Kodak’s Challenge: Surviving the Disruptive Winds of Change

Veronica Pena

MGT 439-Business Strategy

Case Exam

Kodak’s Challenge: Surviving the Disruptive Winds of Change

1. Introduction

Eastman Kodak Company, is commonly known as Kodak and is an American technology company founded in 1888 by George Eastman. Throughout the history of photography many methods to produce photography were developed from tintypes to wet plate negatives method. George Eastman invented a more productive method called the flexible roll film, this enabled a much easier way to produce a photograph and made the mass-produced box camera a reality. Kodak is a publically held company and trades on the New York Stock Exchange with shares relatively around $20. Kodak's mission plan is to grow more rapidly than their competitors by providing customers with the solutions they need to capture, store, process, output and communicate images, anywhere, anytime. They also obtain a competitive advantage by delivering differentiated, cost effective solutions, which includes consumables, hardware, software, systems and services with quick and flawless quality.  Kodak continues to stand by their mission though previously faced financial difficulty in the past. Kodak generates profits through its Graphics, Entertainment and Commercial Films (GECGF) and Digital Printing and Enterprise (DP&E) segments.  

1. Industry

Kodak company participates in the highly competitive electronic equipment industry. The ever rapid change of technology bumped Kodak off as the number one competitor due to not adapting immediately to the digital model it competitors were implementing in the industry. Currently, the industry can be classified as a matured industry in the industry life cycle stage. In the U.S. for the digital camera market there were signs that the market was reaching a mature market in 2006. Previous to that, they had 670% growth from 2000-2005 and expected minimal growth but an expected slowdown in the U.S. economy contributed to the slowdown in demand for digital cameras. Growth possibilities were sought abroad such as Europe and Japan but it is in Central and Eastern Europe that the unit sales of digital cameras increased significantly some up to as 30% increase. China was seen as a potential market for digital cameras due to the improving economic conditions. Currently Kodak's top competitor in the digital camera market is Cannon and Fujifilm.

1. Company Succession & Failures in the Industry

Kodak once stood as the reigning competitor in the early 20th century when it dominated with 90% of film sales and 85% of camera sales in the U.S. Kodak early success contributed to the razor and blades strategy in which it gave away inexpensive cameras and made large margins from consumables such as film, chemical and paper. As mentioned previously Kodak's failures occurred when it did not enter the digital market with its competitors though its first digital camera was invented and patented in 1978. This led Kodak to implement its Digital Strategy in 2003 the company did face a slumping economic and competitive market conditions. Kodak faced immense pressure from its existing competitors and new rivals in the digital photography market which was composed of $385 billion dollar industry composed of devices, infrastructure, and service and media. Despite successfully transitioning into their digital strategy in January 2012, Kodak filed for Chapter 11 bankruptcy protection due to a shortage of cash and sought to restructure and find another opportunity to revive the business. This unfortunately led to more job cuts and discontinuing product that were not as profitable such as exiting the inkjet printer business.