and consumer markets (Mendes 11). In summary, Kodak decided to develop a hybrid approach as a strategy to its business with the intention of enhancing users’ functionality. The goal of the consumer market strategy was to ensure that Kodak maintains its position as the market leader through provision of value, quality, and simplicity. As a result, Kodak offered distinct services that allow customers to digitize the traditional photographs, obtain printed ones, and edit images in different formats through systems such as EasyShare. The strategy on commercial and professional markets was crucial since they introduce customers to the exceptional technologies that Kodak use (Shamiyeh 145). Consequently, the company developed a strong position in commercial printing, formatting and scanning due to its leadership in data printing and inkjet technologies. The acquisitions, alliances, and hiring strategy that George Fisher put in place intended to bring on board the specialists and executives for its new business strategy. Since the company fasces significance challenge in upgrading its technology, it partnered with companies with the leading technological companies and made the essential acquisitions.

4.0 Outcomes

Kodak’s emphasis on printed images have been criticised in all its initiatives in digital imaging since it was entering a highly mature and intense market. Its strategy for the traditional photography harvesting was because it failed to forecast the demand of the emerging market. As a result, it withdrew from the film industry. The company withdrew the unprofitable markets such as Kodak EasyShare Gallery and its cameras. It also withdrew a number of its film products in the market. In addition, it was forced to accelerate it job cutting trends to meet its recent poor financial performances.

The main problem of Kodak was the transformation from conventional imaging to digital. In explanation, the transformation allowed the consumers to view the images on screen as opposed to the printed form. The company had heavily invested in launching of new products and building of digital capabilities but failed in the generation of additional income thus facing a questionable future (Shamiyeh 107).

5.0 Recommendations

Due to the poor financial performances, future strategies are needed to turn around the company. First, the company need to eliminate the Consumer Digital Imaging Group Segment of digital devices and capture but keep the consumer imaging services, inkjet systems, and retail system solutions (Shamiyeh 188). The services are to be kept around due to their major installed base of the retail photo shops in the world (Clemen and Kwit 74). Their technological investments enable their inkjet systems to do well in the market same to their market leadership in photo sharing and online merchandise service. Second, the company need to develop an optics division in the segment of Consumables through partnering with a company such as Costa del Mar or Ray Ban Sunglasses because they are industry leaders in style and optics (Mendes 9). The companies, therefore, have higher chances of increasing sales and consumer awareness through provision of more diversified products to its customers.

6.0 Conclusions

Kodak has one of the best brands in the world thus an upper hand against its competitors in the photographic film industry. However, the dynamism of the business environment has made it difficult for the company to maximise its profits. The company, therefore, need to eliminate the Consumer Digital Imaging Group since it is costly but without significant return on investments. It also needs to develop an optics division to ensure that they regain their command of the market.

Work Cited

Clemen, Robert T., and Robert C. Kwit. «The value of decision analysis at Eastman Kodak Company, 1990-1999.» Interfaces 31.5 (2001): 74-92.

Mendes, George. «What Went Wrong at Eastman Kodak?.» The Strategy Tank (2007).

Shamiyeh, Michael. «Discontinuous Change and Organizational Response: Exploring the Moderating Effects of Resources and Capabilities–the Case of Kodak.» University of St. Gallen, Business Dissertations, Business Source Complete, EBSCOhost (2014).