Kodak - the Downfall

KODAK

THE DOWNFALL

Aman Chawla | IBS | 06-08-18 

RATIONALE

Kodak. That venerable brand name has been a household word for generations worldwide. For more than a century, people relied on Kodak for products to help them capture “Kodak moments”- important personal and family events to be shared and recorded for posterity.

The Hollywood movie industry evolved around Kodak technology. In 1972, Paul Simon even had a number-two hit single called “Kodachrome,” a song that put into words the emotional role that Kodak products played in people’s lives.

In 2012, however, Kodak fell into bankruptcy. Today, the brand that once monopolized the consumer photography industry, capturing 85 percent of all camera sales and 90 percent of a huge film market, doesn’t even sell consumer cameras and film anymore. Once amongst the bluest of blue chips and rolling in cash, a completely transformed Kodak now struggles with declining sales and years-after-years losses. Of the roughly 200 buildings that once stood on the Kodak’s sprawling business park in Rochester, New York, 109 have been demolished or sold off.

Ho could such a storied brand as mighty in its day as Apple or Microsoft today fall so far so fast?

Kodak dell victim to marketing and competitor myopia – focusing on narrow set of current products and competitors rather than on underlying on customer needs and emerging market dynamics. It wasn’t competing film makers that brought Kodak down. It was the competitor Kodak didn’t see soon enough – digital photography and cameras that used no film at all. All along Kodak continued to make the very best film. But in an increasingly digital world, customers no longer need film. Clinging to its legacy products, Kodak lagged behind competitors in making the shift to digital.

In 1880, George Eastman founded Kodak based on a method for dry-plate photography. In 1888, he introduced the Kodak cameras, which used glass plates to capture images. Looking to expand the market, Eastman next developed film and the innovative little Kodak Brownie film camera. He sold the camera for only $1 but reaped massive profits from the sale of film, along with the chemicals and the paper required to produce photographs. Although Kodak also developed innovative technologies for industries ranging from health care to publishing, throughout the twentieth century, cameras and file remained the company’s massive cash cow.

Films and camer photo brownie camer photo

Interestingly, way back in 1975, Kodak engineers invented the first digital camera – a toaster sized image sensor that captured rough hues of black and white. However, failing to recognize the mass-market potential of digital photography and fearing that digital technology would cannibalize its precious film business, Kodak shelved the digital project. Company managers simply could not envision a filmless world. So, Kodak held fast to film and focused its innovation and competitive energies on making better film and out-innovating other film producers. When the company later realized its mistake, it was too late.

First digital camera phot and its makers

Blinded by its film fixation, Kodak failed to see emerging competitive trends associated with capturing and sharing images. Kodak’s culture became bound up in its history and the nostalgia that accompanied it. “They were a company stuck in time.” “Their history was so important to them-this rich century-old history when they made a lot of amazing things and a lot of money along the way. Then their history became a liability.”

By the time Kodak finally introduced a line of pocket-sized digital cameras in the late 1990s, the market was already crowded with digital products from Sony, Cannon, Nikon, Samsung, and a dozen other camera makers. That was soon followed by a completely new category of competitors, as more and more people began pointing and clicking in their phone and other mobile devices and sharing photos instantly via texting, email and online photo sharing social networks. Late to the digital game, Kodak became a relic of the past and an also-ran to a host of new-age digital competitors that hadn’t even existed a decade or two earlier.

Competator camera phots

Somewhere along the way, swelled with success, once-mighty Kodak lost sight of founder George Eastman’s visionary knack for defining customer needs and competitor dynamics. According to one biographer, Eastman’s legacy was not film; it was innovation. “George Eastman never looked back. He always looked forward to doing something better than what he had done, even if he had the best on the market at the time.” If it had retained Eastman’s philosophy, Kodak might well have been the market leader I digital technologies. We might all still be capturing “Kodak Moments” on Kodak digital cameras and smartphones and sharing them on social media and Kodak-run online sites.

So, we have chosen as case study to help us know how Kodak from being the number one company in its sector is now trying to emerge from bankruptcy. It has stopped making cameras and discontinued its famous Kodachrome color film. Instead, it now licenses its name to other manufactures that will make cameras under the Kodak brand. Almost all of its revenues now come from commercial imaging and printing products and services or business customers in graphics arts, commercial print, publishing packaging, electronic displays and entertainment and commercial films.

To summarise it all we chose Kodak as our case study to show how an organization that had been fortunate over a century with a dominant position in the market, led to briskly misfortune and bankruptcy within short span of time. The entire case study emphasizes the stunning bankruptcy of Kodak. The gloomy journey of market giant, that had a lion’s share of imaging world industry and that had positioned the name of photography to its recognition “Kodaking”, has been over to ouster from the market. The general purpose of the research is to analyse the financial position of a company by applying financial analysis tools and check the consistency of results. The specific purpose of the research is to conclude the critical issues that have caused organization downfall by evidential support. Data collection has been made in this study on empirical basis and by the use of company annual reports, results & conclusions have been drawn. The prior segment of report shows the financial results