Kodak strategy

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Case Presentation Kodak’s Strategy

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Group 4

Name IDMd. Asif-Al-Noor 10364040

Monira Mahsharan 10264014

Marshal Richard 10364057

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Agenda• Company Overview• Product line• External Factors Analysis

– Porter’s 5 Forces Model– Industry Driving Forces– Key Success Factors – Strategic Group Mapping

• Internal Factors Analysis– Core Competences– SWOT Analysis– Value Chain

• Kodak Strategy– Based on Case– Why Kodak’s 4-year Strategy failed– Reasons for Failure– Based on Current Situation

• Recommendations• Conclusion

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Company Overview

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Company Overview…. Cont…1879: George Eastman invented the dry-plate process

and filed patent for a machine that coated dry photographic plates

1880: George Eastman established the Eastman Dry Plate Company, at Rochester N.Y.

1884: Introduced paper roll film

1889: Invented perforated celluloid film

1900: The Brownie box camera went on the market with a price of $1

1935: Introduced color film

1960: Brought the Instamatic camera to the market

1970: Major sales growth for Kodak. Concentrates on film and basic cameras

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Company Overview…. Cont…

1980: Fuji emerges as a serious competitor

1994: Kodak abandoned its non-imaging health-related businesses began to invest in digital imaging products for medical practice

1997: Kodak was a high-cost manufacturer with a growing portfolio of digital products which was losing hundreds of millions of dollars annually

1997: Restructuring that eliminated 19,000 jobs and cut more than $1 billion from annual costs

1999: Kodak entered the digital radiography market

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2001: Kodak is pushing aggressively into China, an important growth market

2003: Carp unveiled the plan to invest $3 billion in the next three years in digital products by cutting dividends by 72% - to 50 cents per share

2004: Kodak announced that it would stop selling traditional film cameras in Europe and North America, and cut up to 15,000 jobs

January 2005: The Kodak EasyShare-One Digital Camera, the world’s first Wi-Fi consumer digital camera capable of sending pictures by email, was unveiled

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December 2010: Standard & Poor's removed Kodak from its S&P 500 index

January 19, 2012: Kodak filed for Chapter 11 Bankruptcy Protection The company's stock was delisted from NYSE and moved to OTC exchange. Following the news it ended the day trading down 35% at $0.36 a share

February 9, 2012: Kodak announces it will exit the digital image capture business

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Brand Logo Evolution

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Kodak Product• Four distinct sub-product

– Digital cameras – Home printing– Online services– Retail kiosks and mini-labs

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External Factors Analysis

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Porter’s 5 Forces Model

To aid firms in analyzing competitive forces in an industry environment.

Question: How competitive forces affect industry

attractiveness

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Porter’s 5 Forces: Digital Camera

Threat of Substitute Products

Threat of Substitute Products

Threat of New

Entrants

Threat of New Entrants

Threat of New Entrants

Rivalry Among Competing Firms in

Industry

Rivalry Among Competing Firms in

Industry

Bargaining Power of Buyers

Bargaining Power of Buyers

Bargaining Power of Suppliers

Bargaining Power of Suppliers --

o

-

--

o - --Low Moderat

eHigh

High Competition, technology driven, move fast, numbers of players, lower price strategy.

Few substitutions, i.e. Mobile phone, Camcorder, Traditional cameras

Technology, know how, economies of scales, and high investment

Numbers of digital cameras ,trend of digital market suppliers worldwide, China base

Numbers of digital cameras ,trend of digital market suppliers worldwide, China base

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Porter’s 5 Force in terms of photographic industry

Buyers bargaining power• Have more choice• Switching cost low

Suppliers Bargaining Power is

• Out side the country from global market

Strong bargaining power

moderate to weak

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Porter’s 5 Forces… Cont..

Potential New Entrants• Huge capital & specialized• Not relay on any company

Substitutes ProductsLow switching cost

Low price of substitutes

High bargaining power

Strong entry barriers

Strong threats

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Porter’s 5 Forces… Cont..

Rivalry among Competitor• Intense competition among the rivals

Strong Competition

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Industry Analysis through 5-forces: Answer Question 1

Strong entry barriersBuyer in strong positionModerate to weak position of SupplierHuge threat from substituteStrong rivals

Apparently Unattractive Industry

LOW

Profit

Potential

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Industry Driving Forces: Answer Question No2

• Rapid decline in demand for traditional photography equipment in developed economies

• Rapid growth in demand for digital cameras in developed economies

• Steady decline in demand for film and photo processing

• Development of new imaging technology such as photo-enabled wireless telephones and high-megapixel digital cameras

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Key Success Factors• Technological capabilities• Rapid design-to-market cycle times• Reputation for producing high-quality consumer

electronics• Reputation for producing high-quality optical

devices (cameras, binoculars, microscopes, medical equipment)

• Distribution network that includes large electronics chains and local camera retailers

• Involvement in multiple segments of the industry value chain—camera production and sales, printing supplies, professional photo processing

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Strategic Group mapping

Leica Sony

Samsung

Olympus Nikon

Kodak Cannon

High Price

Low Price

Market share

Firm % Market Share Average Price

Canon 40% $220.00

Sony 15% $300.00

Samsung 10% $260.00

Nikon 10% $250.00

High Market Share

Low Market Share

Price

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Internal Factors Analysis

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Kodak in terms of core competences

Not Rare

Not valuable

Not Non substitutabl

e

Not costly to imitate

Not Core Competence

s

Not able to get

competitive

advantage

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SWOT AnalysisStrength• Existing Brand equity•Distribution Presence•Competitive capabilities• Market advantage•Acquire many strategically aligned companies

WeaknessRapidly decreasing sales revenue•EBITDA are very low•Work force has been cut off• Corporate Culture

Opportunity• Digital Image• New alliances•On line photo sharing and storage

Threat•Competition in traditional• Demise of silver halide technology•Photo capable mobile phone•Price sensitive•Economic health & terrorism

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Value chain pre digital age

Image Capture Processing

Projection

Printing

Storage

- Film Camera- Video Camera

- Retailer Processing

- All Retail Stores- Reprints

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Value Chain post digital age

-Digital Camera -Digital Cameras Software -Hard Disk

- Video Camera -Scanner at home -Floppy Disk/CD -Online (email)

-Digital mini-labs -Removable

Storage

- Kiosks at retailers

-Online Services

Image Capture

Projection

Digitalization Storage

Transmission

Printing

Manipulation

Retrieval

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Kodak Strategy based on case

In 2003, CEO Daniel carp revealed 4 pillars Strategy:

1. Managing the traditional film business

2. Leading in distributed output

3. Growing the digital capture business; and

4. Expanding digital imaging services

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Kodak Strategy….Cont..

1. Managing the Traditional Film Business:

• Slow exit strategy from film business• Looking forward to digital technology

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2. Leading The Distributed Output

• Now a day digital photography much easer to view & share photo(i.e. integrated display on camera & sharing through electronic mail or kiosks etc.) and its affecting the photography industries.

• Then Kodak is able to bring fewer profit through digital technology (i.e. digital print) instead of traditional printing.

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3. Growing the digital capture business

• Profit much lower in digital photography than traditional photography

• Success in this part of the business is dramatically opposed to the traditional photography business .

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4.Expanding digital imaging service

• Strategy take place by expanding product & services. For example Kiosks that could print image directly from mobile phone.

• In case of expanding service/online service Kodak acquiring companies like Ofodo to boost Kodak Easy Share Gallery.

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Low Cost Provider Strategy

• Introduced cheapest Inkjet printers Cost $150-$300;Almost 50% less then competitor, i.e. HP, Epson, Lexmark.

• Ink Cartridges sold $9.99 Black & $14.99 color. Competitor avg. price $ 30.

• Encourage more people to print at home. Photo value pack will allows to print at home for 10 cent, 60% cheaper then HP system

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Reason For Failure

1.Core competency became core rigidities

2.Lack of market research

3.Late mover of digital photography

4. Innovation and transformation Failure

5.Unwillingness to change

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Current Strategy

Current CEO Antonio Perez adopt new strategy, such as_

1. Outsourcing Manufacturing

2. Huge invest in digital technology;

3. Spent hundreds of millions of dollars to build up a high-margin printer ink business to replace shriveling film sales

4. Aggressive patent litigation in order to generate revenue;

5. Expand current brand licensing program

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Recommendation

• Discontinue unprofitable products• Change middle to high-level management• Launch new and innovative product • Move to another business segment such as

movie and entertainment • Focus on high potential products

– Kiosks and mini-lab– Online services such as photo printing and sharing

• Emphasize on niche market i.e. medical market and professional

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Conclusion

• Great example of strategic failure. • Different models and theoretical concepts were

applied to identify key factors that have led the company from where it was to where it stands today.

• Lessons we can learn: • External environment can be deceiving • Change happens• Greatest strength can be weakness • Innovation is not the perfect solution • Its not all over till its over

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Thank you

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Any Question

Kodak strategy

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Transcript of Kodak strategy