Eastman Kodak : Meeting The Digital Challange

EASTMAN KODAK : MEETING THE DIGITAL CHALLANGE

The case basically opens up with information regarding the present time. The information is presented in chronological order based on the company's CEOs. It first provides with a history of the company's creation. It moves on to the diversification of Kodak's core competency, traditional photography to digital imaging and data storage.

As stated earlier, the case studies has been segmented based on the company heads and their strategies and achievements. Starting with the founder George Eastman, the case study talks about how the idea for the company came about and the values that Eastman upheld in his company. After which, the Kay Whitmore era begins, where the company focuses on digital imaging and data storage.

During Whitmore's leadership, Kodak diversified into life sciences. While entering the market of healthcare imaging (diagnostic equipment) was a proper fit, entering healthcare activities (nutritional supplements) and pharmaceuticals was not a wise decision. For a company like Kodak which has a very strong association with photography, entering a market that does not fit in with its image would not benefit the company. Another major mistake was not purchasing Chester Carlson's xerography patents now called Xerox Corp. Such an investment would have greatly benefited Kodak financially, especially due to the fact that it fit with the company's image. This clearly should a lack of future foresight. However there were good decisions made during Whitmore reign. Focus on image storage and data retrieval systems added to Kodak's market presence. The acquisition of Eikonix Corp provided Kodak with a leading position in commercial imaging market. However it was only till the late 1980s that Kodak directed its initiatives towards the consumer market. This was another flaw. Consumers play a key role in the photography market. They also want a 'piece of the action', however at a lower cost. Instead of investing in pharmaceuticals and entering a joint venture for supplying batteries and video-cassettes, Kodak should have at that stage invested that money in the creation of good quality - lower price digital cameras for the consumer market so that it could have had an early capture of the market.

In 1993, Whitmore was replaced by George Fisher. Fisher refocused Kodak's strategy on imaging. He made the right decision to spin off the Eastman Chemical Company and the Sterling Winthrop pharmaceutical company (even though this was at a loss). This was done so that debts could be paid off.

He had a three themed strategic plan. He took on an incremental approach to digital imaging. The advantage Kodak had at this stage was that the penetration level of digital technology was limited and hence traditional photographic imaging was yet used. Quality achieved by the traditional photographic method was not rivaled by the digital. Kodak was quick to recognize this fact.

Another good strategy Kodak implemented was that it provided facilities for digitizing and editing of conventional snaps at retail outlets. This helped Kodak to exploit its distributor resource to the maximum, build its image as a complete photographic imaging service provider. The integration of the use of the World Wide Web to allow consumers to order prints online was another brilliant strategic move on Kodak's part. The partnership with AOL to offer You've Got Pictures along the time the movie You've Got Mail was released was again a brilliant tactic. It further brought Kodak into the limelight.

Fisher believed that approaches towards the consumer and commercial market should be different. He had a mass market approach towards the consumer market. As mentioned previously Kodak has a very good distribution system. Fisher used this resource to get to the consumers.

His approach to the commercial market was that of introducing newer innovations at higher premiums. This worked because Kodak had already established itself as a strong player and catered to the sophisticated needs of the commercial market. From medical imaging, satellite imaging, digital scanning and document management systems for governments, high speed - high quality printing systems to cinematographic supplies, Kodak had its presence everywhere.

Fisher was also convinced that alliances with the established plays in the key areas of the digital market would help Kodak provide an integrated solution to its customers.

Fisher's