Foreword During 2011, Kodak was under extreme pressure to outlive in the digital imaging organization. As teacher Burley describes, ‘Kodak was caught in a perfect thunderstorm of not only technological, nevertheless also cultural and financial change’ (Neate, 2012).
Since Thursday 19 January 2012, Kodak recorded for bankruptcy protection (Neate, 2012) and has right up until 2013 to reshape it is business and exit out from the bankruptcy program (Business Spectator, 2012). Intro Eastman Kodak (Kodak) was at one time a leader (Finnerty, 2000) and legendary brand in the photographic film market (Associated Press, 2011b). This used the catchy slogan “You press the key, we the actual rest” (Kodak, 2011) to successfully market its digital camera products.
This employed as much as 145, 300 people and sales as high as $16 billion when it monopolized america photography industry and became number 1 in the industry in 1988 (Dobbin, 2011). Recently, Kodak lost 90 percent of its their market value (Weiss, 2011) and is facing the menace of annihilation (Associated Press, 2011b). In cases like this study, we all propose and defend a recommended strategic course for the organization to put into practice in the next three to five years based on a balanced assessment of the company’s options. We all first perform a detailed research of Kodak’s internal and external surroundings to understand the opportunities and threats facing the company.
Evaluation Kodak features tried to enhance itself by an older old film technology business into a fast and digital cultured business but has failed as a result of fall in revenue in the United States (Deutsch, 2004). It truly is still aiming to play catch-up with rivals (Associated Press, 2011b) such as Canon, Volvo and HORSEPOWER for the past 15 years. Their current services and products span throughout digital cameras, inkjet printers, detectors, retail kiosks, workflow and business process services and software to consumer, professional photographic film, paper finalizing chemicals and industrial supplies such as films for imprinted circuit boards (Kodak, 2010).
Through the help of drug and discounts stores, Kodak surely could add self-service kiosks to encourage individuals to print their particular digital photographs (Deutsch, 2004). Kodak formed strategic joint ventures with companies just like Sanofi, AMERICA ONLINE online (Grant, 2005), and many recently in 2007 Cinelabs (Beijing) Limited (Kodak, 2007). It has tried to acquire several smaller effective companies including Ofoto and Practice performs to complete the absent pieces of technology and marketplaces that it did not have capacities in (Deutsch, 2004).
Talents Kodak features several strong points to distinguish itself from rivals. Kodak provides superior manufacturer recognition (Aaker, 1992; Deutsch, 2004; Scholarhip, 2005) when compared with rival brands such as Agfa based on ALL OF US consumer reports (Simonson ain al., 1994). Its manufacturer was maintained its significant worldwide distribution presence through retail pictures stores, film processors and professional photographers which presented Kodak while using competitive benefit (Grant, 2005).
Kodak leads in the higher priced photo top quality camera portion (Smith, 1999) where it launched it is major innovations in the image (Grant, 2005). Traditionally, Kodak has advantages in photofinishing services and consumables including paper, tattoo and substance technology (Grant, 2005). This is derived from a rich portfolio of 14, 000 patents (Associated Press, 2011b) created from a strong R&D investment during the early eighties (Grant, 2005). Kodak was financially safeguarded with money flows flowing from its existing photography business during the early 1990s (Grant, 2005). Weak points On the other hand, Kodak has weaknesses.
Kodak prevented taking risks, they were not innovative enough and depended on existing procedures and policies to take care of standards (Gavetti et approach., 2005). They were slow to bring new products to promote (Grant, 2005). Its price tag network of stores was obviously a depreciating asset due to the maximize use of residence computers, email and printing technologies (Grant, 2005). Kodak focused too heavily within the extremely competitive entry-level industry and did not develop progressive products fast enough (Grant, 2005).
Its product development and sales departments were fragmented and spread over many divisions (Gavetti et al., 2005). Subsequently, Kodak’s midsection managers had been resistant to modify and did not understand the digital world (Gavetti et ‘s., 2005; Lucus & Goh, 2009). Kodak managers disregarded analysis job based on info gained from Kodak’s eroding market share (Gavetti et ‘s., 2005). Kodak managers was missing vision and strategy (Gavetti et ‘s., 2005).
Chances A few opportunities exist for Kodak. It could build buyer trust in digital that Kodak already offers in film (Smith, 1999). Kodak can focus on it is core business and develop new technology (Gavetti ou al., 2005) and new products (Deutsch, 2004). Threats However , Kodak will suffer long term hazards to its core business in the film business if it does not extend its manufacturer to digital (Smith, 1999). IBISWorld forecasts the demand for physical photographs would fall due to improvements in digital technology (IBISWorld, 2011).
Kodak has been in battles to competitors including Sony over patent infringements (Deutsch, 2004; Associated Press, 2011a). It has been struggling with an amount war between strong competition such as Fuji Photo Film (Smith, 1999) in the photo taking film industry. Industry research – Porter’s five causes Threat of Entry A great analysis from the industry using Porter’s five forces implies that threat of new entry is moderate. Significant investment in capital would be required to enter a new industry (Select Understanding, 2001) such as the digital the image and digital photography industry.
Printing equipment just like hardware, software, photographic newspaper and chemical compounds is predicted to be forty-five. 7% of purchases versus wages at 26. 8% of earnings (IBISWorld, 2011). New traders would shortage experience and knowledge in key parts of digital image resolution and picture taking such as technical and business knowledge (Greenwood, 2008). Buyer power The buying power of consumers is high especially for consumer electronics (Skoloda, 2009).
Purchasers are given a number of differentiated digital camera products from many companies (IBISWorld, 2010). They expect better offerings and customization of goods and providers (Fraser, 2007). Supplier power Supplier electrical power is low.
A lot of the suppliers are located throughout the world both locally and internationally. Kodak offers several distributor contracts comprising one to three years (Kodak, 2010). However , you will discover single or limited types of finished goods manufactured and purchased by the company’s alternative party suppliers which can pose a risk for the corporation (Kodak, 2010). Unique suppliers can lessen industry profitability (McGuigan et al., 2010).
Threat of substitution The threat of substitutes is definitely high. Companies are quick to complement specifications, features and prices (Select Knowledge, 2001). You will find minimal switching costs among brands or perhaps substitutes because buyers can change to fresh updated versions based on sensible buyer notion (Select Know-how, 2001). Competitive rivalry Competitive rivalry is definitely high. Kodak’s faces strong competition coming from rivals just like start-ups (Grant, 2005; IBISWorld, 2010; Cruz, 1999; ) and significant competitors will be Canon, Fuji Photo Film, Hewlett Packard (HP), Nikon and Fiat (Gavetti et al., 2005).
Similarly, Kodak is competing in comparable segments with rivals – Hewlett-Packard (HP) to provide digital printing technology to customers and commercial businesses (Weiss, 2011). Kodak (2010) states that competitive pricing and rising product prices has contributed to the negative results for 2010 across its prepress solutions, digital capture and devices, and entertainment imaging (Kodak, 2010). External Analysis There are several external (political and legal, cost-effective, socio-cultural and technological) elements which effect Kodak’s business structure. Political and legal Laws and government environmental regulations have an impact to the way Kodak operates in several different countries.
For example , U. S federal legislations such as the Toxic substances control act, clean air and water work etc . impact the way Kodak manufactures products and process squander for proper disposal (Kodak, 2010). In 2003, that needed to type a committee to reduce odours which originated towards local neighborhoods (Kodak, 2006). Cost-effective From an economical view, the decline in prices made it cost-effective for consumers to buy digital cameras (IBISWorld, 2010).
Nevertheless , forecasts display that separate digital cameras reach a state of market vividness with very little room to get future growth (IBISWorld, 2010). Socio-cultural and Technological Digicams became a built-in and normal feature in mobile phones (IBISWorld, 2010). Elevating trends present that people are taking and sharing photos on cellphones daily (Okabe, 2004).
The archiving and exchange capabilities for images have been facilitated by social networks and sociable practices (Scifo, 2009), just like Facebook (Upbin, 2011), and mobile social-media applications (Naaman et al., 2005). Strong competition among rivals can be expected achievable 3D camera technology in mobile phones (AFP, 2010). Strategy, approaches & implications To ensure that Kodak to sustain a competitive advantage, it needs to strategically convert its whole business model around to capture new and one of a kind growth options. There are several options which Kodak can check out to achieve this approach.
The options listed below focus on structural changes in the industry and assets (skills and capabilities) inside the organisation. Business Process Re-engineering (BPR) Rebranding Other options exists pertaining to Kodak, it may change thier name from Eastman Kodak Organization to say Kodak Communication (Deutsch, 2004), or as Hopelain suggests, it will need to establish a unique Kodak Technology brand (Deutsch, 2004). A great organisation’s approach and procedures will be possibly impacted by the scope of corporate rebranding (Burke ainsi que al., 2011). Stakeholder commitment needs to be obtained for the revised manufacturer to be successful (Burke et ing., 2011).
It will involve staff in planning proposed adjustments and teaching employees intended for changes (Burke et approach., 2011). Any kind of rebrand will impact the cost of the brand (Davis & Baldwin, 2006). Rebranding will involve a lot of conversation and stakeholder involvement (Davis & Baldwin, 2006). Poor corporate rebranding can be a high-risk (Davis & Baldwin, 2006) for the organisation wherever core beliefs may not incorporate well into the new brand (Burke ou al., 2011).
Leadership and organisational learning Kodak should train personnel, especially managers in weakened areas about vision and strategy (Gavetti et ing., 2005). For instance , managers can be taught ‘design methods’, to build growth, progress, and respond as industry (Rahim & Rahim, 2009) and end user needs improvements so that the business model can progress to bypass extinction (Fraser, 2007). In the same way, Apple progressed with the user to fresh opportunities, that did not live to the restrictions of the current business model (Fraser, 2007).
Subsequently, Kodak will need to cease some of its products, especially in saturated markets just like digital cameras (IBISWorld, 2010) in which profit margins will be low (Pride & Ferrell, 2007) and competition is usually fierce. It may better make use of its resources and genuine core competencies (Garrett, 2010) to make it difficult to replicate its products (Prahalad & Hamel, 1990) and demonstrate leadership. However , market leaders would need to have the ability to influence groups indirectly through climate and culture in the organisation (Kaiser et al., 2008). Technology enabled conversions will affect the importance of efficiency culture (Lucus & Goh, 2009) where hierarchy and standards gives resistance to troublesome technologies (Lucus & Goh, 2009).
Joint ventures and outsourcing Kodak can form joint ventures with other companies. It may create new emerging sectors or new value selections, alliances and collaboration – to be type by matching and contributing to its features and assets (Camillus, 2000). It can capitalise heavily about its existing patent collection (Deutsch, 2004).
Kodak will need to outsource a lot more of its manufacturing (Deutsch, 2004), while part-time and casual staff can lead to the reduction of labour costs (IBISWorld, 2011). Extreme care has to be taken exactly where processes of high strategic importance should not be outsourced (Sounderpandian & Sinha, 2007). The result enables Kodak, to develop new expertise for foreseeable future developments and sustain the value of long lasting success (Utterback, 1995).
Recommendation To preserve competitive advantage, Kodak has to strategically enhance its entire business model around to capture new and unique growth opportunities. It is recommended that Kodak, take the BPR and organisational learning way, to improve performance and make simpler the enterprise; leadership to communicate and influence eyesight and change (Bolman & Deal, 2008); to capture new business designs and better match consumer needs and economic benefit (Fraser, 2007). Larsen & Leinsdorff (1998) research shows that BPR and organisational learning work well together (Larsen & Leinsdorff, 1998).
Though, having a coherent technique is not going to become easy for a digital imaging business (Grant, 2005) like Kodak. It will be Kodak’s last chance to ‘reinvigorate their man capital to get ahead with the curve’ (Fraser, 2007, p. 67).