Assignment 3 A New Strategy For Kodak

The problem in this case is concerned with Eastman Kodak losing its market share in film products to lower-priced economy brands. Over the last five years, in addition to being brand-aware, customers have also become price-conscious. This has resulted in the fast paced growth of lower priced segments in which Kodak has no presence.

Question 1: What had been Polaroid’s overall growth strategy? How did this affect its HR planning and strategy?

G.G. Dess, G.T. Lumpkin, M.L. Taylor, A.A. Thompson, and A.J. Strickland III, Strategic Management (Boston, McGraw Hill, 2004) pp. 141-148.

Pearce, J. A., II, Robinson, R. B. (2011). Strategic management: Formulation, implementation, and control (12th ed.). Boston, MA: McGraw-Hill/Irwin

It was Kodak’s’ strategy to sell the cameras at low prices, and it used to earn revenue from the films; this strategy is called the razor-blade strategy. This model for photography became flop when Sony introduced a camera with floppy disk inside, in which there wasn’t any use of films. As a result of Sony’s introduction of the Mavica in 1981, Kodak took it as a threat and started investing in the digital photography. For this purpose, it has conducted a huge research on the digital photography. As exposed by Fisher in 1997, Kodak’s respond wasn’t appropriate for the digital world: “One of the mistakes we [Kodak] have made is that we [Kodak]’ve tried to do it all. We [Kodak] do not have to pursue all aspects of the digital opportunity and service side.”

Kathy Hudson was appointed to the newly created CIS unit in 1988 by CEO Colby Chandler with a directive to “overhaul the existing IT organization to promote the use of IT to improve the competive position of Kodak businesses while lowering cost.” At the time of her appointment, Kodak was suffering several serious business setbacks, along with rising competition and a Polaroid lawsuit. Jobs were cut and reorganization attempts did little to alleviate falling profits. Kodak needed an IT overhaul

The problem in this case is Kodak's steadily eroding market share and shareholder value in the film rolls market. This is especially undesirable given the fact that the market has been growing at a tepid 2% annual rate and the steadily increasing threat from competition. Kodak needs to come up with a strategy for corrective action so as to arrest this decline, regain market share and increase share holder value. Kodak's strategy is to reposition itself by targeting a new segment of price sensitive customers and re-segmenting the super premium customers’ space by including a wider segment of special occasion customers.

It is considered that photography only became widely available to the public when the Kodak Eastman Company introduced the box shaped Brownie Camera in 1900. (Baker, n.p.) Its features became more refined since its original placing on the market; one of the reasons why it has become considered the birth of public photography is because of the processing. Using a similar image capture system, the brownie exposed the light to a 120mm roll of film, which could be wound round, meaning six photographs could be taken before the slides needed removing. The first Brownie used a six-exposure cartridge that Kodak processed for the photographer. (Kodak.com, n.d.) Realistically, the armature photographers did not need to understand darkroom processes,

“Eastman’s improvements had the effect of moving photography from the professional’s studio, where it had evolved from the realm of portraiture and art, to the world of the general consumer,”(Carlisle 247). Photography was a difficult hobby or profession to have in the mid- 1800s. It was difficult because it needed essential pieces of equipment in order to even come out with a decent picture. Cameras were normally five by eight inches, and all the equipment that was needed was a hassle to carry (Buckland and Lefer 250). It required a darkroom, a tripod, and lots of chemicals. In a darkroom, a photographer had to coat a glass plate with egg white, and then lay it on a solution of gun cotton and alcohol mixed with bromide salts. When this

When Kodak began making changes to its organizational architecture in 1984, its current architecture did not fit the business environment for the industry. The largest factor that motivated Kodak to make this change was increased competition and decreased market share. Until the early 1980’s, Kodak owned the film production market with very little competition. This suddenly changed when Fuji Corporation and many other generic store brands began producing high quality film as well (Brickley, 2009, p. 358). Another factor in this change was technology advancements. As technology rapidly expanded in the 1980’s, other

In my March 6 memo, I discussed the need for Kodak to revamp its core strategy and regain popularity. Eastman Kodak has been the leader of photography and printing products for nearly 130 years. Over the last few years Kodak has been in distress due to its poor fundamental shift into the digital age. Lack of strategic creativity led Kodak to misunderstand the industry in which it was operating. This lack of strategic creativity was costly for Kodak.

What I feel about Kodak’s move was that they are trying to make a space for themselves in an already crowded market. Kodak is trying to carve out a niche for them by offering inks for low prices. But, they have forgotten the abilities of the competitors. They have probably underestimated them. HP and Canon are big names in the printing industry and because of their continued rollout of good quality products; customers trust them more than they trust Kodak. It is also observed that Kodak had forgotten that if HP lowers their price to almost the same level like Kodak, Kodak won’t stand a chance. The only way that Kodak can hope to make some profit is by hoping that their competitors won’t reduce the price of the inks as it is the only source of revenue in the printing industry. But I am pretty sure that marketing research people of Kodak has made a blunder by opting for this. The major fact is that they have forgotten cartridge refilling industry which is cheap too and people have started to use that as they are comparatively cheaper to the original printing inks. I sincerely feel that Kodak has taken the wrong path to get out of their troubles.

To account for their miscalculation in film sales, Kodak is undergoing a massive digitally based shift. Kodak plans on building a stronger base in its consumer, medical, and profession imaging products. However, this shift does not come without a price tag. Kodak’s projected spending could reach as much as $3 billion in future investments to aid the shift. With these investments Kodak claims a tremendous turnaround in revenue. Kodak anticipates reaching $16 billion in revenue by 2006 and $20 billion by 2010. To pay

While Kodak has historically been a well-established brand name in the marketplace, it struggled to find a niche when the industry morphed from a film-based market to a digital-based market. Kodak has struggled to successfully evolve its film-based business structure to the new structure of digital-based technology, which has allowed for competitors to enter the market, decreasing Kodak’s market share. Competitors (such as Canon Inc., Fuji Photo Film Co., Hewlett Packard Co., Nikon, and Sony Corp.) have posed major threats to Kodak’s livelihood. Kodak faces a 5% drop in film sales (2001-2003) and a 3% reduction in overall revenues over the same time period. In addition, revenues and net income are expected to be fairly flat (or decrease) in future estimates. Kodak faces much pressure to revitalize their business through digital imaging, a radical innovation, or risk being eaten alive in an industry they thought they controlled.

Background Eastman Kodak Company, headquartered in Rochester New York, was founded in 1889. The corporation, now multinational and focusing on imaging and photographic equipment, posted revenues in excess of $6 billion in 2011. During most of the 20th century Kodak was dominant in the photographic film industry in 1976 it held 90% of the market but began a downward slide once the Internet, digital cameras and computer processing grew. By 2007, Kodak ceased making a profit and in January 2012 filed for bankruptcy protection and ceased making cameras, video cameras and began to focus on the corporate digital imaging market (De La Merced, 2012). In evaluating Kodak's corporate strategy from the mid-1980s onward, we find that there four major management paradigms in place during this transitional period: