1

Case Presentation Kodak’s Strategy

2

Group 4

Name IDMd. Asif-Al-Noor 10364040Monira Mahsharan 10264014Marshal Richard 10364057

3

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

4

Company Overview

5

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 film1889: Invented perforated celluloid film 1900: The Brownie box camera went on the market

with a price of $1 1935: Introduced color film1960: Brought the Instamatic camera to the market1970: Major sales growth for Kodak. Concentrates on

film and basic cameras

6

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

7

Company Overview…. Cont…

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

8

Company Overview…. Cont…

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

9

Brand Logo Evolution

10

Kodak Product• Four distinct sub-product

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

11

External Factors Analysis

12

Porter’s 5 Forces Model

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

Question: How competitive forces affect industry

attractiveness

13

Porter’s 5 Forces: Digital Camera

Threat of Substitute Products

Threat of New

Entrants

Threat of New Entrants

Rivalry Among Competing Firms in

Industry

Bargaining Power of Buyers

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

14

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

15

Porter’s 5 Forces… Cont..

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

Substitutes ProductsLow switching costLow price of substitutesHigh bargaining power

Strong entry barriers

Strong threats

16

Porter’s 5 Forces… Cont..

Rivalry among Competitor• Intense competition among the rivals

Strong Competition

17

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

18

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

19

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

20

Strategic Group mapping

Leica Sony

Samsung

Olympus Nikon

Kodak Cannon

High Price

Low Price

Market share

Firm % Market Share Average PriceCanon 40% $220.00Sony 15% $300.00Samsung 10% $260.00Nikon 10% $250.00

High Market Share

Low Market Share

Price

21

Internal Factors Analysis

22

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

23

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

24

Value chain pre digital age

Image Capture Processing

Projection

Printing

Storage

- Film Camera- Video Camera

- Retailer Processing

- All Retail Stores- Reprints

25

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 StorageTransmission

Printing

Manipulation

Retrieval

26

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

27

Kodak Strategy….Cont..

1. Managing the Traditional Film Business:

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

28

Kodak Strategy….Cont..

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.

29

Kodak Strategy….Cont..

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 .

30

Kodak Strategy….Cont..

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.

31

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

32

Reason For Failure

1.Core competency became core rigidities

2.Lack of market research3.Late mover of digital photography4. Innovation and transformation Failure5.Unwillingness to change

33

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

34

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

35

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

36

Thank you

37

Any Question