Kodak Case Study

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STRATEGY 2015/2016
Prof. Mario Morais

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                                                          INDEX

Introduction to Kodak                                                   

Company Overview                                                       

5 Forces of Porter Analysis                                           

PESTLE Analysis                                                             

SWOT Analysis                                                               

Core competencies                                                      2

Organizational Structure and controls                     3

Kodak: Simultaneous Cost Leadership Differentiation                                                              6

Vertical Integration to outsourcing                           8

Digital strategy from 1993 to 2012                           20

Why did the strategy fail? Was there a better alternative?                                                                   22

What to do in 2012?                                                    4

Bibliography                                                                  26

INTRODUCTION TO KODAK

Eastman Kodak is an American company founded in 1892 by George Eastman in Rochester, New York. It later became the leading manufacturer of image and photographic equipment, materials and services. Since the very first day of its existence Kodak had the strategy of selling inexpensive cameras that appealed to consumers. During most of the 20th century, Kodak held a dominant position in the market by being responsible for an average of 90% of sales of photographic film sales in the United States.  Kodak is a company that adopts the stakeholder approach by doing right not only to shareholders, but to customers, employees, neighbors and suppliers. Kodak operates its facilities and designs its products and services, not only to increase shareholder value, but also to promote the development of the individual, the well being of the community and respect for the environment. Its vision consists in being the world leader in imaging. For the conjunction of everything that was said until now Kodak built its mission around the following: panning to grow more rapidly than their competitors by providing customers with solutions they need to capture, store, process, output and communicate images anywhere and anytime, deriving competitive advantage by delivering differentiated, cost effective solutions (like consumables, software, hardware, systems and services) quickly and with flawless quality and finally developing a team of energetic, results oriented employees with the world class talent and skills necessary to sustain Kodak as the world leader in imaging. The firms’ goals (strategic objectives) obviously change from year to year and will be analyzed further ahead. We can also mention that there exists a strong corporate social responsibility in Kodak built around 12 principles like ethical behavior, equality, respect for the environment, etc.

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5 FORCES OF PORTER ANALYSIS

Threat of Entry

Threat of new entrants is low. Significant investments in capital would have to be made to enter in the digital imaging and photography industry. Expenditures in printing equipment like hardware, software, photographic paper and chemicals are, on average, estimated to be 26.8% of revenues and 47.8% of profits. New entrants would also lack the experience and knowledge necessary in key areas of digital imaging and photography such as technical and business knowledge.

Buyer power

Buying power of consumers is moderate to high (but more on the moderate side) especially for consumer electronics. Buyers are given a range of differentiated digital products from a number of companies. They have low switching costs and they constantly expect and demand better offerings and customization of services. However they are many and there is no concentration of any kind which decreases their power.

Supplier power

Supplier power is moderate to weak (but more to the moderate side). There are a lot of suppliers that are located around the world both at the local level and at the international level. Kodak fortunately has several supplier contracts spanning only from one to 3 years. However, unique suppliers and also single or limited sources of finished goods manufactured and purchased by the companies may reduce industry profitability.

Threat of substitution

The threat of substitutes is high. Companies are quick to match specifications, features and pricing. There are minimal switching costs between brands and substitutes so buyers can change to new updated models based on reasonable buyer perception. However, Kodak´s strong presence in the market and brand recognition, helped tone down the effect of substitution.

Competitive rivalry

Competitive rivalry is high. Kodak faces intense competition from  rivals such as major competitors like Canon, Fuji Photo Film, Hewlett Packard, Nikon, Shutterfly, 3M, Oji and Sony and minor brands (the start ups).Kodak is also competing in similar segments with its powerful already well established and expert rivals like in the digital printing technology to consumers and commercial businesses segment where it is trying to compete against Hewlett Packard. Kodak has also stated that competitive pricing and rising commodity prices have contributed to the negative results for 2010 and 2011 in the following: prepress solutions, digital capture and devices, and entertainment imaging.