Eastman Kodak’s Quest for a Digital Future

CASE 12 – EASTMAN KODAK’S QUEST FOR A DIGITAL FUTURE

Competitive Strategy

Being the 18th biggest company in US by revenues, Kodak was one of the most powerful brands in world and employing more than 133 thousand people. However, in 2012 the company went bankrupt due to its failure to successfully adapt to the new digitized world. Having been a technology leader for decades, the company did not meet it’s demise over night. The company was very innovative, had forecasted evolutions in the market, and implemented its digital strategy in the 1990s. Still, all 3 CEOs failed in building a financially viable digital imaging business.

Their strategy was to gradually integrate digital technology by seeking external knowledge through alliances, acquisitions, and hiring outside talent while still promoting the traditional printed images that made them a household name.

Further, they segmented the market into: digital imaging, graphic communications and film development group.

Kodak’s main strategic mistake was focusing only on the digital imaging business and photo printing, narrowing its chance to succeed in other digital areas such as image capture through cameras and sensors and displays. They believed that consumers would still value the printed photo as much or more so than the digital photo on the computer. However, this proved to be not the case with the rapid growth of photographic technology on websites and mobile devices. Meanwhile, other traditional photographic companies - Canon, Nikon, Pentax - adopted new transformation to digital photography with less loss, because “digitalization” did not change their most expensive products, such as camera lenses. These companies focused on the upgrade of the camera house mainly.

Comparing Kodak with Fujifilm, one of its main competitors, Fujifilm anticipated that digital imaging alone would be a small market for a big company. Although, both companies diversified their business, Fujifilm restructured and expanded into more segments including medical systems, cosmetics, and pharmaceuticals. Through the renovation, the company even found scientific evidence that the same antioxidants used in film could be used for human skin. Kodak also did not anticipate web based entry threats such as Shutterfly.