Management

Prospects; Restructuring Kodak

LEAD: The Eastman Kodak Company announced a major restructuring aimed at paring costs following a weak second quarter. The company will cut 4,500 jobs this year and will sell some of its business units. There will also be a wage and salary freeze for 1990. Kodak's poor showing comes after its $5.1 billion purchase of Sterling Drug Inc.

The Eastman Kodak Company announced a major restructuring aimed at paring costs following a weak second quarter. The company will cut 4,500 jobs this year and will sell some of its business units. There will also be a wage and salary freeze for 1990. Kodak's poor showing comes after its $5.1 billion purchase of Sterling Drug Inc. last year. Two customers, an analyst and a corporate strategist offer advice to Kodak. Michael L. Horowitz Vice president, Kenmar-Camera Corporation, Great Neck, N.Y.

Kodak needs to provide more support from its technical people. The company is very innovative with its film, but it doesn't provide product support. In the past, it was different. Kodak's technical representative used to take calls at his home at night and on the weekend. When he was on vacation, he would leave the number where he could be reached. Those days are gone.

Now they don't even send out brochures or technical information and they don't tell us when they made a bad product batch. The first batch of 120 Kodachrome in late 1986 was bad and it burned a lot of people - but Kodak didn't tell us. Fuji, on the other hand, has very good technical support. I sold a bad batch of Fuji film and they replaced it and they were everywhere - all over the customer. Anthony Loew Professional photographer, New York.

I wish that I could use one of Kodak's professional films, test a roll and six months later, when I buy that film, know that it would do the same thing it did on the original test.

Kodak has romanced the amateur market, but it has ignored the professional market. I never felt they cared about me. It's my belief that if you romance the pros, the amateurs will follow. The pros set the pattern. It's like Nikon. Nikon cameras are what a lot of professionals use, so amateurs go and buy Nikons, maybe not the professional models, but they buy Nikon cameras. But Kodak couldn't care less about professionals. Eugene G. Glazer Senior vice president, technology analyst, Dean Witter Reynolds Inc.

Kodak's restructuring will continue over the next few years. The company will concentrate more on its core businesses. It will spin off some of its joint ventures - video tape production, for example. Another key ingredient in Kodak's restructuring has to be its balance sheet. The company was once known for its very conservative balance sheet. Now 50 percent of its capital is debt.

A mature company in a mature market should not take any unecessary risks. The company should generate as much cash as possible and give it to the stockholders. Donald V. Potter President, Windermere Associates, San Francisco.

Kodak began charging too much for its product. It created a price umbrella that other companies - like Fuji - could come in under. What Kodak has to do is lower its costs - which it is doing - and bring down its prices. As it reduces its costs and prices it must be careful not to cut its service. Reducing prices will make it uncomfortable for Kodak's competitors. If Kodak brings its prices down its customers will say it is not worth looking around for other suppliers. Paradoxically, as the company brings down prices, it will earn more because sales volume increases. When prices are higher, salespeople have to spend time justifying why they charge more than the competition.

Succeeding in a mature market - Chief Concern - chief executive officers - Brief Article

Chief Executive, The, Dec, 2002 by Jeff Jacobson

It's tough gaining a competitive edge when you're in a slow-growth industry. Business isn't yours for the taking, so you have to be that much more creative, efficient and visionary to succeed. But I like to think--and recent events have borne this out--that all CEOs would benefit from running their companies as if they were mature businesses. That's because the competitive fundamentals, the blocking and tackling, become relevant in every sector sooner or later.

Kodak Polychrome Graphics is the largest supplier of graphic arts products in the world, with hundreds of thousands of customers on six continents. We've been successful--but competing in the mature graphics industry means never having guarantees. I've followed some time-tested methods of achieving growth.

Sell in depth to delighted customers. There are only so many customers out there, so you have to sell deep to every one you have. If we don't have 100 percent of a customer's business, we ask our sales personnel why; and we hold them accountable.

You need to know early on if you're not meeting customers' needs--because if they're less than thrilled it will be only too easy for them to find another supplier. I spend 50 percent of my time traveling to get out in front of customers so they know I'm committed. I return emails within 24 hours--no matter where I am in the world.

And if there are problems, I handle them myself. Recently, one of our smaller New York customers called up asking for the CEO. I was in a meeting, but my assistant knew to get me. I called him back, and, not knowing who I was and quite agitated, he began swearing at me. I told him who I was and that I wanted to help. Incredulous that the CEO was calling him, he was embarrassed and didn't want to share the problem. I said, let's get it resolved, because if there's an issue here that could be systemic, I want to nip it in the bud. I followed up with him through the process--calling twice a week, then once a week, then once a month; I still call him periodically. Most of our customers just want some attention. When my people see me taking the time to do it, they do it too. Some CEOs would say they don't have the time; I think that's a crock. There's nothing more important than your customers.

Cannibalize yourself. Since your missed opportunities mean a chance for competitors to get ahead of you, you have to be the first to recognize change. And you can't wax sentimental about it. Our conventional products--film, analog proofing, plates--have been declining rapidly due to enhanced technology. But because we had digital plates ready, we had a two-year head start on our competitors. Fact is, cannibalization is always going to happen; it's just a